Doordash, Inc. current report, 09 April 2022

Full document

Business Context and Reporting Period

DoorDash, Inc. filed a Form 8-K under Item 8.01 on April 9, 2022, with the report signed April 14, 2022. The filing concerns an amendment to DoorDash’s proposed acquisition of Wolt Enterprises Oy, originally announced November 9, 2021. It supplements and updates DoorDash’s effective Form S-4 prospectus.

Transaction Terms and Key Metrics

  • DoorDash agreed to acquire all Wolt shares held by participating securityholders in exchange primarily for DoorDash Class A common stock.
  • The stated base Total Share Consideration is 39,382,172 DoorDash shares, subject to adjustments for Wolt cash, transaction expenses, taxes, indebtedness, debt-like items, net working capital, option exercise prices, and potential liquidation-preference top-up shares.
  • Consideration adjustments will be calculated in euros and converted using a DoorDash reference price of $206.4513 per share and the contractually defined closing euro exchange rate.
  • Wolt’s preliminary estimated Per Share Closing Stock Consideration was approximately 0.059 DoorDash shares per Wolt share after estimated indemnity escrow deductions. The actual amount remained subject to closing calculations and post-closing adjustments.
  • DoorDash expected former Wolt shareholders and eligible vested optionholders to own approximately 9.5% of DoorDash common stock after closing, excluding certain additional dilution from escrow releases, substitute awards, and retention awards.
  • DoorDash’s reported closing share price was $104.72 on April 11, 2022; the filing cautions that the value delivered to Wolt securityholders would fluctuate with DoorDash’s stock price.
  • An indemnity escrow of 2,250,409 DoorDash shares was specified, with additional true-up escrow possible for certain Wolt preferred-share liquidation preferences.
  • The filing does not provide DoorDash revenue, net income, operating margins, cash flow, debt, or liquidity metrics for a comparable reporting period.

Material Changes Versus the Prior Agreement

  • The April 9, 2022 amendment revised consideration-allocation mechanics to accommodate liquidation preferences in Wolt’s shareholder agreements and articles of association.
  • Vested Wolt options will be cancelled at closing. Continuing Wolt employees generally will receive substitute vested DoorDash options, while non-continuing employees generally will receive DoorDash shares, subject to the agreement’s terms.
  • Updated forms of the lockup agreement and joinder agreement were filed as exhibits.
  • The transaction process was revised to address joinder requirements, drag-along procedures, Finnish squeeze-out rights, option treatment, escrow arrangements, and post-closing purchase-price adjustments.
  • Certain key Wolt employees will have 40% of their transaction consideration subject to a four-year time-based vesting schedule, subject to continued employment and specified acceleration events.

Guidance, Outlook, Risks, and Unusual Items

  • Closing timing had not been determined. The preliminary estimates assumed closing during the first half of calendar 2022.
  • Completion remained subject to conditions including receipt of joinder agreements covering all Wolt shares on a fully diluted basis, satisfaction of supermajority and lockup requirements, cancellation of Wolt options, and other contractual conditions.
  • If shareholders did not voluntarily join within the specified period, Wolt and supporting stockholders could commence a drag-along exercise. Supporting stockholders represented approximately 72% of outstanding Wolt shares and approximately 64% of Wolt’s fully diluted securities as of November 9, 2021.
  • The transaction consideration is fixed primarily by the number of DoorDash shares rather than by DoorDash’s stock price. A decline in DoorDash’s share price before closing would reduce the market value received by Wolt securityholders without giving either party a termination right solely because of that price movement.
  • Wolt optionholders eligible for share consideration must timely execute an Optionholder Acknowledgement and Waiver or forfeit consideration for those options.
  • Indemnification is generally several and pro rata, with a €750,000 individual-loss threshold and a €25 million aggregate threshold for specified warranty and covenant claims. Certain fundamental-representation and fraud exceptions apply, and specified claims are capped at €200 million from the indemnity escrow.
  • The filing added risks related to the Russia-Ukraine conflict, sanctions, export controls, payment restrictions, supply-chain disruption, fuel and energy costs, and Wolt’s regulatory obligations in affected regions.
  • Other identified risks include integration costs, failure to realize synergies, litigation, regulatory changes, tax treatment, COVID-19 effects, competitive pressure, dilution, and failure to satisfy closing conditions.

Most Important Facts for Investors to Verify

  • Whether and when the Wolt transaction ultimately closed and whether all closing conditions were satisfied.
  • The final number of DoorDash shares issued, including consideration adjustments, liquidation-preference top-ups, substitute options, substitute RSUs, and escrowed shares.
  • The final Per Share Closing Stock Consideration and the resulting ownership dilution to existing DoorDash stockholders.
  • The final value and release status of the 2,250,409-share indemnity escrow and any true-up escrow.
  • Whether Wolt optionholders executed the required acknowledgements and the resulting treatment of vested and unvested options.
  • Post-closing integration performance, incremental costs, realized synergies, and any material indemnification claims or litigation.