j2 Global, Inc. (NASDAQ:JCOM) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry into a Material Definitive Agreement.
As further described under Item 2.01 below, on December5, 2016
(the Closing Date), j2 Global, Inc., a
Delaware corporation (j2), completed
the previously announced acquisition of Everyday Health, Inc., a
Delaware corporation (Everyday Health),
to the Agreement and Plan of Merger (Merger
Agreement), dated October21, 2016, by and among j2,
Ziff Davis, LLC, a Delaware limited liability company and a
subsidiary of j2 (Parent or
Ziff Davis), Project Echo Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (Purchaser), and Everyday
Health.
In connection with the completion of the acquisition, j2 entered
into a Credit Agreement (the Credit
Agreement) with MUFG Union Bank, N.A., as
administrative agent (Agent), and
certain other lenders from time to time party thereto
(collectively, the Lenders). to the
Credit Agreement, the Lenders have provided j2 with a credit
facility of $225million (the Credit
Facility). The proceeds of the Credit Facility are
being used to finance a portion of the cash consideration in the
Offer and the Merger (as such terms are defined below) and fees
and expenses related thereto and other general corporate purposes
of j2.
At j2s option, amounts borrowed under the Credit Agreement will
bear interest at either (i)the London interbank offered rate
multiplied by the Statutory Reserve Rate (as defined in the
Credit Agreement) (the Eurocurrency
Rate) or (ii)a base rate (the Base
Rate) equal to the highest of (x)the federal funds
rate, plus 0.50%, (y) the Reference Rate (as defined in the
Credit Agreement) then in effect and (z)the Eurocurrency Rate for
an interest period of one month, plus 1.0%, in each case, plus an
applicable margin. Until the date that is six months after the
Closing Date, the applicable margin relating to any Eurocurrency
Rate loan is 1.75% and the applicable margin relating to any Base
Rate loan is 0.75%. From and after the date that is six months
after the Closing Date, the applicable margin relating to any
Eurocurrency Rate loan is 2.25% and the applicable margin
relating to any Base Rate loan is 1.25%.
The final maturity of the Credit Facility will occur on
December4, 2017 (the Maturity Date). j2
is permitted to make voluntary prepayments of the Credit Facility
at any time without payment of a premium or penalty. j2 is
required to make mandatory prepayments of loans under the Credit
Facility with (i)net cash proceeds from issuances of debt (other
than certain permitted debt), (ii) net cash proceeds from certain
non-ordinary course asset sales (subject to reinvestment rights
and other exceptions) and (iii)casualty proceeds and condemnation
awards (subject to reinvestment rights and other exceptions). j2
is also required to make prepayments of loans under the Credit
Facility in the amount equal to the then-outstanding loans under
the Credit Facility minus $150,000,000, if on the date that is
six months after the Closing Date, the aggregate principal amount
of the loans under the Credit Facility is greater than
$150,000,000.
The obligations under the Credit Facility and certain cash
management and hedging obligations are and will be fully and
unconditionally guaranteed by certain of j2s existing and
subsequently acquired or organized direct and indirect
subsidiaries (including Ziff Davis and Everyday Health) to a
guarantee agreement and secured by a lien on the equity interests
of certain of j2s subsidiaries, subject to customary exceptions.
The Credit Agreement contains financial maintenance covenants,
including a (i)maximum total leverage ratio as of the last date
of any fiscal quarter not to exceed 3.25:1.00; and (ii)a minimum
Consolidated EBITDA (as defined in the Credit Agreement) of not
less than $75,000,000 for any fiscal quarter. The Credit
Agreement also contains restrictive covenants that limit, among
other things, j2s and its restricted subsidiaries ability to
incur additional indebtedness, create, incur or assume liens,
consolidate, merge, liquidate or dissolve, pay dividends or make
other distributions or other restricted payments, make or hold
any investments, enter into certain transactions with affiliates,
sell assets other than on terms specified by the Credit
Agreement, amend the terms of certain other indebtedness and
organizational documents and change their lines of business and
fiscal years, in each case, subject to customary exceptions. The
Credit Agreement also sets forth customary events of default,
including, among other things, the failure to make timely
payments under the Credit Facility, the failure to satisfy
certain covenants, cross-default and cross-acceleration to other
material debt for borrowed money, the occurrence of a change of
control and specified events of bankruptcy and insolvency.
