Business Context and Reporting Period
This Form 8-K, dated September 20, 2021, reports that Procore Technologies, Inc. (PCOR) entered into a definitive agreement to acquire Levelset (formerly Express Lien, Inc.), a software company specializing in lien rights management and payment compliance for the construction industry. The transaction is structured as a merger where Levelset will become a wholly-owned subsidiary of Procore.
Key Financial Metrics and Transaction Details
The filing details the financial structure of the acquisition rather than Procore's operational financial results for a specific period.
- Total Purchase Price: Approximately $500 million.
- Cash Consideration: Approximately $425 million, subject to customary adjustments for working capital, transaction expenses, cash, and indebtedness.
- Stock Consideration: Approximately $75 million in Procore common stock.
- Share Issuance: Based on the September 20, 2021 stock price, the transaction would have issued approximately 820,223 shares. The final number will be determined by the volume-weighted average trading price over the 30 trading days prior to closing.
- Non-Accredited Investors: Former Levelset interest holders who are not accredited investors will receive cash in lieu of stock.
Note: This filing does not provide Procore's revenue, profit, cash flow, margins, debt, or liquidity metrics for the reporting period.
Material Changes and Transaction Timeline
The primary material change is the execution of the Merger Agreement. The closing of the transaction is anticipated to occur in the fourth quarter of 2021. The deal is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Guidance, Risks, and Management Commentary
Management has issued forward-looking statements regarding the anticipated benefits of the transaction, though specific financial guidance for the combined entity is not provided in this document. Key risks and contingencies identified include:
- Regulatory Approval: Risk that governmental entities may prohibit, delay, or refuse to grant necessary approvals.
- Integration Challenges: Potential failure to successfully integrate Levelset or realize anticipated synergies.
- Operational Distraction: Diversion of management attention from ongoing business operations.
- Legal and Litigation: Potential legal proceedings related to the transaction.
- Market and External Factors: Changes in laws, market conditions, the impact of COVID-19, and the loss of key customers or partners.
Investor Verification Checklist
- Verify the final closing date and whether all regulatory conditions (specifically HSR Act) have been satisfied.
- Confirm the final number of Procore shares issued based on the 30-day volume-weighted average price at closing.
- Review the full text of the Merger Agreement (to be filed as an exhibit to the Q3 2021 Form 10-Q) for specific indemnification rights and termination fees.
- Monitor Procore's subsequent 10-Q filings for the impact of the acquisition on cash reserves and working capital adjustments.
- Assess the integration progress and any customer retention metrics for Levelset post-closing.