Business Context and Reporting Period
Company: Global Payments Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 30, 2017
Event Date: September 1, 2017 (Completion of Acquisition)
Global Payments Inc. filed this report to disclose the completion of its acquisition of Athlaction Topco, LLC ("ACTIVE Network"), a provider of software solutions for sports and recreation organizations. The transaction was executed pursuant to a Stock Purchase and Merger Agreement dated August 2, 2017, and amended on August 31, 2017.
Key Financial Metrics and Transaction Details
This filing details a specific acquisition transaction rather than periodic financial performance metrics (revenue, profit, or cash flow for a reporting period). Key financial figures related to the transaction include:
- Total Purchase Price: $1.2 billion.
- Cash Consideration: $600 million, funded by a draw on the Company's revolving credit facility and cash on hand.
- Stock Consideration: 6,357,509 shares of Global Payments common stock, valued at approximately $600 million based on the volume-weighted average trading price for the ten trading days prior to execution.
- Debt Impact: The Company incurred a direct financial obligation by drawing $600 million from its revolving credit facility on August 30, 2017.
Material Changes Versus Prior Period
The primary material change reported is the expansion of Global Payments' asset base and equity structure through the acquisition of 100% of the issued and outstanding equity interests of ACTIVE Network. Prior to closing, the outdoors business of ACTIVE Network was divested and is no longer owned by the target entity. Additionally, the Company's capital structure changed due to the issuance of unregistered equity securities and the increase in debt obligations via the credit facility draw.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Agreements:
In connection with the closing, the Company and sellers entered into a Stockholders' Agreement. This agreement imposes transfer restrictions and customary standstill provisions on the sellers (excluding certain current or former employees). Sellers are prohibited from increasing their ownership in the Company to 6% or more of outstanding common stock without prior written consent until the second-year anniversary of the closing date.
Risks and Contingencies:
The filing notes that the description of the Purchase Agreement and Stockholders' Agreement is qualified by reference to the full text of the exhibits. The transaction relied on exemptions from registration requirements under Section 4(a)(2) of the Securities Act of 1933, as all sellers receiving stock were "accredited investors."
Unusual Items:
The filing does not disclose unusual items outside of the standard acquisition mechanics and the specific divestiture of the outdoors business prior to closing.
Important Facts for Investor Verification
- Verify the impact of the $600 million credit facility draw on the Company's total debt load and liquidity ratios as reported in the most recent Form 10-Q.
- Confirm the dilution effect of the issuance of 6,357,509 new shares of common stock on existing shareholders.
- Review the full text of the Stockholders' Agreement (Exhibit 10.1) to understand the specific standstill provisions and transfer restrictions placed on the Vista Equity Partners sellers.
- Assess the strategic fit and integration plans for ACTIVE Network, noting that the outdoors business was excluded from the acquisition.
- Monitor future filings for the pro forma financial impact of the acquisition once consolidated results are available.