The foregoing descriptions of the Credit Agreement are not
complete and are qualified in their entirety by reference to the
Credit Agreement attached as Exhibit 10.1 to this Current Report
on Form 8-K, which is incorporated herein by reference.
Item2.01 Completion of Acquisition or Disposition of
Assets.
As previously disclosed, on November2, 2016, to the terms and
conditions of the Merger Agreement, Purchaser commenced a tender
offer (the Offer) for all of the
outstanding shares of common stock of Everyday Health, $0.01 par
value per share (the Shares), at a
purchase price of $10.50 per Share in cash (the Offer
Price), without interest, subject to any required
withholding of taxes.
The Offer expired at 12:00 midnight, New York City time, on
Saturday December3, 2016 (one minute after 11:59 p.m., NewYork
City time on December2, 2016) as scheduled and was not extended.
According to American Stock Transfer Trust Company, LLC, the
depositary for the Offer, 30,147,384 Shares were validly tendered
and not properly withdrawn, which represented approximately 87.8%
of the outstanding Shares and a sufficient number of Shares such
that the minimum tender condition to the Offer was satisfied.
On December5, 2016, Purchaser merged with and into Everyday
Health, with Everyday Health surviving as a wholly owned
subsidiary of Parent (the Merger). The
Merger was governed by Section 251(h) of the General Corporation
Law of the State of Delaware, with no stockholder vote required
to consummate the Merger. At the effective time of the Merger
(the Effective Time), the Shares not
purchased to the Offer (other than Shares held by Everyday
Health, Parent, Purchaser or any of their respective wholly owned
subsidiaries or by stockholders of Everyday Health who have
perfected their statutory rights of appraisal under Delaware law)
were converted into the right to receive an amount in cash equal
to the Offer Price (the Merger
Consideration), without interest, subject to any
required withholding of taxes.
Each of Everyday Healths stock options (Everyday
Options) that was then outstanding, vested and
unexercised were cancelled and converted into the right to
receive cash (without interest) in an amount equal to the product
of (i)the total number of Shares subject to the vested portion of
such Everyday Option immediately prior to the Effective Time
(taking into account any acceleration of vesting), multiplied by
(ii)the excess, if any, of (x)the Merger Consideration over
(y)the exercise price payable per Share under such Everyday
Option, subject to any required withholding of taxes. No holder
of an Everyday Option that is unvested or has an exercise price
per Share that is equal to or greater than the Merger
Consideration were entitled to any payment with respect to such
cancelled Everyday Option before or after the Effective Time.
Each restricted stock unit providing for settlement in Shares
(Everyday RSU) that was outstanding and
vested as of immediately prior to the Effective Time was
cancelled and converted into the right to receive cash (without
interest) in an amount equal to the product of (i)the total
number of Shares issuable in settlement of the vested portion of
such Everyday RSU immediately prior to the Effective Time (taking
into account any acceleration of vesting) multiplied by (ii)the
Merger Consideration, subject to any required withholding of
taxes.
The total amount of consideration paid by Purchaser in the Offer
and the Merger was approximately $465 million, without giving
effect to related transaction fees and expenses. j2 provided
Purchaser with the necessary funds to fund the Offer and the
Merger through available cash on hand and borrowings under the
Credit Facility described in Item 1.01 above.
The foregoing descriptions of the Merger Agreement and the
transactions contemplated thereby are not complete and are
qualified in their entirety by reference to the Merger Agreement
attached as Exhibit 2.1 to the Current Report on Form 8-K filed
by j2 on October27, 2016, which is incorporated herein by
reference.
Item2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
The information in
Item 1.01 above is incorporated by reference into this Item
2.03.
Item8.01
Other Events.
On December5,
2016, j2 issued press releases announcing (i)the expiration and
results of the Offer and (ii)the consummation of the Merger.
Copies of the press releases are attached hereto as Exhibit 99.1
and Exhibit 99.2, respectively, and are incorporated herein by
reference.
