Item 1.01. Entry into a Material Definitive Agreement.
Put Option and Share Purchase and Contribution Agreement
On March 29, 2023, Concentrix and OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of the Company (“Purchaser”), entered into a binding put option letter agreement (the “Put Option”) with certain stockholders (the “Beneficiaries”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business. Pursuant to the Put Option, the Company and Purchaser have committed to acquire (the “Offer”) all of the issued and outstanding capital stock of Webhelp Parent (the “Shares”) from the holders thereof (the “Sellers”), subject to the terms and conditions of the Share Purchase and Contribution Agreement (the “SPA”) in the agreed form set forth as Schedule 3 to the Put Option. Capitalized terms used but not defined in this Current Report on Form 8-K shall have the respective meanings ascribed to such terms in the SPA.
Subject to certain terms and conditions set forth in the Put Option, the Offer expires on the earlier of (i) five business days following completion of the required consultation processes with works councils representing certain Webhelp staff in France and the Netherlands and (ii) September 29, 2023 (the “Expiry Date”). Upon completion of such consultation processes, the Company expects that the Beneficiaries will accept the Offer and enter into the SPA. The Beneficiaries have undertaken to collect powers of attorney from the other Sellers (the “PoAs”) to allow a representative to act on behalf of the Sellers in connection with the execution of the SPA and other related agreements and documents.
Subject to the terms and conditions of the SPA, Purchaser will acquire the Sellers’ Shares. The aggregate consideration for the acquisition of the Shares will consist of (i) €500 million in cash, subject to adjustment as set forth in the SPA (the “Closing Cash Payment”), (ii) a note issued by the Company in substantially the form attached as an exhibit to the SPA (the “Sellers’ Note” and, together with the Closing Cash Payment, the “Cash Purchase Price”) in the aggregate principal amount of €700 million, with a term of two years and bearing interest at a rate of 2% per annum, (iii) 14,861,885 shares (the “Closing Shares”) of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) and (iv) the contingent right to earn an additional 750,000 shares of Common Stock (the “Earnout Shares”) if certain conditions set forth in the SPA occur, including the share price of Common Stock reaching $170.00 per share within seven years from the closing of the Transaction (the “Closing Date”) (based on daily volume weighted average prices measured over a specified period).
On the Closing Date, the Purchaser will purchase certain of the Sellers’ Shares (the “Acquired Shares”) in exchange for the Cash Purchase Price, (ii) certain Sellers will contribute certain of their Shares (the “Contributed Shares”) to the Company in exchange for the Closing Shares, (iii) the Sellers will transfer and exchange certain of their Shares (the “Exchanged Shares”) to Purchaser in exchange for the contingent right to earn the Earnout Shares, (iv) the Company will execute and deliver the Sellers’ Note to the Sellers party thereto, and (v) the Company will transfer to Purchaser the Contributed Shares (collectively, the “Transaction”). As a result of the Transaction, Purchaser will hold all of the share capital and voting rights of Webhelp Parent on a fully diluted basis.
Consummation of the Transaction is subject to various conditions set forth in the SPA, including, among others, (i) approval of the issuance of the Closing Shares and the Earnout Shares (the “Share Issuance”) by the
Company’s shareholders, (ii) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the filing, consent, clearance, authorization or approval pursuant to certain other merger control and regulatory laws, and (iii) the approval of the listing of the Closing Shares and the Earnout Shares on the Nasdaq Stock Market. The obligation of each party to consummate the Transaction is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions), the other party having performed in all material respects its obligations under the SPA, and the absence of a Material Adverse Effect with respect to the other party.
Until the earlier of (x) the execution of the SPA and (y) March 29, 2024 (the “Exclusivity Period”), the Beneficiaries and Webhelp Parent may not, directly or indirectly, (i) solicit, initiate, or knowingly encourage, or take any other action designed or reasonably likely to facilitate, any inquiries or proposals that could reasonably be expected to lead to an Alternative Proposal, (ii) enter into, encourage, continue or otherwise participate in any discussions or negotiations regarding any Alternative Proposal or (iii) enter into or approve any agreement with respect to any Alternative Proposal.
The obligations of the Company under the Put Option may be terminated for certain events, including any material breaches of covenants or agreements made by the Beneficiaries in connection with the exclusivity provisions described above and breaches of representations and warranties made by the Beneficiaries. Either party may terminate the Put Option if (i) an order permanently restraining, enjoining, or otherwise prohibiting consummation of the Transaction becomes final and non-appealable, (ii) there is a Parent Adverse Recommendation Change, or (iii) approval of the Share Issuance by the Company’s shareholders is not obtained.
