Opinion of Qatalyst Partners, Financial Advisor to Anaplan
The Anaplan Board considered the financial analyses reviewed and discussed with the Anaplan Board by Qatalyst Partners at a meeting of the Anaplan Board on March 20, 2022. At such meeting of the Anaplan Board, Qatalyst Partners rendered to the Anaplan Board its oral opinion, subsequently confirmed in writing, to the effect that, as of the date thereof and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Anaplan common stock (other than Parent or any affiliate of Parent) was fair, from a financial point of view, to such holders.
The full text of Qatalyst Partners’ written opinion, dated March 20, 2022, is attached hereto as Annex C and is incorporated by reference herein. Qatalyst Partners’ opinion was provided to the Anaplan Board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Anaplan common stock (other than Parent or any affiliate of Parent), to such holders, and it does not address any other aspect of the Merger. It does not
constitute a recommendation as to how any holder of shares of Anaplan common stock should vote with respect to the Merger or any other matter and does not in any manner address the price at which Anaplan common stock will trade or otherwise be transferable at any time.
Financial Projections. The Anaplan Board considered the Financial Projections prepared by Anaplan’s senior management team. The Anaplan Board understood that these Financial Projections were based on assumptions and estimates that are difficult to project and were subject to high levels of uncertainty and also significant execution risk.
Cash Consideration. The Anaplan Board considered that the form of consideration to be paid to Anaplan stockholders in the Merger was all-cash and considered the certainty of value compared to other forms of consideration and immediate liquidity associated with such cash consideration, while eliminating the effect of long-term industry, competitive and execution risk.
Likelihood of Closing. The Anaplan Board concluded that the Merger would likely be consummated in an orderly manner as a result of a number of factors, including:
| • | the meaningful premium over the market price of the shares of Anaplan common stock and certainty of value to Anaplan stockholders offered by Parent; |
| • | the business reputation and significant financial resources of Parent and willingness of Parent to consummate the Merger, including Sponsor’s track record of completing acquisition transactions; |
| • | the fact that Parent’s proposal offered to fully fund the aggregate Merger Consideration with equity funding from the Sponsor if necessary; |
| • | the fact that Parent had obtained a limited guaranty from the Sponsor guaranteeing full payment of the termination fee payable by Parent to Anaplan in the event of a failure of the Merger to be consummated under certain circumstances; |
| • | the likelihood and anticipated timing of completing the proposed Merger in light of the scope of the conditions to completion, including the fact that there were no anticipated significant issues in connection with the HSR Act and other antitrust clearances and other regulatory approvals; |
| • | that the Outside Date under the Merger Agreement is expected to allow for sufficient time to complete the Merger; |
| • | that the conditions to closing contained in the Merger Agreement are reasonable and customary in number and scope and which, in the case of the condition related to the accuracy of Anaplan’s representations and warranties, are generally subject to a “Material Adverse Effect” qualification, as described under the section captioned “The Merger Agreement—Representations and Warranties” beginning on page 91; and |
| • | Anaplan’s ability, under certain circumstances pursuant to the Merger Agreement, to seek specific performance to prevent breaches of the Merger Agreement, and to enforce specifically the terms of the Merger Agreement, including to cause the Equity Financing contemplated by Sponsor’s equity commitment letter to be funded, regardless of whether Parent is able to obtain any debt financing for the transaction as described under the section captioned “The Merger Agreement—Specific Performance” beginning on page 112. |
Speed of Closing. The Anaplan Board considered the anticipated timing of the consummation of the Merger and concluded that, subject to the satisfaction or waiver of the applicable conditions set forth in the Merger Agreement, the Merger would allow Anaplan stockholders to receive the consideration in a relatively short timeframe. The Anaplan Board also determined that such a relatively short timeframe would be expected to reduce the uncertainty and potential disruption to Anaplan’s business during the pendency of the Merger.
