Business Context and Reporting Period
This Form 8-K, dated February 2, 2021, reports that Dragoneer Growth Opportunities Corp. (Dragoneer), a Cayman Islands exempted company, entered into a Business Combination Agreement with Cypress Holdings, Inc. (CCC Intelligent Solutions Holdings Inc.). The transaction involves Dragoneer domesticating to Delaware and merging with CCC via a wholly-owned subsidiary. The combined entity is expected to close in the second quarter of 2021, subject to shareholder approvals and customary closing conditions.
Key Financial Metrics and Transaction Terms
- Implied Equity Value: The transaction values CCC at an implied equity value of $5,740,750,000.
- PIPE Financing: Dragoneer secured $150,000,000 in gross proceeds from the sale of 15,000,000 shares of Dragoneer Common Stock at $10.00 per share to investors including Fidelity, T. Rowe Price, and Altimeter Capital.
- Forward Purchase Agreements: A condition to closing requires aggregate cash proceeds of no less than $175,000,000, with at least $150,000,000 provided by the Sponsor.
- Trust Account Requirement: Closing requires aggregate cash proceeds from Dragoneer's trust account of no less than $207,000,000 (net of redemptions and expenses).
- Net Tangible Assets: Dragoneer must have at least $5,000,001 of net tangible assets remaining after closing.
- Earn-out: Current CCC equityholders and the Sponsor have earn-out provisions tied to the post-closing trading price of the combined company.
Note: This filing is a current report regarding a material agreement and does not contain historical revenue, profit, cash flow, or margin data for CCC or Dragoneer.
Material Changes and Transaction Structure
The primary material change is the execution of the Business Combination Agreement, which alters the corporate structure of both entities. Key structural changes include:
- Domestication: Dragoneer will convert from a Cayman Islands company to a Delaware corporation.
- Merger: Chariot Opportunity Merger Sub, Inc. will merge with CCC, with CCC surviving as a wholly-owned subsidiary of Dragoneer.
- Share Exchange: All outstanding CCC shares and equity awards will be exchanged for Dragoneer Common Stock or comparable awards.
- Board Composition: The post-closing board will consist of nine directors, including six designated by Advent (at least three independent) and two designated by other parties.
Guidance, Outlook, Risks, and Contingencies
Outlook and Timing: The Business Combination is expected to close in the second quarter of 2021. Dragoneer intends to file a Registration Statement on Form S-4 to solicit shareholder proxies.
Conditions to Closing: The transaction is contingent upon:
- Expiration of the Hart-Scott-Rodino Antitrust waiting period.
- Approval by Dragoneer and CCC shareholders.
- NYSE approval of the initial listing application.
- Receipt of minimum cash proceeds from the trust account and forward purchase agreements.
Risks and Contingencies: The filing highlights significant risks, including the inability to consummate the transaction, failure to obtain regulatory or shareholder approvals, shareholder redemptions reducing trust account funds below the $207 million threshold, and the impact of the COVID-19 pandemic. The agreement may be terminated if not consummated by August 2, 2021, or if certain representations are breached.
Investor Verification Checklist
- Verify the final amount of cash remaining in Dragoneer's trust account after shareholder redemptions to ensure it meets the $207,000,000 minimum threshold.
- Confirm the execution of Forward Purchase Agreements totaling at least $175,000,000, specifically the $150,000,000 commitment from the Sponsor.
- Monitor the status of Dragoneer and CCC shareholder votes required to approve the Business Combination.
- Review the definitive proxy statement/prospectus (Form S-4) for detailed risk factors and the final composition of the board of directors.
- Assess the impact of the earn-out provisions on the total potential equity value for CCC shareholders.