09/26/2024 | Press release | Distributed by Public on 09/26/2024 06:15
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Allison Schneirov
Christopher Barlow
Daniel Luks
Skadden, Arps, Slate, Meagher &
Flom LLP
One Manhattan West
New York, NY 10001
Tel: (212) 735-3000
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Srinivas Raju
Nathaniel Stuhlmiller
Richards, Layton & Finger, P.A.
920 North King Street
Wilmington, Delaware 19801
Tel: (302) 651-7700
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☐
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Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
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Item 1. Subject Company Information
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1
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Item 2. Identity and Background of Filing Person
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2
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Item 3. Past Contacts, Transactions, Negotiations and Agreements
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6
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Item 4. The Solicitation or Recommendation
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18
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Item 5. Persons/Assets, Retained, Employed, Compensated or Used
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58
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Item 6. Interest in Securities of the Subject Company
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59
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Item 7. Purposes of the Transaction and Plans or Proposals
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61
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Item 8. Additional Information
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62
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Item 1.
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Subject Company Information
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Item 2.
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Identity and Background of Filing Person
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(i) the number of Shares validly tendered (within the meaning of Section 251(h) of the DGCL) and not validly withdrawn, together with any Owned Company Shares, equals at least one vote more than 50% of the aggregate voting power of all issued and outstanding Shares, (ii) the number of Shares beneficially owned, directly or indirectly, by the Unaffiliated Company Stockholders (as defined below) and validly tendered (within the meaning of Section 251(h) of the DGCL) and not validly withdrawn, equals at least one vote more than 50% of the aggregate voting power of all issued and outstanding Shares beneficially owned, directly or indirectly, by the Unaffiliated Company Stockholders, (iii) the number of Class B Shares validly tendered (within the meaning of Section 251(h) of the DGCL) and not validly withdrawn, together with any Class B Shares constituting Owned Company Shares, equals at least one vote more than 50% of the aggregate voting power of all issued and outstanding Class B Shares, and (iv) the number of Class A Shares validly tendered (within the meaning of Section 251(h) of the DGCL) and not validly withdrawn, together with any Class A Shares constituting Owned Company Shares, equals at least one vote more than 50% of the aggregate voting power of all issued and outstanding Class A Shares, in each case as of the Expiration Time, but excluding any Shares held in treasury by Squarespace as of the expiration of the Offer or any other Shares acquired by Squarespace prior to the expiration of the Offer (including any Shares acquired in connection with tax withholding or payment of the exercise price for the exercise of Squarespace Options, Squarespace PSUs or Squarespace RSUs) (collectively, the "Minimum Condition");
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certain representations and warranties made by Squarespace in the A&R Merger Agreement will be true and correct, subject to the materiality and other qualifications set forth in the A&R Merger Agreement as further described in the Offer to Purchase;
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Squarespace will have performed and complied in all material respects with certain covenants and obligations as further described in the Offer to Purchase;
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no material adverse effect on Squarespace has occurred since September 9, 2024 that is continuing;
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the Buyer Parties will have received a certificate of Squarespace, validly executed for and on behalf of Squarespace and in the name of Squarespace by a duly authorized executive officer thereof, certifying that the conditions set forth in the second, third, and fourth bullets above have been satisfied; and
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the A&R Merger Agreement will not have been terminated in accordance with its terms.
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Item 3.
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Past Contacts, Transactions, Negotiations and Agreements
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Subject to specified exceptions, the Fee Funding Agreement will terminate upon the earliest of:
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the termination of the A&R Merger Agreement by mutual written consent of Squarespace, Parent and Merger Sub;
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the Closing pursuant to the A&R Merger Agreement;
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the date that is 60 days following the valid termination of the A&R Merger Agreement, unless, prior to the expiration of such 60 day period, Squarespace has delivered a written notice with respect to the obligations payable alleging that the FFA Investors, Parent or Merger Sub is liable for any such obligations; and
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Squarespace or any of its affiliates asserts certain litigation or legal proceedings under the A&R Merger Agreement or the Equity Commitment Letters.
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Certain members of the Squarespace Board received and are entitled to receive compensation for their service on the Special Committee. In particular, Squarespace paid compensation of $20,000 per month to Special Committee members and $25,000 per month to the Special Committee Chair, payable from the formation of the Special Committee on February 22, 2024 until the Original Merger Agreement was executed on May 13, 2024. In addition, Squarespace will pay to Michael Fleisher, as Special Committee Chair, a monthly fee equal to $10,000 for each full or partial month from and including May 14, 2024 through the month in which the Closing occurs. Squarespace will pay the other members of the Special Committee a monthly fee equal to $7,500 for each full or partial month from and including May 14, 2024 through the month in which the Closing occurs. Such fees are in addition to the regular compensation received as a member of the Squarespace Board;
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Squarespace's directors and officers are entitled to continued indemnification and insurance coverage under the A&R Merger Agreement and indemnification agreements between such individuals and Squarespace;
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Anthony Casalena, Squarespace's Chief Executive Officer, (i) will be the Chief Executive Officer of the Surviving Corporation as of the consummation of the Merger and (ii) together with the Casalena Rollover Stockholders, entered into a Tender and Support Agreement with Squarespace and Parent, pursuant to which the Casalena Rollover Stockholders agreed, among other things, to contribute, sell or otherwise transfer a portion of the shares of Squarespace Common Stock owned by them to a direct or indirect parent company of Parent in exchange for equity interests in such direct or indirect parent company of Parent, which contribution and exchange will happen immediately prior to the Closing and, solely as a result of such contribution and exchange, Mr. Casalena (together, as applicable, with his affiliates) will own approximately 33.3% of such direct or indirect parent company following the consummation of such contribution and exchange and will have certain governance rights with respect to such direct or indirect parent company following the consummation of the Merger;
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Each of Squarespace's executive officers (other than Anthony Casalena, Squarespace's Chief Executive Officer) is party to an employment agreement with Squarespace that provides for severance payments and benefits in the event of an involuntary termination (as defined in the section of this Schedule 14D-9 captioned "-Change in Control and Severance Benefits under Existing Agreements-Executive Employment Agreements" below);
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Squarespace RSUs (as defined in the section of this Schedule 14D-9 captioned "Effect of the Offer and the Merger on Shares and Squarespace Equity Awards-Consideration for Squarespace Options, Squarespace RSUs, and Squarespace PSUs-Generally" below) granted to non-employee directors in 2024 are subject to prorated vesting in connection with the Merger;
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Mr. Levy is a member of the Squarespace Board and an employee of an entity affiliated with General Atlantic and Mr. Braccia is a member of the Squarespace Board and an employee of an entity affiliated with the Accel Rollover Stockholders, and, each of GA SQRS II (the "General Atlantic Rollover Stockholder") and the Accel Rollover Stockholders entered into a Tender and Support Agreement with Squarespace and Parent, pursuant to which each such Rollover Stockholder agreed, among other things, to contribute, sell or otherwise transfer a portion of the Shares it owns to a direct or indirect parent company of Parent in exchange for equity interests in such direct or indirect parent company of Parent, which contribution and exchange will happen immediately prior to the Closing and, solely as a result of such contribution and exchange, each of the General Atlantic Rollover Stockholder and the Accel Rollover Stockholders (together, as applicable, with their respective affiliates) will own approximately 8.4% and 0.5%, respectively, of such direct or indirect parent company, following the consummation of such contribution and exchange (with respect to the Accel Rollover Stockholders this does not reflect the equity commitment by the Accel Equity Investors pursuant to its equity commitment letter).
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Base salary continuation for a certain number of months (12 months for Mr. Gooden, and six months for Mr. Gubbay and Ms. O'Connor);
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Squarespace will pay the executive's COBRA premiums for a certain number of months (12 months for Mr. Gooden, and six months for Mr. Gubbay and Ms. O'Connor); and
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if such involuntary termination occurs within three months prior to or within 12 months following a change in control, 100% acceleration of all Squarespace Equity Awards (as defined in the section of this Schedule 14D-9 captioned "Effect of the Offer and the Merger on Shares and Squarespace Equity Awards-Consideration for Squarespace Options, Squarespace RSUs, and Squarespace PSUs-Generally" below).