Merger Agreement. The Anaplan Board considered the terms and conditions of the Merger Agreement, including:
| • | Ability to Respond to Certain Unsolicited Takeover Proposals. While Anaplan is prohibited from soliciting any acquisition proposal, the Merger Agreement does permit the Anaplan Board, subject to compliance with certain procedural requirements (including that the Anaplan Board determine in good faith, after consultation with its financial advisors and outside legal counsel, that an unsolicited acquisition proposal would reasonably likely lead to a superior proposal), (i) to furnish information with respect to Anaplan to a person making such unsolicited acquisition proposal and (ii) to participate in discussions or negotiations with the person making such unsolicited acquisition proposal. |
| • | Right to Accept Superior Proposals. In the event Anaplan receives a superior proposal, the Anaplan Board may withdraw or change its recommendation in favor of the Merger if the Anaplan Board determines in good faith, after consultation with its outside legal counsel and its financial advisors, that the failure to do so would be inconsistent with its fiduciary duties to Anaplan’s stockholders under applicable law. In order for the Anaplan Board to withdraw or change its recommendation in connection with a superior proposal, the Anaplan Board must first provide Parent with a right to negotiate with Anaplan to adjust the terms and conditions of the Merger Agreement so that such change in recommendation is no longer necessary. If the Anaplan Board terminates the Merger Agreement in order to accept a superior proposal, Anaplan must substantially concurrently pay Parent a termination fee of $293,122,500 in cash. |
| • | Change in Recommendation for an Intervening Event. If a specified Intervening Event (as defined in the section of this Proxy Statement captioned “The Merger Agreement—Acquisition Proposals”) occurs, the Anaplan Board may withdraw or change its recommendation in favor of the Merger if the Anaplan Board determines in good faith, after consultation with its outside legal counsel, that the failure to do so would be inconsistent with its fiduciary duties to Anaplan’s stockholders under applicable law. In order for the Anaplan Board to withdraw or change its recommendation in connection with such an Intervening Event, the Anaplan Board must first provide Parent with a right to negotiate with Anaplan to adjust the terms and conditions of the Merger Agreement so that such change in recommendation is no longer necessary. In the event that the Anaplan Board withdraws or changes its recommendation in connection with an Intervening Event, Parent may terminate the Merger Agreement, in which case Anaplan must pay Parent a termination fee of $293,122,500 in cash within three business days after such termination. |
| • | Termination Fee. The Anaplan Board considered the fact that, in connection with the termination of the Merger Agreement under specified circumstances, including a termination by Anaplan to accept and enter into a definitive agreement with respect to superior proposal, Anaplan would be obligated to pay Parent a termination fee of $293,122,500. The Anaplan Board was of the view that this termination fee was comparable to termination fees in transactions of a similar size, was reasonable in light of the bidding and negotiation process that led to the execution of the Merger Agreement, as well as of the terms of the Merger Agreement itself, and was necessary to induce Parent to enter into the Merger Agreement. The Anaplan Board believed that the termination fee would not likely deter or preclude another party with interest in Anaplan and financial resources sufficient to consummate an alternative acquisition transaction with Anaplan, were one to exist, from making a competing proposal for Anaplan and would likely only be required to be paid in the event that the Anaplan Board entered into a transaction more financially favorable to Anaplan’s stockholders than the Merger. |
| • | Conditions to the Completion of the Transactions. The Anaplan Board considered the limited conditions to Parent’s obligations to consummate the Merger, including the condition that there not have occurred a change or event that would constitute a Material Adverse Effect (as defined in |
| the section of this Proxy Statement captioned “The Merger Agreement—Representations and Warranties”) that is continuing with respect to Anaplan. The Anaplan Board considered the fact that specified changes or events would be excluded from the determination whether Anaplan had experienced a Material Adverse Effect, particularly any change or event resulting from the announcement, pendency and consummation of the Merger. |
| • | Regulatory Undertaking by Parent. The Anaplan Board considered that the Merger is subject to a waiting period and appropriate regulatory clearance, and that Parent is obligated, subject to certain limitations, to use reasonable best efforts to obtain necessary regulatory approvals. |
| • | Financing Undertaking by Parent. The Anaplan Board considered that Sponsor provided an equity commitment for the Merger and the fact that Anaplan is a named third party beneficiary in the equity commitment letter. The Anaplan Board considered the fact that Parent’s obligation to complete the Merger is not conditioned upon the receipt of third-party debt financing or completion of any debt financing marketing period. |
| • | Specific Performance. The Anaplan Board considered Anaplan’s ability, under certain circumstances pursuant to the Merger Agreement, to seek specific performance to prevent breaches of the Merger Agreement and to enforce specifically the terms of the Merger Agreement, including the obligations of Parent and Merger Sub to consummate the Merger and to cause the Equity Financing contemplated by Sponsor’s equity commitment letter to be funded. |
| • | Reverse Termination Fee. The Anaplan Board considered the fact that a reverse termination fee of $586,245,000 in cash is payable by Parent to Anaplan in the event that Parent does not proceed to consummate the Merger in certain circumstances following satisfaction or waiver of the conditions set forth in the Merger Agreement and that such payment obligation is supported by a guaranty provided by Sponsor with respect to Parent’s obligation to pay the reverse termination fee, indemnify and reimburse the Company for specified costs and expenses incurred in cooperating with any debt financing sought by Parent and pay certain other amounts under the Merger Agreement (as described in the below section captioned “The Merger—Financing of the Merger”). |
| • | Appraisal Rights. The Anaplan Board considered the fact that Anaplan’s stockholders who do not vote their shares in favor of adoption of the Merger Agreement and who properly exercise their appraisal rights under Delaware law will be entitled to such appraisal rights with respect to such shares in connection with the Merger, subject to the provisions of Section 262 of the DGCL. |
The Anaplan Board also considered a variety of risks and other potentially negative factors relating to the Merger in making its determination and reaching its recommendation, including the following (which factors are not necessarily presented in order of relative importance):
No Stockholder Participation in Future Growth or Earnings. The Anaplan Board considered the fact that the nature of the Merger as an all-cash transaction means that Anaplan stockholders would no longer be able to participate in any future earnings or growth of Anaplan or benefit from any appreciation in the value of Anaplan following the consummation of the Merger, which earnings or growth could have resulted, if Anaplan had remained independent, in future prices for shares of the Anaplan common stock in excess of the Merger Consideration.