Item9.01
Financial Statements and Exhibits.
(a) Financial
Statements of Businesses Acquired. The financial statements
required by this Item 9.01(a) will be filed by an amendment to
this report within 71 calendar days after the date this report
was required to be filed.
(b) Pro Forma
Financial Information. The pro forma financial information
required by this Item 9.01(b) will be filed by an amendment to
this report within 71 calendar days after the date this report
was required to be filed.
(d)
Exhibits.
Exhibit
Number
Description
2.1*
Agreement and Plan of Merger, dated as of October21, 2016, by
and among Everyday Health, Inc., Ziff Davis, LLC, Project
Echo Acquisition Corp. and j2 Global, Inc. (incorporated by
reference to Exhibit 2.1 to j2s Current Report on Form 8-K
filed on October27, 2016)
10.1
Credit Agreement, dated as of December5, 2016, among j2
Global Inc., MUFG Union Bank, N.A., as Administrative Agent
and the lenders party thereto
99.1
Press release issued by j2 Global, Inc. on December5, 2016,
announcing the expiration and results of the Offer
99.2
Press release issued by j2 Global, Inc. on December5, 2016,
announcing the consummation of the Merger
*
Schedules omitted to Item 601(b)(2) of Regulation S-K. j2
Global, Inc. agrees to furnish supplementally a copy of any
omitted schedule to the SEC upon request.
This Current
Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Such forward-looking statements are subject to
numerous assumptions, risks and uncertainties that could cause
actual results to differ materially from those described in such
statements. Such forward-looking statements are based on
managements expectations or beliefs as of December5, 2016.
Factors that might cause such differences include, but are not
limited to, a variety of economic, competitive, and regulatory
factors, many of which are beyond the Companys control and are
described in the Companys Annual Report on Form 10-K filed by the
Company on February29, 2016 with the Securities and Exchange
Commission (the SEC) and the other reports the Company files from
time to time with the SEC. The Company undertakes no obligation
to revise or publicly release any updates to such statements
based on future information or actual results.
to the
requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
j2 Global, Inc.
Date:December 5, 2016
By:
/s/ Jeremy Rossen
Name:Jeremy Rossen
Title: Vice President, General Counsel
EXHIBIT
INDEX
Exhibit
Number
Description
2.1*
Agreement and Plan of Merger, dated as of October21, 2016, by
and among Everyday Health, Inc., Ziff Davis, LLC, Project
Echo Acquisition Corp. and j2 Global, Inc. (incorporated by
reference to Exhibit 2.1 to j2s Current Report on Form 8-K
filed on October27, 2016)
10.1
Credit Agreement, dated as of December5, 2016, among j2
Global Inc., MUFG Union Bank, N.A., as Administrative Agent
and the lenders party thereto
99.1
Press release issued by j2 Global, Inc. on December5, 2016,
announcing the expiration and results of the Offer
99.2
Press release issued by j2 Global, Inc. on December5, 2016,
announcing the consummation of the Merger
*
Schedules omitted
About j2 Global, Inc. (NASDAQ:JCOM)
j2 Global, Inc., together with its subsidiaries, is a provider of Internet services. The Company operates through two segments: Business Cloud Services and Digital Media. Through its Business Cloud Services Division, the Company provides cloud services to businesses of all sizes, from individuals to enterprises, and licenses its intellectual property (IP) to third parties. In addition, the Business Cloud Services Division includes its j2 Cloud Connect business, which is primarily focused on its voice and fax products. The Company’s Digital Media Division specializes in the technology and gaming markets, reaching in-market buyers and influencers in both the consumer and business-to-business space. The Company’s Digital Media business segment consists of the Web properties and business operations of Ziff Davis. The Ziff Davis portfolio of Web properties includes PCMag.com, IGN.com, Speedtest.net, AskMen.com and TechBargains.com. j2 Global, Inc. (NASDAQ:JCOM) Recent Trading Information
j2 Global, Inc. (NASDAQ:JCOM) closed its last trading session up +1.68 at 76.51 with 285,846 shares trading hands.
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