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Number of Shares Beneficially Owned
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Named Executive
Officers and Directors
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Shares of Class A
Common Stock
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Shares of Class B
Common Stock
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Total
Shares
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Implied Cash
Consideration for
Shares
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Anthony Casalena(1)
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1,953,786
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42,886,410
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44,840,196
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$1,996,171,851.00
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Nathan Gooden(2)
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77,212
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77,212
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$3,590,358.00
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Paul Gubbay(3)
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48,769
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48,769
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$2,267,758.50
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Courtenay O'Connor(4)
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57,296
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57,296
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$2,664,264.00
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Andrew Braccia(5)
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14,572,025
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14,572,025
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$677,599,162.50
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Michael Fleisher(6)
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75,493
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75,493
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$3,510,424.50
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Jonathan Klein(7)
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168,072
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168,072
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$7,815,348.00
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Liza Landsman(8)
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29,173
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29,173
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$1,356,544.50
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Anton Levy(9)
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25,390
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25,390
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$1,180,635.00
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Neela Montgomery(10)
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18,298
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18,298
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$850,857.00
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All executive officers and directors as a group (10 persons)(11)
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17,025,514
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42,886,410
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59,911,924
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$2,785,904,466.00
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(1)
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Consists of (a) 387,500 shares of Class A common stock and 2,050,838 shares of Class B common stock held directly by Anthony Casalena 2019 Family Trust, for which Mr. Casalena is the trustee, and (b) 1,566,286 shares of Class A common stock and 40,835,572 of Class B common stock held directly by Anthony Casalena Revocable Trust, for which Mr. Casalena is the trustee. Each share of Class B common stock is convertible at the option of Mr. Casalena into one share of Class A common stock. Mr. Casalena may be deemed to have voting power and dispositive power over the shares held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust.
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(2)
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Consists of 77,212 shares of Class A common stock.
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(3)
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Consists of 48,769 shares of Class A common stock.
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(4)
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Consists of 57,296 shares of Class A common stock.
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(5)
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Consists of (a) 25,390 shares of Class A common stock held directly by Andrew Braccia, (b) 32,439 shares of Class A common stock held by AKB Living Trust, of which Andrew Braccia is a trustee and (c) shares held by the entities affiliated with Accel, consisting of (a) 530,953 shares of Class A common stock held of record by Accel Leaders 3 L.P., (b) 21,982 shares of Class A common stock held of record by Accel Leaders
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(6)
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Consists of 75,493 shares of Class A common stock.
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(7)
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Consists of 168,072 shares of Class A common stock.
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(8)
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Consists of 29,173 shares of Class A common stock.
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(9)
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Consists of 25,390 shares of Class A common stock held by Mr. Levy solely for the benefit of General Atlantic Service Company, L.P. Mr. Levy disclaims beneficial ownership of the restricted stock units and the shares of Class A common stock.
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(10)
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Consists of 18,298 shares of Class A common stock.
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(11)
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Consists of 17,025,514 shares of Class A common stock, (b) 42,886,410 shares of Class B common stock.
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Shares Underlying
Squarespace RSU
Awards(1)(3)
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Shares Underlying
Squarespace PSU
Awards(2)(3)
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Name
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Number of
Shares
(#)
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Value
($)
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Number of
Shares
(#)
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Value
($)
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Total
($)
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Non-Employee Directors
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Andrew Braccia
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6,197
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288,161
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-
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-
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288,161
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Michael Fleisher
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6,197
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288,161
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-
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-
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288,161
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Jonathan Klein
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6,197
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288,161
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-
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-
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288,161
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Liza Landsman
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6,197
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288,161
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-
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-
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288,161
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Anton Levy
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6,197
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288,161
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-
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-
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288,161
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Neela Montgomery
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6,197
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288,161
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-
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-
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288,161
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Executive Officers
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Anthony Casalena
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-
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-
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-(4)
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-(4)
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-(4)
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Nathan Gooden
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404,557
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18,811,901
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134,837
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6,269,921
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25,081,822
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Paul Gubbay
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110,954
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5,159,361
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59,718
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2,776,887
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7,936,248
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Courtenay O'Connor
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108,189
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5,030,789
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61,855
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2,876,258
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7,907,047
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(1)
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Represents Shares subject to Squarespace RSUs outstanding as of September 1, 2024. The values shown with respect to Squarespace RSUs are determined as the product of the Per Share Price multiplied by the total number of Shares subject to Squarespace RSUs. With respect to Squarespace RSUs held by non-employee directors, the number of Shares subject to such Squarespace RSUs does not reflect any prorated vesting in connection with the Merger.
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(2)
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Represents Shares subject to Squarespace PSUs outstanding as of September 1, 2024 (without regard to any change in control-related accelerated vesting, except as noted below), and includes Squarespace PSUs that have been earned but are subject to the satisfaction of service-based vesting conditions. The values shown with respect to Squarespace PSUs are determined as the product of the Per Share Price multiplied by the total number of Shares subject to Squarespace PSUs (assuming achievement of target performance levels). Achievement of maximum performance levels would result in 200% of such amounts.
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(3)
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Each of the Squarespace executive officers (other than Anthony Casalena) is eligible for vesting acceleration of his or her equity awards in connection with certain qualifying terminations of employment under their respective employment agreements.
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(4)
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Mr. Casalena's Squarespace PSUs, which cover, at maximum performance, 2,750,000 Shares, will be automatically forfeited in connection with the Merger without the payment of any consideration.
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the Merger constitutes a change in control under the Squarespace Equity Plans and each NEO's employment agreement;
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September 1, 2024, which is the latest practicable date prior to this filing, as the date of the closing of the Merger;
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each NEO experiences an involuntary termination on September 1, 2024, based on the terms of his or her respective agreement(s);
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the NEO's base salary rates remain unchanged from those in effect as of September 1, 2024;
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Squarespace RSUs and Squarespace PSUs are valued based upon the Offer Price, and do not forecast any vesting, deferrals or forfeitures of equity-based awards following September 1, 2024 (except for Mr. Casalena's Squarespace PSUs, which will be automatically forfeited in connection with the Merger pursuant to their terms without the payment of any consideration); and
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Squarespace PSUs held by each NEO (other than Mr. Casalena) will be deemed earned based on the achievement of target level of performance.
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Name
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Cash
($)(1)
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Equity
($)(2)
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Perquisites/
Benefits
($)(3)
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Total
($)
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Anthony Casalena
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-
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-
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-
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-
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Nathan Gooden
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750,000
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25,081,822
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32,000
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25,863,822
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Paul Gubbay
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325,000
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7,936,248
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13,600
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8,274,848
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Courtenay O'Connor
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275,000
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7,907,047
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12,800
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8,194,847
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1)
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The estimated amount for each NEO (other than Mr. Casalena who is not entitled to any severance payments or benefits) represents the cash severance payments to which the NEO may become entitled under his or her existing employment agreement. As discussed above, under their existing employment agreements, upon an involuntary termination (whether or not in connection with a change in control), the NEOs will be entitled to base salary continuation for a certain number of months (12 months for Mr. Gooden, and six months for Mr. Gubbay and Ms. O'Connor). The cash severance is contingent upon an involuntary termination and subject to the NEO's execution and non-revocation of a release of claims. These amounts are payments that would be payable upon an involuntary termination of employment, whether or not there is also a change in control.
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2)
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As noted above, each NEO (other than Mr. Casalena) is eligible for "double-trigger" acceleration in full of his or her Squarespace Equity Awards in the event he or she experiences an involuntary termination within three months prior to or within 12 months following a change in control. Set forth below are the values of each unvested Squarespace Equity Award held by the NEOs that would become vested upon an involuntary termination immediately following the consummation of a change-in-control. Mr. Casalena's Squarespace PSUs, which cover, at maximum performance, 2,750,000 Shares, will be automatically forfeited in connection with the Merger without the payment of any consideration.
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Name
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Squarespace
RSUs
($)
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Squarespace
PSUs(i)
($)
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Anthony Casalena
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-
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-
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Nathan Gooden
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18,811,901
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6,269,921
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Paul Gubbay
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5,159,361
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2,776,887
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Courtenay O'Connor
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5,030,789
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2,876,258
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(i)
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Includes Squarespace PSUs that have been earned but are subject to the satisfaction of service-based vesting conditions.