Risk of Non-Consummation. The Anaplan Board considered the fact that, while Anaplan expects that the Merger will be consummated, there can be no assurance that the conditions to the Merger will be satisfied, and that, as a result, the Merger may not be consummated. The Anaplan Board considered the potential risks associated with a failure of the Merger to be consummated, including (i) the extensive time and effort expended by Anaplan’s directors, senior management and other employees during the pendency of the proposed Merger, (ii) the significant transaction-related costs and opportunity costs incurred by Anaplan, (iii) the trading price for shares of Anaplan’s common stock could be negatively
impacted, (iv) Anaplan’s business could be disrupted and negatively impacted, including loss of business partners and employees, and (v) the market’s perceptions of Anaplan’s prospects could be adversely affected.
Restrictions on Conduct of Business. The Anaplan Board considered the limitations on Anaplan’s pursuit of business opportunities during the pendency of the Merger due to certain covenants contained in the Merger Agreement requiring Anaplan to operate its business in the ordinary course of business consistent with past practice and, subject to specified exceptions, to comply with certain other operating restrictions. Such restrictions could delay or prevent Anaplan from pursuing business opportunities that may arise during the pendency of the proposed Merger and/or have a significant adverse effect on Anaplan’s ability to respond to changing market and business conditions, in a timely manner, or at all.
Impact of Negotiation and Announcement. The Anaplan Board considered the impact on Anaplan’s business of the negotiation and public announcement of the proposed Merger, including the potentially negative effects that the negotiation and announcement may have on Anaplan’s business relationships and its ability to attract and retain key management, technical and other personnel while the Merger is pending.
Inability to Solicit Other Acquisition Proposals. The Anaplan Board considered the covenant in the Merger Agreement prohibiting Anaplan from soliciting other competing acquisition proposals.
Termination Fee. The Anaplan Board considered the possibility that the $293,122,500 termination fee could potentially dissuade a potential acquirer from proposing an alternative acquisition transaction that could be of greater value to Anaplan stockholders than the Merger.
Antitrust Clearance. The Anaplan Board considered the fact that completion of the Merger is subject to antitrust clearance in the United States.
Possible Loss of Key Management or Other Personnel. The Anaplan Board considered the risk of the possible loss of key management or other personnel of Anaplan during the pendency of the Merger.
Interests of the Board and Management. The Anaplan Board considered the fact that Anaplan’s directors and officers may have financial interests in the transactions contemplated by the Merger Agreement, including the Merger, that may be different from or in addition to those of Anaplan’s other stockholders, and the risk that these interests might influence their decision with respect to the transactions contemplated by the Merger Agreement.
Tax Treatment. The Anaplan Board considered the fact that the cash consideration to be received by Anaplan stockholders in the Merger would be taxable to U.S. Holders (as defined under the section captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”). However, the Anaplan Board noted that the all-cash nature of the consideration payable in the transactions contemplated by the Merger Agreement would provide such Anaplan stockholders with adequate cash for the payment of any taxes due.
The foregoing discussion of the reasons for the Anaplan Board’s recommendation that Anaplan stockholders vote in favor of adoption of the Merger Agreement is not meant to be exhaustive, but addresses the material information and factors considered by the Anaplan Board in consideration of its recommendation. In view of the wide variety of factors considered by the Anaplan Board in connection with the evaluation of the Merger and the complexity of these matters, the Anaplan Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, the Anaplan Board did not reach any specific conclusion with respect to any of the particular factors considered. Instead, the Anaplan Board conducted an overall analysis of the factors described above and made its determinations and recommendations based on the totality of the information reviewed. The judgments of individual members of the Anaplan Board may have been influenced to a greater or lesser degree by different factors. The Anaplan Board ultimately concluded that, in the aggregate, the potential benefits of the Merger outweighed the potential risks or negative consequences of the Merger.
For the reasons described above, the Anaplan Board unanimously recommends that Anaplan’s stockholders vote in favor of adoption of the Merger Agreement.