If the Put Option terminates on the Expiry Date due to the non-exercise by the Beneficiaries of the Put Option or due to any material breaches of covenants or agreements made by the Beneficiaries in connection with the exclusivity provisions of the Put Option, the Beneficiaries will reimburse the Company for its reasonable out-of-pocket expenses actually incurred and related to the Put Option and the transactions contemplated thereby in an amount up to $31 million; provided that if the Beneficiaries or Webhelp Parent enter into a definitive agreement with respect to an Alternative Proposal or consummate a transaction contemplated by an Alternative Proposal within the Exclusivity Period, then the cap on reimbursable expenses will be increased to $110 million.
If the Put Option or SPA is terminated due to a Parent Adverse Recommendation Change or acceptance by the Company of a Superior Proposal, then the Company will pay the Beneficiaries a fee of $110 million. If the Put Option or SPA is terminated by the Company or the Beneficiaries because approval of the Share Issuance by the Company’s shareholders is not obtained or due to any material breaches of covenants or agreements made by the Company to not solicit, propose, initiate, or enter into any definitive agreements related to an Alternative Transaction, then the Company will reimburse the Beneficiaries or Webhelp Parent for their reasonable out-of-pocket expenses actually incurred and related to the Put Option and the transactions contemplated thereby in an amount up to $31 million.
The SPA contains customary representations and warranties of the Company, Purchaser, Webhelp Parent, and the Sellers. Additionally, the Put Option and the SPA provide for customary pre-closing covenants of the Company and Webhelp Parent, including a covenant for Webhelp Parent to conduct its business in the ordinary course in all material respects and for the Company and Webhelp Parent to refrain from taking certain specified actions without the other party’s consent.
Investor Rights Agreement
In connection with the proposed Transaction, on March 29, 2023, the Company entered into an Investor Rights Agreement (the “IRA”) with certain stockholders of Webhelp Parent (the “Initial Stockholders”), including certain affiliates of Groupe Bruxelles Lambert SA, a public limited liability company (société anonyme) incorporated under the laws of Belgium (“GBL”) and Olivier Duha, the Co-founder and Chief Executive Officer of Webhelp. The IRA becomes effective on, and subject to, the closing of the Transaction. If the Put Option or the SPA is terminated in accordance with their terms prior to the closing, the IRA will automatically terminate.
Subject to the terms and conditions of the IRA, (x) GBL will have the right to nominate two directors (the “GBL Directors”) to the Concentrix Board of Directors (the “Board”) for so long as certain entities associated with GBL and Mr. Duha (collectively, the “GBL and Duha Shareholders”) own at least 70% of the shares of Common Stock originally issued to them in the Transaction and (y) GBL will have the right to nominate one director to the Board for so long as the GBL and Duha Shareholders own at least 50% of the shares of Common Stock originally issued to them in the Transaction. If at any time entities affiliated with GBL own less than 50% of the shares of Common Stock originally issued to them in the Transaction, GBL will have no right to nominate any directors to the Board. If GBL has the right to nominate two directors, Mr. Duha has the right to be nominated as one of the two GBL Directors for so long as he owns at least 50% of the shares of Common Stock originally issued to him in the Transaction. The initial GBL Directors are expected to be Mr. Duha and Nicolas Gheysens, a Partner at GBL.
Each of the Initial Stockholders has agreed not to take certain actions without the Company’s prior written consent so long as they hold at least 50% of the shares originally issued to them in the Transaction, including: (i) making any proposal, public statement or offer to the Board or the Company’s stockholders regarding business combinations, tender offers, restructuring, liquidation, or acquisition of Company loans, securities, or assets, (ii) making any proposal to seek representation on the Board or otherwise seek to control or influence management, the Board or policies of the Company, (iii) forming or encouraging others to form a voting group with any Company stockholder, other than solely among the Initial Stockholders, (iv) acquiring any additional shares of Common Stock over certain authorized additional amounts, or (v) publicly disclosing or encouraging others to disclose any arrangement or intention prohibited by the foregoing or taking action that would reasonably be expected to require the Company to make a public announcement regarding (i) or (ii) above. Neither the Company nor any material subsidiary may amend its charter or its bylaws or similar organizational documents in a manner that disproportionately adversely affects the rights of the Initial Stockholders or which is knowingly in violation of the rights of any Initial Stockholder pursuant to the IRA, in each case so long as such Initial Stockholder holds at least 50% of the shares of Common Stock originally issued to it in the Transaction.