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3)
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The estimated amount for each NEO (other than Mr. Casalena who is not entitled to any severance payments or benefits) represents continuation of medical benefits to which the NEO may become entitled under his or her existing employment agreement. As discussed above, under their existing employment agreements, upon an involuntary termination (whether or not in connection with a change in control), Squarespace will pay such NEOs COBRA premiums for a certain number of months (12 months for Mr. Gooden, and six months for Mr. Gubbay and Ms. O'Connor). These amounts are contingent upon an involuntary termination and are subject to the NEO's execution and non-revocation of a release of claims. These amounts are payments that would be payable upon an involuntary termination of employment, whether or not there is also a change in control.
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Item 4.
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The Solicitation or Recommendation
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Solicitation Process Prior to Original Merger Agreement. The Special Committee's process for soliciting and responding to offers from potential bidders in an effort to obtain the best value reasonably available to the Unaffiliated Company Stockholders, including the fact that eight parties (including Permira) were contacted in such process to solicit interest in a potential transaction with Squarespace, seven of which entered into non-disclosure agreements with Squarespace and were provided with an opportunity to conduct due diligence, including reviewing the estimated projections of Squarespace's financial performance. In addition, management diligence sessions were conducted with five parties (including Permira), during which members of Squarespace management reviewed estimated projections, Squarespace's long-range plan and other diligence information regarding Squarespace (as described in the section of this Schedule 14D-9 captioned "-Background of the Offer and the Merger"). The Special Committee also considered conducting outreach to strategic acquirers, but ultimately determined not to do so because it determined that it was unlikely that a strategic buyer would be willing to engage in a transaction with Squarespace given that such parties had never before contacted Squarespace about a potential transaction, coupled with Mr. Casalena's desire to maintain a significant equity stake in and control of the day-to-day management of Squarespace following a potential transaction. The Special Committee also considered the fact that, by the initial bid deadline of April 26, 2024, the Special Committee had only received a proposal from one bidder (Permira) and each of the other financial sponsors had withdrawn from the process (as described in the section of this Schedule 14D-9 captioned "-Background of the Offer and the Merger").
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Potential Strategic Alternatives. The assessment of the Special Committee that none of the possible alternatives to the Transactions (including continuing to operate Squarespace as a stand-alone public company or pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to the Unaffiliated Company Stockholders of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for Squarespace to create greater value for the unaffiliated security holders, taking into account execution risks as well as business, financial, industry, competitive and regulatory risks. The Special Committee also considered the fact that, on September 6, 2024, Permira Portfolio Management Limited (which we refer to as "Permira") indicated that its offer was its best and final offer and that the Special Committee had not received a proposal from any party other than Permira. Prior to entry into the Original Merger Agreement, in consultation with Centerview and RLF, the Special Committee assessed the potential benefits of re-soliciting the parties previously involved in the process or soliciting additional parties, to determine interest in a potential acquisition of Squarespace and determined that the benefits of doing so were outweighed by the risks, including the risk that further outreach could cause Permira to lower
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Certainty of Value. The consideration to be received by the unaffiliated security holders in the Offer and the Merger consists entirely of cash, which provides the unaffiliated security holders certainty of value and immediate liquidity at an attractive price measured against the ongoing business and financial execution risks of Squarespace's business plan and its continued operations as a stand-alone public company and allows the unaffiliated security holders to realize that value immediately upon the consummation of the Transactions, while eliminating long-term business and execution risk. In that regard, the Special Committee noted that the amount of cash to be received for each outstanding share of Squarespace Common Stock is fixed and will not be reduced if the share price of Squarespace stock declines prior to the Effective Time.
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Best Value Reasonably Obtainable. The belief of the Special Committee that the Per Share Price represented Permira's best and final offer and the best value that Squarespace could reasonably obtain for the Shares from Permira, taking into account (1) Permira's statements and reputation as a financial sponsor; (2) the Special Committee's assessment, which included consultation with its financial advisor, Centerview, that other parties did not have sufficient interest in, or capability to, acquire Squarespace at a higher price, including based on the regulatory, financing and other execution risks applicable to each party; and (3) the Special Committee's familiarity with the business, operations, prospects, business strategy, assets, liabilities and general financial condition of Squarespace on a historical and prospective basis and its assessment of associated risks, including execution risks with respect to Squarespace's business plan. The Special Committee believed that, after negotiations at the direction of the Special Committee and with the assistance of experienced independent legal and financial advisors, the Special Committee obtained the best terms and highest price that Permira or any other financial sponsor whom the Special Committee had solicited interest from was willing to pay for a transaction with Squarespace, pursuant to a thorough process and that further negotiations were not likely to result in a higher price than the Per Share Price. In addition, the Special Committee believed that, measured against the longer-term execution risks for Squarespace's business plan described above, the Per Share Price reflects a fair and favorable price for the Shares. The Special Committee also considered that the Per Share Price constitutes a significant premium, including (1) a premium of approximately 47% to the closing price of the Squarespace Common Stock on February 13, 2024 of $31.61 per share, the date on which Permira submitted its initial indication of interest; (2) a premium of approximately 22% over Squarespace's closing stock price of $38.19 on May 10, 2024 (the last trading day prior to public announcement of the Original Merger Agreement); (3) a premium of approximately 36% to Squarespace's 90-day volume weighted average trading price on May 10, 2024; (4) a
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Speed and Likelihood of Completion. The Special Committee considered the likelihood of completion of the Offer and the Merger in light of the terms of the A&R Merger Agreement and the conditions to consummating the Offer, including:
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○
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The anticipated timing of the consummation of the Offer and the Merger, and the structure of the transaction as a tender offer for the Squarespace Common Stock pursuant to Section 251(h) of the DGCL, which, subject to the satisfaction or waiver of the applicable conditions set forth in the A&R Merger Agreement, permits the consummation of the Offer and the Merger in a rapid manner.
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○
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The fact that a portion of the Shares were held by Squarespace stockholders who could not vote at the Special Meeting based on a record date of August 19, 2024.
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○
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The belief that there are certain Squarespace stockholders that might want to tender into the Offer but could not vote in favor of the Original Merger Agreement because of institutional policies regarding proxy advisor vote recommendations, which recommendations do not apply to tender offer structures.
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○
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The conditions to the Offer and the Merger contained in the A&R Merger Agreement, which are limited in number and scope.
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○
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The limited rights of Permira to extend the Offer.
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○
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The fact that the regulatory approvals required pursuant to the HSR Act and under all other applicable antitrust laws have already been received.
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•
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Loss of Opportunity. In approving the A&R Merger Agreement, the possibility that, if the Special Committee declined to recommend that the Squarespace Board approve the A&R Merger Agreement, (1) the Original Merger Agreement may have been approved by the stockholders, resulting in the Squarespace stockholders receiving $44.00 per share rather than having an opportunity to receive the increased price of $46.50 per share and (2) there may not be another opportunity for the Unaffiliated Company Stockholders to receive a comparably priced offer of $46.50 with a comparable level of closing certainty for their Shares under the A&R Merger Agreement. The Special Committee also considered Permira's position that the September 6, 2024, offer was its best and final offer (as described in the section of this Schedule 14D-9 captioned "-Background of the Offer and the Merger"), and that Permira had been the most engaged potential bidder throughout the Special Committee's process and the only potential bidder that submitted an offer. From January 2022 through May 10, 2024 (the last trading day prior to public announcement of the A&R Merger Agreement), Squarespace's closing stock price had never exceeded $38.19 and had always maintained a range of $18.85 to $38.19.
|
•
|
Financial Condition, Results of Operations and Prospects of Squarespace; Risks of Execution. The Special Committee considered the current, historical and projected financial condition, results of operations and business of Squarespace, as well as Squarespace's prospects and risks if it were to remain a stand-alone public company. The Special Committee considered Squarespace's then-current business plan, including management's then-current estimated projections of Squarespace's financial prospects, as reflected in the Unaudited Prospective Financial Information (as defined in the section of this Schedule 14D-9 captioned "-Certain Unaudited Prospective Financial Information-Projections."). The Special Committee also considered Squarespace's then-current business plan and the potential opportunities and risks to achieving the business plan, including, among other things: (1) the nature of the website design and management platform business, and the business of providing websites, domains and emails, on both historical and prospective bases; and (2) Squarespace's relationship with its customers and vendors. The Special Committee considered the assumptions underlying the business plan, as well as the estimated projections of Squarespace's financial prospects, all as reflected in the Unaudited Prospective Financial Information.
