Business Context and Reporting Period
This Form 8-K, filed on August 13, 2018, reports on events occurring on August 8, 2018, involving Cannae Holdings, Inc. The filing details the entry into a material definitive agreement to partner with an investment consortium, including CC Capital Partners LLC and Thomas H. Lee Partners, to acquire The Dun & Bradstreet Corporation (NYSE: DNB).
Key Financial Metrics and Obligations
The filing outlines specific financial commitments rather than historical operating results:
- Equity Commitment: Cannae has committed to purchase common equity of the acquisition vehicle (Parent) for an aggregate price of $900 million.
- Termination Fee Guarantee: Cannae has executed a Limited Guarantee to cover 46.31% of certain termination fees payable by Parent to Dun & Bradstreet.
- Termination Fee Amounts: The potential termination fees subject to the guarantee are $380.1 million in scenarios involving breach of representations or failure to consummate the merger, and $380.1 million in scenarios involving failure to receive regulatory approvals.
- Financing Structure: The acquisition is to be financed through committed equity from the Consortium, preferred equity, and debt financing from Bank of America, Merrill Lynch, Citigroup, and Royal Bank of Canada.
Material Changes and Syndication
Cannae has entered into a Letter agreement stipulating that it will use reasonable best efforts to syndicate at least $600 million of its $900 million Equity Commitment to other investors. The filing notes that the Equity Commitment is subject to reductions based on successful syndication sales. Additionally, the agreement places restrictions on Cannae's ability to sell or pledge 37,135,921 shares of Ceridian HCM Holding Inc., except for purposes of funding the Equity Commitment.
Outlook, Risks, and Contingencies
The acquisition is expected to close within six months, subject to Dun & Bradstreet shareholder approval, regulatory clearances, and other customary closing conditions. The Dun & Bradstreet board has unanimously recommended the merger to stockholders. The obligations under the Equity Commitment Letter and Limited Guarantee will terminate automatically upon the earliest of: (a) the Closing, (b) termination of the Merger Agreement, or (c) specific claims asserted by Dun & Bradstreet against Cannae. Cannae remains the primary obligor for the Equity Commitment until the Closing or termination of the obligation.
Investor Verification Checklist
- Verify the final closing date and whether the transaction closes within the expected six-month window.
- Confirm the extent of syndication achieved to determine if Cannae's net equity exposure remains at $900 million or is reduced toward the $300 million threshold mentioned in the Letter.
- Monitor regulatory clearance status and the outcome of the Dun & Bradstreet shareholder vote.
- Review the impact of the restrictions on the sale of Ceridian HCM Holding Inc. shares on Cannae's liquidity.
- Assess the potential liability exposure of 46.31% of the $380.1 million termination fee in the event of deal failure.