Subject to the terms and conditions of the IRA, the Initial Stockholders have agreed to certain customary lock-up provisions covering the shares of Common Stock issued to them at closing. In particular, subject to certain exceptions set forth in the IRA, the Initial Shareholders have agreed not to transfer any such shares for six months from closing. GBL has further agreed not to transfer more than 25% of such shares for 12 months from closing, and not to transfer more than 50% of such shares for 18 months from closing. Mr. Duha has further agreed not to transfer more than 25% of such shares for 12 months from closing, and not to transfer more than 75% of such shares for 18 months following closing. Certain other stockholders of Webhelp Parent have also agreed, subject to certain exceptions set forth in the SPA or the IRA, not to transfer any shares of Common Stock issued to them at closing for six months from closing, not to transfer more than 25% of such shares for 12 months from closing, and not to transfer more than 75% of such shares for 18 months following closing.
The Initial Stockholders have certain registration rights under the IRA, which will require the Company to register within 180 days of closing the resale of the shares of Common Stock and Earnout Shares held by the Initial Stockholders immediately following closing. Upon demand by the Initial Stockholders, the Company will also be required to register a sale by the Initial Stockholders of such shares with a value of at least $100 million up to two times in any rolling twelve-month period. The Initial Stockholders will also have “piggy-back” registration rights to include their shares of Common Stock in certain other registration statements filed by the Company.
The Company has agreed to waive the corporate opportunity doctrine to the extent permitted under the Delaware General Corporation Law with respect to GBL and the GBL Directors.
Commitment Letter
In connection with the potential Transaction, the Company entered into a debt commitment letter (the “Commitment Letter”), dated as of March 29, 2023, with JPMorgan Chase Bank, N.A. (“JPMorgan”), pursuant to which JPMorgan has committed to provide a 364-day bridge loan facility in an aggregate principal amount of $5.29 billion (the “Bridge Facility”), consisting of three tranches: (i) a $2.44 billion tranche of term bridge loans, (ii) a
$1.85 billion tranche of term bridge loans and (iii) a $1.0 billion tranche of revolving commitments (the “Amendment Revolving Tranche”), each subject to the satisfaction of certain customary closing conditions including the consummation of the Transaction. The Bridge Facility is available to (i) pay for a portion of the Cash Purchase Price, (ii) directly or indirectly repay certain indebtedness of Webhelp Parent and its subsidiaries and certain indebtedness of the Company and its subsidiaries, and (iii) to pay fees, costs and expenses related to the Transaction, the Bridge Facility and transactions being entered into or otherwise contemplated in connection therewith. Additionally, the Amendment Revolving Tranche will be available after the consummation of the Transaction for working capital and other general corporate purposes.
If the Company utilizes the Bridge Facility, amounts drawn thereunder will bear interest at an annual rate equal to adjusted term SOFR plus a margin which may initially range from 1.125% to 2.000%, depending on the Company’s debt rating or leverage ratio, as applicable, as determined in accordance with the Commitment Letter, which margin will be increased by 0.25% on each of the 90th, 180th and 270th day after the closing of the Bridge Facility. The Company will pay commitment fees on the undrawn amount of this commitment ranging from 0.125% to 0.275% if based upon the Company’s debt rating or 0.225% to 0.300% if based upon the Company’s leverage ratio, as applicable, determined in accordance with the Commitment Letter.
Under the terms of the Commitment Letter, JPMorgan will act as sole lead arranger and sole lead bookrunner in connection with the Bridge Facility. The Company will pay certain customary fees and expenses in connection with obtaining the Bridge Facility.
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The foregoing descriptions of the Put Option, the SPA, the Sellers’ Note, the IRA and the Commitment Letter are qualified in their entirety by reference to the full text of the Put Option, the form of SPA attached as Schedule 3 to the Put Option, the form of Sellers’ Note attached as Schedule 7 to the Put Option, the IRA and the Commitment Letter, copies of which are filed as Exhibits 10.1, 10.2, and 10.3 to this Current Report on 8-K and are incorporated in this Item 1.01 by reference.
The Put Option and the SPA have been filed with this Current Report on Form 8-K to provide investors with information regarding their terms. It is not intended to provide any other factual information about the parties. In particular, the assertions embodied in the representations and warranties contained in the Put Option and the SPA are qualified by information in confidential disclosure schedules provided by each party in connection with the signing of the Put Option. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Put Option and the SPA. Certain representations and warranties in the Put Option and the SPA were used for the purpose of allocating risk between the parties rather than establishing matters as facts. Investors are not third-party beneficiaries under the Put Option or the SPA and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, the representations and warranties in the Put Option and the SPA are made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to shareholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Put Option and the SPA are not necessarily characterizations of the actual state of facts about the parties to those agreements at the time they were made or otherwise and should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the U.S. Securities and Exchange Commission (the “SEC”).