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•
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Opinion of Centerview. The opinion of Centerview rendered to the Special Committee, which was subsequently confirmed by delivery of a written opinion dated September 8, 2024, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Offer Price or the Per Share Price to be paid to the Unaffiliated Company Stockholders (other than as specified in such opinion) pursuant to the A&R Merger Agreement was fair, from a financial point of view, to such holders (as more fully described below in the section entitled "-Opinion of Centerview") (the Special Committee considered the Unaffiliated Company Stockholders (other than as specified in such opinion) to be situated substantially similarly to the "unaffiliated security holders," as such term is defined in Rule 13e-3 under the Exchange Act).
|
•
|
Recommendation of Institutional Shareholder Services. The recommendation of ISS that that stockholders vote against the proposal to adopt and approve the Original Merger Agreement.
|
•
|
Likelihood of Adoption of the Original Merger Agreement. The Special Committee's belief that it may be difficult to obtain the necessary stockholder approval to adopt the Original Merger Agreement at the Special Meeting in light of the fact that Squarespace's Class A Shares had consistently traded above the deal price throughout August and that ISS had recommended that stockholders vote against the proposal to adopt the Original Merger Agreement.
|
•
|
Negotiations with Permira and Terms of the A&R Merger Agreement. The terms and conditions of the A&R Merger Agreement, which was the product of arm's-length negotiations, including:
|
○
|
That the closing of the Offer would be conditioned upon, among other things, a majority of the outstanding Shares held by the Unaffiliated Company Stockholders being tendered in the Offer. This condition is in addition to the conditions otherwise required under Delaware law under Section 251(h) of the DGCL, and it ensures that if the Merger is ultimately consummated, it will have been supported by the Unaffiliated Company Stockholders and a substantial majority of Squarespace's stockholders.
|
○
|
Squarespace's ability, under certain circumstances, to enter into discussions with, furnish information to, and conduct negotiations with, third parties submitting unsolicited alternative Acquisition Proposalsif the Special Committee determines in good faith (after consultation with its financial advisor and legal counsel) that the proposal(s) constitutes, or is reasonably expected to lead to a Superior Proposal.
|
○
|
The Special Committee's belief that if any other parties exist that are motivated and interested in acquiring Squarespace and are willing and able to make a superior proposal, the terms of the A&R Merger Agreement would be unlikely to deter such third parties from making such a Superior Proposal.
|
○
|
The ability of the Squarespace Board, acting upon the recommendation of the Special Committee, and the Special Committee's ability, in each case under certain circumstances, to change, withdraw or modify the recommendation that Squarespace's stockholders (including the Unaffiliated Company Stockholders) accept the Offer and tender their Shares to Purchaser pursuant to the Offer.
|
○
|
The Squarespace Board's ability, acting upon the recommendation of the Special Committee, under certain circumstances, to terminate the A&R Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal. In that regard, the Special Committee believed that the termination fee payable by Squarespace in such instance in accordance with the terms of the A&R Merger Agreement was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other potential offers.
|
○
|
The remedies available to Squarespace under the A&R Merger Agreement in the event the Merger is not consummated, including monetary damages and the ability of Squarespace to seek specific performance of Permira's obligations under the A&R Merger Agreement, as well as the fact that Squarespace's right to seek specific performance is not conditioned on the availability of any financing.
|
○
|
The terms of (1) the Second Amended and Restated Commitment Letter entered into by Blue Owl Capital Corporation and Parent, which commits the debt sources to lend a portion of the amounts
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○
|
The terms of the A&R Merger Agreement provide Squarespace with sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the A&R Merger Agreement.
|
•
|
Reasonable Likelihood of Consummation. The belief of the Special Committee that an acquisition by Permira has a reasonable likelihood of closing, based on, among other matters:
|
○
|
the limited conditions to Permira's obligation to consummate the Merger as provided by the A&R Merger Agreement, including the absence of a financing condition;
|
○
|
the fact that all required regulatory approvals have been obtained;
|
○
|
the fact that the Rollover Stockholders (who collectively hold over 90% of the voting power of Squarespace's outstanding stock) have duly executed and entered into those certain Tender and Support Agreements, pursuant to which they agreed to, among other things, contribute, sell or otherwise transfer their Shares to the direct or indirect parent company of Parent pursuant to the Offer subject to the terms and conditions set forth therein;
|
○
|
the fact that Permira had increased its offer price three times since making its original indication of interest prior to entering into the Original Merger Agreement and again prior to entering into the A&R Merger Agreement;
|
○
|
Squarespace's ability to specifically enforce Permira's obligations under the A&R Merger Agreement in accordance with its terms; and
|
○
|
Permira's business reputation and financial resources, which provided the Special Committee comfort that Permira would be able to consummate the transaction.
|
•
|
Appraisal Rights. Squarespace's stockholders have the right to exercise their statutory appraisal rights under Section 262 of the DGCL and receive payment of the fair value of their Shares in lieu of tendering their Shares into the Offer, subject to and in accordance with the terms and conditions of the A&R Merger Agreement and the DGCL, unless and until any such Squarespace stockholder fails to perfect or effectively withdraws or loses such holder's rights to appraisal and payment under the DGCL.
|
•
|
Current and Historical Market Prices. The current and historical market prices of Squarespace Common Stock, taking into account the trading price of Squarespace's stock relative to those of other industry participants and general market indices and current industry, regulatory, economic and market conditions, trends and cycles.
|
•
|
Independence. The Special Committee is comprised of directors who are independent (for purposes of serving on the Special Committee), disinterested and not affiliated with, and are independent of, Permira or any of the potential participants in a potential acquisition of Squarespace (including Mr. Casalena, General Atlantic and Accel) and who are otherwise disinterested and independent with respect to a potential
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•
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Negotiating Authority and Procedural Safeguards. The fact that the Special Committee adopted "Rules of the Road" at the outset of the Special Committee's strategic review process that set forth certain process rules applicable to the Squarespace Board, the Special Committee, senior management and their advisors and were intentionally structured to ensure that the Special Committee and its advisors would lead the strategic review process. In accordance with the Rules of the Road, (1) the Special Committee and its advisors led the strategic review process, (2) members of management, Squarespace and its advisors regularly consulted with the Special Committee, Michael Fleisher, as Special Committee Chair, and the Special Committee's advisors to receive direction therefrom with respect to the strategic review process, and (3) members of management followed the Special Committee's directives with respect to discussions, presentations, negotiations and communications with potential bidders.
|
•
|
Prior Special Committee Recommendation Required. The Squarespace Board was not permitted to approve any potential acquisition of Squarespace (including a potential acquisition of Squarespace that also included a transaction or series of transactions in which one or more significant stockholders of Squarespace had an interest that was in addition to, and/or different from, the interests of Squarespace's stockholders as a whole) or recommend for approval any such transactions by Squarespace's stockholders without a prior favorable recommendation of the transaction by the Special Committee.
|
•
|
Active Involvement and Oversight. The twenty-four meetings held by the Special Committee over a seven-month period (usually with its legal and financial advisors present) to discuss and evaluate, among other things, the process for exploring a potential strategic transaction and the proposals from Permira, and the Special Committee's active oversight of the negotiation process. The Special Committee was actively engaged in this process on a regular basis and was provided with full access to Squarespace management and its advisors in connection with the evaluation process.
|
•
|
Independent Advice. The Special Committee selected and engaged its own independent legal advisor (RLF) and financial advisor (Centerview) and received the advice of such advisors throughout its review, evaluation and negotiation of a potential acquisition of Squarespace.
|
•
|
Full Knowledge. The Special Committee made its evaluation of a potential acquisition of Squarespace by Permira based upon the factors discussed in this Schedule 14D-9 and with the full knowledge of the interests of the Rollover Stockholders in the transaction.
|
•
|
No Obligation to Recommend. The recognition by the Special Committee that it had no obligation to recommend to the Squarespace Board the approval of the A&R Merger Agreement, the Transactions or any other transaction and had the authority to reject any proposals made.
|
•
|
Unaffiliated Company Stockholder Approval. The A&R Merger Agreement provides that the closing of the Offer is subject to certain conditions, including a majority of the outstanding Shares held by the Unaffiliated Company Stockholders being tendered in the Offer. In addition, because Casalena, General Atlantic and Accel are rolling over or reinvesting portions of their equity in the Merger, and will therefore be treated differently vis-à-vis other Squarespace stockholders in the Merger, the A&R Merger Agreement is also conditioned upon (1) a majority in voting power of the number of shares of Class B Common Stock outstanding being validly tendered subject to the terms of the A&R Merger Agreement and in accordance with Section 251(h) of the DGCL, and (2) a majority in voting power of the number of shares of Class A Common Stock being validly tendered subject to the terms of the A&R Merger Agreement and in accordance with Section 251(h) of the DGCL.
|
•
|
No Stockholder Participation in Future Growth or Earnings. The nature of the Transactions as a cash transaction means that the Unaffiliated Company Stockholders will not participate in Squarespace's future
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•
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No-Shop Restrictions. The restrictions in the A&R Merger Agreement on Squarespace's ability to solicit competing transactions (subject to certain exceptions to allow the Squarespace Board, acting upon the recommendation of the Special Committee, or the Special Committee, to exercise their respective fiduciary duties to negotiate with parties who submit an unsolicited Acquisition Proposal and, in the case of the Squarespace Board, acting upon the recommendation of the Special Committee, to accept a Superior Proposal, and then only upon the payment of a termination fee by Squarespace to Permira). The Special Committee was also aware that the interests of Casalena, General Atlantic and Accel in the Transactions would likely be considered by third parties in evaluating whether to make Superior Proposals.
|
•
|
Risk Associated with Failure to Consummate the Transactions. The possibility that the Transactions might not be consummated, and if it is not consummated, that: (1) Squarespace's directors, management team and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of Squarespace during the pendency of the Transactions; (2) Squarespace will have incurred significant transaction and other costs; (3) Squarespace's continuing business relationships with customers, business partners and employees may be adversely affected, which could include the loss of key personnel; (4) the trading price of Squarespace's stock could be adversely affected; (5) the contractual and legal remedies available to Squarespace in the event of the breach or termination of the A&R Merger Agreement may be insufficient, costly to pursue, or both; and (6) the failure of the Merger to be consummated could result in an adverse perception among our customers, potential customers, employees and investors about Squarespace and its prospects.
|
•
|
Regulatory Risks. The possibility that regulatory agencies may delay, object to, challenge or seek to enjoin the Merger, or may seek to impose terms and conditions on their approvals that are not acceptable to Permira, notwithstanding its obligations under the A&R Merger Agreement.
|
•
|
Impact of Interim Restrictions on Squarespace's Business Pending the Completion of the Transactions. The restrictions on the conduct of Squarespace's business prior to the consummation of the Transactions, including covenants that Squarespace use its reasonable best efforts to operate in the ordinary course of business and refrain from taking certain actions without Permira's consent, which may delay or prevent us from undertaking strategic initiatives before the completion of the Transactions that, absent the A&R Merger Agreement, we might have pursued, or from taking certain actions aimed at incentivizing and retaining our employees.
|
•
|
Effects of the Transactions Announcement. The continued possible effects of the public announcement of the Transactions, including the: (1) effects on our employees, customers, operating results and stock price; (2) impact on our ability to attract and retain key management, sales and marketing, and technical personnel; and (3) potential for additional litigation in connection with the Transactions.
|
•
|
Termination Fee Payable by Squarespace. The requirement that Squarespace pay Permira a termination fee of $210,493,094.39 (representing approximately 3.0% of the equity value implied by the Transactions) under certain circumstances following termination of the A&R Merger Agreement, including if Squarespace terminates the A&R Merger Agreement to accept a Superior Proposal or if Permira terminates the A&R Merger Agreement because the Special Committee changes its recommendation (as further described in this Schedule 14D-9 under the section captioned "Item 3. Past Contacts, Transactions, Negotiations and Agreements-The A&R Merger Agreement"). The Special Committee considered the potentially discouraging impact that this termination fee could have on a third party's interest in making an unsolicited competing Acquisition Proposal to acquire Squarespace.
|
•
|
Cap on Permira Liability. That the A&R Merger Agreement provides that the maximum aggregate liability of Permira for breaches under the A&R Merger Agreement will not exceed, in the aggregate for all such breaches, an amount equal to the sum of the Parent Termination Fee (as defined in the A&R Merger Agreement), reimbursement of expenses in connection with Legal Proceedings (as defined in the A&R
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•
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Taxable Consideration. The receipt of cash in exchange for the Shares in the Transactions will be a taxable transaction for U.S. federal income tax purposes for many of the unaffiliated security holders.
|
•
|
Interests of Squarespace's Directors and Executive Officers. The interests that Squarespace's directors and executive officers may have in the Transactions, which may be different from, or in addition to, those of the other unaffiliated security holders, as further described in the sections captioned "Item 3. Past Contacts, Transactions, Negotiations and Agreements-Arrangements between Squarespace and its Executive Officers, Directors and Affiliates" and "Item 3. Past Contacts, Transactions, Negotiations and Agreements-Golden Parachute Compensation" in this Schedule 14D-9.
|
•
|
Interests of Certain Significant Stockholders in the Transactions. Casalena, GA SQRS II and Accel will participate in the transaction through an equity rollover or reinvestment of a portion of their equity interests in Squarespace. As a result, Casalena, General Atlantic and Accel will be able to participate in the future growth or earnings of the post-closing company with respect to that portion of their equity that they are rolling over or reinvesting in the post-closing entity.
|
•
|
Obligations of Certain Significant Stockholders. The Casalena Parties, GA SQRS II and the Accel Parties are each party to certain Tender and Support Agreements with Squarespace and Permira, pursuant to which they agreed to, among other things, sell to the Buyer Parties all of their Shares (excluding any Rollover Shares) subject to the terms and conditions set forth therein, respectively, and that those obligations do not automatically terminate in the event that the Special Committee, or the Squarespace Board, acting upon the recommendation of the Special Committee, modifies, changes or withdraws Squarespace's recommendation with respect to the Offer.
|
•
|
Transaction Costs. Squarespace has incurred and will incur substantial costs in connection with the transactions contemplated by the A&R Merger Agreement, even if such transactions are not consummated.
|
•
|
Determinations of the Special Committee. The Special Committee's analysis (as to both substantive and procedural aspects of the Transactions), conclusions and unanimous determination, which the Board adopted as its own, that the A&R Merger Agreement and the transactions contemplated thereby, including the Transactions, are advisable, fair to, and in the best interests of Squarespace and its unaffiliated
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•
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Procedural Protections. The procedural fairness of the Transactions, including that (1) it was negotiated by the Special Committee consisting solely of independent (for purposes of serving on the Special Committee) and disinterested directors who are not affiliated with, and are independent of, any of the potential counterparties to a potential acquisition of Squarespace (including the Rollover Stockholders) and were otherwise disinterested and independent with respect to a potential acquisition of Squarespace (including a potential acquisition of Squarespace that includes a transaction or series of transactions in which one or more significant stockholders of Squarespace have an interest that is in addition to, and/or different from, the interests of Squarespace's stockholders as a whole), other than as discussed in the sections captioned "Item 3. Past Contacts, Transactions, Negotiations and Agreements-Arrangements between Squarespace and its Executive Officers, Directors and Affiliates" and "Item 3. Past Contacts, Transactions, Negotiations and Agreements-Golden Parachute Compensation"; and (2) the Special Committee had the authority to select and engage, and was advised by, its own independent legal and financial advisors;
|
•
|
Minimum Condition for the Offer. The Offer is conditioned upon the satisfaction of the Minimum Conditions at the Expiration Time.
|
•
|
Other Factors Considered by the Special Committee. The other material factors and countervailing factors considered by the Special Committee and listed above.
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•
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consolidated revenue growth rates ranging from 20% in 2024 to 10% in 2029 reflecting Squarespace management's assumptions and estimates for future growth;
|
•
|
operating income margins ranging from 7% in 2024 to 19% in 2029;
|
•
|
increase in deferred revenue ranging from $71 million in 2024 to $80 million in 2029;
|
•
|
adjusted EBITDA margins ranging from 24% in 2024 to 33% in 2029 reflecting Squarespace management's expectations for margin expansion based on (1) sales and marketing efficiencies as a result of efficiencies in brand spend, (2) corporate general and administrative support functions driving efficiencies at scale and, to a lesser extent, (3) gross margin expansion due to a mix towards higher margin products and continued focus on efficiencies in customer support and service delivery.
|
•
|
unlevered free cash flow margin ranging from 27% in 2024 to 33% in 2029, calculated as adjusted EBITDA minus capital expenditures, taxes and other reconciling items, plus increases in deferred revenue and changes in net working capital (excluding deferred revenue);
|
•
|
stock-based compensation expenses ranging from 11% of total revenue in 2024 to 10% of total revenue in 2029;
|
•
|
tax and other reconciling items ranging from $70 million in 2024 to $150 million in 2029;
|
•
|
capital expenditures from $6 million in 2024 to $6 million in 2029 which primarily consists of capitalized software development costs, server hardware, and employee hardware and is consistent with historical trends of the business; and
|
•
|
changes in net working capital (excluding deferred revenue) increasing from a $45 million source of cash in 2024 to a $63 million source of cash in 2029 consistent with Squarespace management's growth expectations for the business.
|
•
|
consolidated revenue growth rates ranging from 20% in 2024 to 10% in 2029 reflecting Squarespace management's assumptions and estimates for future growth;
|
•
|
increase in deferred revenue ranging from $71 million in 2024 to $80 million in 2029;
|
•
|
adjusted EBITDA margins ranging from 26% in 2024 to 35% in 2029 reflecting Squarespace management's expectations for margin expansion based on (1) sales and marketing efficiencies as a result of efficiencies in brand spend, (2) corporate general and administrative support functions driving efficiencies at scale and, to a lesser extent, (3) gross margin expansion due to a mix towards higher margin products and continued focus on efficiencies in customer support and service delivery.
|
•
|
unlevered free cash flow margin ranging from 29% in 2024 to 34% in 2029, calculated as adjusted EBITDA minus capital expenditures, taxes and other reconciling items, plus increases in deferred revenue and changes in net working capital (excluding deferred revenue);
|
•
|
stock-based compensation expenses ranging from 11% of total revenue in 2024 to 10% of total revenue in 2029;
|
•
|
tax and other reconciling items ranging from $75 million in 2024 to $153 million in 2029;
|
•
|
capital expenditures from $6 million in 2024 to $6 million in 2029 which primarily consists of capitalized software development costs, server hardware, and employee hardware and is consistent with historical trends of the business; and
|
•
|
changes in net working capital (excluding deferred revenue) increasing from a $45 million source of cash in 2024 to a $63 million source of cash in 2029 consistent with Squarespace management's growth expectations for the business.
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(Amounts in millions)
|
||||||||||||||||||
2024E
|
2025E
|
2026E
|
2027E
|
2028E
|
2029E
|
|||||||||||||
Total Revenue
|
$1,216
|
$1,374
|
$1,539
|
$1,740
|
$1,932
|
$2,125
|
||||||||||||
Total Operating Income(1)
|
$82
|
$131
|
$194
|
$294
|
$357
|
$412
|
||||||||||||
Adjusted EBITDA(2)
|
$291
|
$371
|
$446
|
$537
|
$627
|
$709
|
||||||||||||
Gross Profit
|
$911
|
$1,047
|
$1,193
|
$1,375
|
$1,545
|
$1,715
|
||||||||||||
Less: Marketing & Sales
|
$(411)
|
$(445)
|
$(481)
|
$(523)
|
-
|
-
|
||||||||||||
Less: Research & Development
|
$(292)
|
$(333)
|
$(368)
|
$(397)
|
-
|
-
|
||||||||||||
Less: General & Administrative
|
$(126)
|
$(138)
|
$(149)
|
$(161)
|
-
|
-
|
||||||||||||
Less: Taxes and Other Reconciling Items
|
$(70)
|
$(67)
|
$(87)
|
$(115)
|
$(133)
|
$(150)
|
||||||||||||
Less: Capital Expenditures
|
$(6)
|
$(5)
|
$(9)
|
$(8)
|
$(6)
|
$(6)
|
||||||||||||
Change in Net Working Capital
|
$45
|
$49
|
$40
|
$48
|
$56
|
$63
|
||||||||||||
Change in Deferred Revenue
|
$71
|
$44
|
$58
|
$65
|
$72
|
$80
|
||||||||||||
Unlevered Free Cash Flow
|
$331
|
$392
|
$448
|
$527
|
$616
|
$696
|
||||||||||||
Unlevered Free Cash Flow (post- stock-based compensation)(3)
|
$198
|
$226
|
$268
|
$337
|
$423
|
$483
|
||||||||||||
(1)
|
Total Operating Income represents Total Revenue minus cost of goods sold, sales and marketing expenses, research and development expenses and general and administrative expenses.
|
(2)
|
Adjusted EBITDA represents Squarespace earnings before interest, taxes, depreciation and amortization.
|
(3)
|
Represents Unlevered Free Cash Flow less stock-based compensation expense projections provided by Squarespace. Centerview used this metric for its discounted cash flow analysis.
|
(Amounts in millions)
|
||||||||||||||||||
2024E
|
2025E
|
2026E
|
2027E
|
2028E
|
2029E
|
|||||||||||||
Total Revenue
|
$1,157
|
$1,308
|
$1,461
|
$1,652
|
$1,822
|
$1,999
|
||||||||||||
Adjusted EBITDA(1)
|
$301
|
$383
|
$456
|
$546
|
$627
|
$703
|
||||||||||||
Less: Taxes and Other Reconciling Items
|
$(75)
|
$(73)
|
$(93)
|
$(121)
|
$(137)
|
$(153)
|
||||||||||||
Less: Capital Expenditures
|
$(6)
|
$(5)
|
$(9)
|
$(8)
|
$(6)
|
$(6)
|
||||||||||||
Change in Net Working Capital
|
$45
|
$49
|
$40
|
$48
|
$56
|
$63
|
||||||||||||
Change in Deferred Revenue
|
$71
|
$44
|
$58
|
$65
|
$72
|
$80
|
||||||||||||
Unlevered Free Cash Flow
|
$336
|
$398
|
$452
|
$530
|
$612
|
$687
|
||||||||||||
Unlevered Free Cash Flow (post- stock-based compensation)(2)
|
$213
|
$245
|
$286
|
$354
|
$436
|
$494
|
||||||||||||
(1)
|
Adjusted EBITDA represents Squarespace earnings before interest, taxes, depreciation and amortization.
|
(2)
|
Represents Unlevered Free Cash Flow less stock-based compensation expense projections provided by Squarespace. Centerview used this metric for its discounted cash flow analysis.
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|
a draft of the A&R Merger Agreement dated September 8, 2024, referred to in this summary of Centerview's opinion as the "Draft A&R Merger Agreement";
|
•
|
Annual Reports on Form 10-K of Squarespace for the years ended December 31, 2023, December 31, 2022 and December 31, 2021;
|
•
|
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Squarespace;
|
•
|
certain publicly available research analyst reports for Squarespace;
|
•
|
certain other communications from Squarespace to its stockholders; and
|
•
|
certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Squarespace, including certain financial forecasts, analyses and projections relating to Squarespace prepared by management of Squarespace and furnished to Centerview by Squarespace for purposes of Centerview's analysis (which we refer to as "Forecasts") as well as business data provided for the purposes of financial due diligence (which we collectively refer to as the "Internal Data").
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Selected Company
|
Revenue
Growth
CY2024E to
CY2025E
|
NTM uFCF
Margin
|
EV / NTM
uFCF Multiple
|
||||||
BigCommerce Holdings, Inc
|
8%
|
7%
|
21.5x
|
||||||
BILL Holdings, Inc.
|
14%
|
17%
|
21.8x
|
||||||
GoDaddy Inc.
|
8%
|
33%
|
16.3x
|
||||||
Intuit Inc.
|
12%
|
33%
|
29.5x
|
||||||
VeriSign, Inc.
|
4%
|
62%
|
19.2x
|
||||||
Wix.com Ltd.
|
14%
|
28%
|
17.1x
|
||||||
TABLE OF CONTENTS
•
|
Analyst Price Targets Analysis. Centerview reviewed price targets for the shares of Common Stock in 14 publicly available Wall Street, Bloomberg and FactSet research analyst reports as of market close on May 10, 2024 (the last trading day before the public announcement of the Original Merger Agreement), noting that these price targets ranged from a low of $38.00 per share of Common Stock to a high of $50.00 per share of Common Stock as follows: $50, $46, $45, $45, $43, $43, $42, $40, $40, $40, $40, $39, $38 and $38.
|
•
|
Historical Price Trading Analysis. Centerview reviewed historical trading prices of the shares of Common Stock during the 52-week period ended May 10, 2024, which reflected low and high closing stock prices for the shares of Common Stock during such period of $27.41 (on November 1, 2023) and $38.19 (on May 10, 2024) per share of Common Stock.
|
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•
|
The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on March 26, 2024, filed as Exhibit (a)(5)(D) hereto, contains, among other information, an overview of potentially viable financial and strategic transaction partners for Squarespace.
|
TABLE OF CONTENTS
•
|
The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on April 9, 2024, filed as Exhibit (a)(5)(E) hereto, contains, among other information, (i) an overview of Squarespace's draft financial projections, (ii) observations and perspectives on Squarespace's key model assumptions with respect to revenue growth, gross and adjusted earnings before interest, taxes, depreciation and amortization and unlevered free cash flow margins and (iii) an overview of Squarespace's long range plan projections, key performance indicators, and expense profile over time, including in comparison to selected competitors as applicable.
|
•
|
The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on April 19, 2024, filed as Exhibit (a)(5)(F) hereto, contains, among other information, an overview of Squarespace's long-range plan projections, including in comparison to selected competitors.
|
•
|
The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on April 25, 2024, filed as Exhibit (a)(5)(G) hereto, contains, among other information, (i) a transaction status update and overview, (ii) an overview of Squarespace's long range plan projections and a preliminary indicative valuation summary, including a discounted cash flow analysis and selected public trading comparables analysis, (iii) observations and perspectives on Squarespace's historical stock and financial performance, including in comparison to the financial performance of selected competitors and (iv) observations and perspectives on analyst price targets.
|
•
|
The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on April 27, 2024, filed as Exhibit (a)(5)(H) hereto, contains, among other information, (i) preliminary analysis of Permira's indicative valuation of $42.50 per share pursuant to its April 26, 2024 proposal and (ii) a summary of Permira's proposed governance structure included in the April 26, 2024 proposal.
|
•
|
The presentation presented or delivered by Centerview to the Squarespace Board on May 12, 2024, filed as Exhibit (a)(5)(I) hereto, contains, among other information, (i) a transaction status update and overview, (ii) a summary of Centerview's due diligence and (iii) a summary of implied premiums and multiples based on the final proposal compared to Permira's prior proposals.
|
•
|
The presentation presented or delivered by Centerview to the Special Committee on May 12, 2024, filed as Exhibit (a)(5)(J) hereto, with respect to its opinion, dated May 12, 2024, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations, upon the review undertaken in preparing its opinion, the $44.00 consideration to be paid to the Unaffiliated Company Stockholders (other than as specified in such opinion) pursuant to the Original Merger Agreement was fair, from a financial point of view, to such holders, contains, among other information, (i) an indicative valuation summary, including a discounted cash flow analysis and selected public trading comparables analysis, (ii) observations and perspectives on Squarespace's historical stock and financial performance, including in comparison to the financial performance of selected competitors and (iii) observations and perspectives on analyst price targets.
|
TABLE OF CONTENTS
Item 5.
|
Persons/Assets, Retained, Employed, Compensated or Used
|
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Item 6.
|
Interest in Securities of the Subject Company
|
Name
|
Date of
Transaction
|
Number
of Shares*
|
Price Per
Share ($)
|
Nature of Transaction
|
||||||||
Anthony Casalena
|
7/26/2024
|
63,756
|
$43.99
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
||||||||
7/29/2024
|
62,011
|
$43.99
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/08/2024
|
68,659
|
$44.18
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/09/2024
|
47,787
|
$44.14
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/21/2024
|
23,726
|
$44.74
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/22/2024
|
52,485
|
$44.80
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
9/04/2024
|
38,466
|
$45.26
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
9/05/2024
|
33,375
|
$45.16
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
Jonathan Klein
|
8/08/2024
|
122,000
|
$0.00
|
Shares disposed as bona fide gift for no consideration
|
||||||||
8/13/2024
|
35,036
|
$44.11
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/14/2024
|
164,964
|
$44.31
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
8/15/2024
|
22,700
|
$0.00
|
Shares disposed as bona fide gift for no consideration
|
|||||||||
Nathan Gooden
|
8/20/2024
|
32,350
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
||||||||
8/20/2024
|
16,515
|
$44.86
|
Shares withheld by Squarespace to satisfy applicable withholding tax upon vesting of Squarespace RSUs
|
|||||||||
8/22/2024
|
7,916
|
$44.81
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
Courtenay O'Connor
|
8/20/2024
|
3,504
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
||||||||
8/20/2024
|
4,482
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
|||||||||
8/20/2024
|
4,417
|
$44.86
|
Shares withheld by Squarespace to satisfy applicable withholding tax upon vesting of Squarespace RSUs
|
|||||||||
8/23/2024
|
3,569
|
$44.94
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
|||||||||
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Name
|
Date of
Transaction
|
Number
of Shares*
|
Price Per
Share ($)
|
Nature of Transaction
|
||||||||
Paul Gubbay
|
8/12/2024
|
2,500
|
$44.12
|
Shares sold in multiple transactions pursuant to a Rule 10b5-1 trading plan and the weighted average price per share in such transactions
|
||||||||
8/20/2024
|
16,740
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
|||||||||
8/20/2024
|
4,122
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
|||||||||
8/20/2024
|
4,383
|
$0.00
|
Shares acquired in connection with vesting of Squarespace RSUs
|
|||||||||
8/20/2024
|
13,962
|
$44.86
|
Shares withheld by Squarespace to satisfy applicable withholding tax upon vesting of Squarespace RSUs
|
|||||||||
(1)
|
Class A Shares unless otherwise noted
|
TABLE OF CONTENTS
Item 7.
|
Purposes of the Transaction and Plans or Proposals
|
TABLE OF CONTENTS
Item 8.
|
Additional Information
|
•
|
banks and other financial institutions;
|
•
|
mutual funds;
|
•
|
insurance companies;
|
•
|
tax-exempt organizations (including private foundations), governmental agencies, instrumentalities or other governmental organizations, and qualified foreign pension funds;
|
•
|
retirement or other tax deferred accounts;
|
•
|
S corporations, partnerships or any other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes (or investors in such entities or arrangements);
|
•
|
controlled foreign corporations, passive foreign investment companies or corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
dealers and brokers in securities, currencies or commodities;
|
•
|
dealers or traders in securities that elect to use the mark-to-market method of accounting with respect to the Shares;
|
•
|
regulated investment companies or real estate investment trusts, or entities subject to the U.S. anti-inversion rules;
|
•
|
U.S. expatriates or certain former citizens or long-term residents of the United States;
|
•
|
persons that own or have owned (directly, indirectly or constructively) five percent (5%) or more of the Shares (by vote or value);
|
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•
|
persons who hold their Shares as part of a hedging, constructive sale or conversion, straddle, synthetic security, integrated investment or other risk reduction transaction for U.S. federal income tax purposes;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to the Shares being taken into account in an "applicable financial statement" (as defined in the Code);
|
•
|
persons who properly exercise appraisal rights in the Merger;
|
•
|
persons that acquired their Shares pursuant to the exercise of employee stock options or warrants or otherwise as compensation or in connection with the performance of services; or
|
•
|
persons whose "functional currency" is not the U.S. dollar.
|
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•
|
such gain is effectively connected with the conduct of a trade or business by such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain will be subject to U.S. federal income tax at rates generally applicable to U.S. Holders, and any such gain of a Non-U.S. Holder that is a corporation may be subject to an additional "branch profits tax" at a rate of thirty percent (30%) (or such lower rate as may be specified by an applicable income tax treaty); or
|
•
|
such Non-U.S. Holder is an individual who is present in the United States for one hundred and eighty-three (183) days or more in the taxable year of the Offer, and certain other conditions are met, in which case such gain will generally be subject to U.S. federal income tax at a rate of thirty percent (30%) (or such lower rate as may be specified by an applicable income tax treaty).
|
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•
|
Prior to the later of the consummation of the Offer, which shall occur on the date on which acceptance of Shares occurs, which shall be October 11, 2024 (unless Purchaser extends the Offer pursuant to the terms of the A&R Merger Agreement), and 20 days after the giving of this Schedule 14D-9, the date of such mailing being September 16, 2024, deliver to Squarespace a written demand for appraisal of Shares held, which demand must reasonably inform Squarespace of the identity of the person demanding appraisal and that the person is demanding appraisal;
|
•
|
not tender such Shares in the Offer; and
|
•
|
continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) the subject Shares from the date of making a demand through the Effective Time.
|
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•
|
before such person became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction in which the interested stockholder became an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85 percent of the voting stock of the corporation outstanding at the time the transaction commenced (excluding, only for purposes of determining the number of shares of voting stock outstanding (but not for determining the number of shares of outstanding voting stock owned by the interested stockholder), stock held by (1) directors who are also officers and (2) employee stock plans that do not allow plan participants to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or
|
•
|
following the transaction in which such person became an interested stockholder, the business combination is (1) approved by the board of the corporation and (2) authorized at a meeting of stockholders by the affirmative vote of the holders of at least 66 2/3 percent, or two-thirds, of the outstanding voting stock of the corporation which is not owned by the interested stockholder.
|
TABLE OF CONTENTS
•
|
uncertainties related to the consummation of the Transactions;
|
•
|
our ability to complete the Transactions, if at all, on the anticipated terms and timing, including obtaining the Minimum Condition and any requisite stockholder approvals and regulatory approvals, and the satisfaction of other conditions to the completion of the Transactions;
|
•
|
the risk that the A&R Merger Agreement may be terminated in certain circumstances that require us to pay the Parent a termination fee of $210,493,094.39;
|
•
|
uncertainties about the pendency of the Transactions and the effect of the Transactions on employees, customers and other third parties who deal with Squarespace;
|
•
|
the impact of certain interim covenants that we are subject to under the A&R Merger Agreement;
|
•
|
provisions in the A&R Merger Agreement that limit our ability to pursue alternatives to the Transactions, which might discourage a third party that has an interest in acquiring all or a significant part of Squarespace from considering or proposing that acquisition;
|
•
|
the fact that we and our directors and officers may be subject to lawsuits relating to the Transactions;
|
•
|
the substantial transaction-related costs we will continue to incur in connection with the Transactions;
|
•
|
our efforts to complete the Transactions could disrupt our relationships with third parties and employees, divert management's attention, or result in negative publicity or legal proceedings;
|
•
|
the inability of stockholders (excluding the Rollover Stockholders) to participate in any further upside of Squarespace's business if the Transactions are consummated;
|
•
|
our ability to retain and hire key personnel;
|
•
|
competitive responses to the Transactions;
|
•
|
continued availability of capital and financing and rating agency actions;
|
•
|
legislative, regulatory and economic developments affecting our business;
|
•
|
general economic and market developments and conditions;
|
•
|
unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, pandemics, outbreaks of war or hostilities, as well as our response to any of the aforementioned factors;
|
•
|
the fact that the receipt of cash in exchange for Shares pursuant to the Transactions will be a taxable transaction for U.S. federal income tax purposes; and
|
•
|
the risk that Squarespace's stock price may fluctuate during the pendency of the Transactions and may decline significantly if the Transactions are not completed.
|
TABLE OF CONTENTS
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Item 9.
|
Exhibits
|
Exhibit No.
|
Description
|
||
Amended and Restated Offer to Purchase, dated September 25, 2024 (incorporated by reference to Exhibit (a)(1)(A) to the Schedule TO)
|
|||
Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(B) to the Schedule TO)
|
|||
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(C) to the Schedule TO)
|
|||
Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(D) to the Schedule TO)
|
|||
Summary Advertisement as published on September 16, 2024, in the New York Times (incorporated by reference to Exhibit (a)(1)E) to the Schedule TO)
|
|||
Joint Press Release issued by Squarespace and Buyer Parties on September 9, 2024 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Squarespace with the SEC on September 9, 2024)
|
|||
(a)(5)(B)*
|
Opinion of Centerview Partners LLC to the Special Committee of the Board of Directors of Squarespace, Inc., dated September 8, 2024 (included as Annex A to this Schedule 14D-9 and incorporated herein by reference)
|
||
(a)(5)(C)*
|
Discussion materials prepared by Centerview Partners LLC, dated September 8, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(D)*
|
Discussion materials prepared by Centerview Partners LLC, dated March 26, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(E)*
|
Discussion materials prepared by Centerview Partners LLC, dated April 9, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(F)*
|
Discussion materials prepared by Centerview Partners LLC, dated April 19, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(G)*
|
Discussion materials prepared by Centerview Partners LLC, dated April 25, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(H)*
|
Discussion materials prepared by Centerview Partners LLC, dated April 27, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(I)*
|
Discussion materials prepared by Centerview Partners LLC, dated May 12, 2024, for the Board of Directors of Squarespace, Inc.
|
||
(a)(5)(J)*
|
Discussion materials prepared by Centerview Partners LLC, dated May 12, 2024, for the Special Committee of the Board of Directors of Squarespace, Inc.
|
||
Amended and Restated Agreement and Plan of Merger, dated September 9, 2024, between the Buyer Parties and Squarespace (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Squarespace with the SEC on September 9, 2024)
|
|||
Agreement and Plan of Merger, dated May 13, 2024, between the Buyer Parties and Squarespace (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Squarespace with the SEC on May 13, 2024)
|
|||
(e)(3)*
|
Confidentiality Agreement, dated March 29, 2024, by and between Squarespace and Permira Advisers LLC
|
||
Equity Commitment Letter, dated May 13, 2024, by and between the Parent Parties and the Accel Equity Investors (incorporated by reference to Exhibit 16(b)(iii) to the Schedule TO)
|
|||
First Amendment to Equity Commitment Letter, dated August 28, 2024, by and between the Parent Parties and the Accel Equity Investors (incorporated by reference to Exhibit (b)(viii) to the Schedule TO)
|
|||
Second Amendment to Equity Commitment Letter, dated September 9, 2024, by and between the Parent Parties and the Accel Equity Investors (incorporated by reference to Exhibit (d)(5) to the Schedule TO)
|
|||
Equity Commitment Letter, dated May 13, 2024, by and between the Parent Parties and the Permira Equity Investors (incorporated by reference to Exhibit 16(b)(ii) to the Schedule TO)
|
|||
TABLE OF CONTENTS
Exhibit No.
|
Description
|
||
First Amendment to Equity Commitment Letter, dated August 28, 2024, by and between the Parent Parties and the Permira Equity Investors (incorporated by reference to Exhibit (b)(vii) to the Schedule TO)
|
|||
Second Amendment to Equity Commitment Letter, dated September 9, 2024, by and between the Parent Parties and the Permira Equity Investors (incorporated by reference to Exhibit (d)(6) to the Schedule TO)
|
|||
Tender and Support Agreement, dated as of September 9, 2024, by and among Squarespace, the Parent Parties and Casalena (incorporated by reference to Exhibit (d)(2) to the Schedule TO)
|
|||
Tender and Support Agreement, dated as of September 9, 2024, by and among Squarespace, the Parent Parties and GA SQRS II (incorporated by reference to Exhibit (d)(3) to the Schedule TO)
|
|||
Amended and Restated Tender and Support Agreement, dated as of September 16, 2024, by and among Squarespace, the Parent Parties and GA SQRS II (incorporated by reference to Exhibit (d)(9) to the Schedule TO)
|
|||
Tender and Support Agreement, dated as of September 9, 2024, by and among Squarespace, the Parent Parties and Accel (incorporated by reference to Exhibit (d)(4) to the Schedule TO)
|
|||
Amended and Restated Tender and Support Agreement, dated as of September 16, 2024, by and among Squarespace, the Parent Parties and Accel (incorporated by reference to Exhibit (d)(10) to the Schedule TO)
|
|||
Fee Funding Agreement, dated as of May 13, 2024, by and among the FFA Investors and Squarespace (incorporated by reference to Exhibit 16(b)(i) to the Schedule TO)
|
|||
Amendment to Fee Funding Agreement, dated as of September 9, 2024, by and among the FFA Investors and Squarespace (incorporated by reference to Exhibit (d)(7) to the Schedule TO)
|
|||
(g)
|
Not applicable
|
||
*
|
Filed herewith.
|
TABLE OF CONTENTS
SQUARESPACE, INC.
|
||||||
Date: September 26, 2024
|
By:
|
/s/ Courtenay O'Connor
|
||||
Courtenay O'Connor
|
||||||
General Counsel and Secretary
|
||||||
TABLE OF CONTENTS
Centerview Partners LLC
|
||||||
31 West 52nd Street
|
||||||
New York, NY 10019
|
||||||
September 8, 2024
|
||||||
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Very truly yours,
|
||||||
/s/ Centerview Partners LLC
|
||||||
CENTERVIEW PARTNERS LLC
|
||||||