Item 1.01 Entry into a Material Definitive Agreement.
On April 27, 2021, HealthEquity, Inc., a Delaware corporation ("HealthEquity"),
entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase
Agreement") with Fifth Third Bank, National Association, a national banking
association ("Fifth Third Bank").
The Purchase Agreement contemplates a transfer to HealthEquity of approximately
149,000 current HSA members and their approximately $477.0 million of HSA
assets. The Purchase Agreement provides that HealthEquity will, at the closing
of the transactions contemplated thereby (the "Closing"), pay an aggregate
purchase price of $60.8 million (the "Purchase Price"), subject to a
post-Closing purchase price adjustment based on the amount of HSA assets
actually transferred, as consideration for its acquisition of the exclusive
right to act as custodian of the HSA Accounts (as defined in the Purchase
Agreement) and the assumption of certain specified obligations. In addition,
under the terms of the Purchase Agreement, Fifth Third Bank will transition its
notional accounts business (consisting of flexible spending accounts, health
reimbursement arrangements and commuter accounts) to HealthEquity (such
acquisition of the exclusive right to act as custodian of the HSA Accounts and
the transition of the notional accounts, the "Acquisition").
Consummation of the Acquisition is subject to satisfaction of certain conditions
at the Closing, including, without limitation (i) the nonexistence of any
governmental order prohibiting the consummation of the Acquisition, (ii) receipt
of certain regulatory approvals, (iii) HealthEquity and Fifth Third Bank
entering into a master services agreement in a form to be agreed between the
parties prior to the Closing for the provision of health savings accounts and
notional accounts to Fifth Third Bank employees, and (iv) the execution and
delivery of certain customary closing certificates.
The Purchase Agreement contains customary representations, warranties and
covenants for a transaction of this type, including representations and
warranties by (a) Fifth Third Bank regarding, among other things, (i) its
corporate organization, (ii) its authority to enter into the Purchase Agreement
and perform its obligations thereunder, (iii) the absence of certain legal
proceedings, (iv) compliance with law and (v) title, and (b) HealthEquity
regarding, among other things, its (i) corporate organization and (ii) its
authority to enter into the Purchase Agreement and perform its obligations
thereunder. The Purchase Agreement also contains post-closing indemnification
obligations subject to certain de minimis, deductible and cap limitations and
time limitations with respect to recovery for losses.
The Purchase Agreement contains certain customary termination rights prior to
the Closing for both HealthEquity and Fifth Third Bank.
In consideration of the Purchase Price, Fifth Third Bank has agreed to a
customary non-competition provision preventing Fifth Third Bank from
participating in certain competitive activities, including acting as trustee or
custodian for health savings accounts in the United States or otherwise offering
or administering health savings accounts, flexible spending accounts, health
reimbursement arrangements or commuter accounts in the United States for a
period of five years following the Closing.
The Purchase Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual information
about HealthEquity, Fifth Third Bank or their respective subsidiaries or
affiliates. The representations, warranties and covenants contained in the
Purchase Agreement were made only for purposes of the Purchase Agreement and as
of specific dates, were solely for the benefit of the parties to the Purchase
Agreement, may be subject to limitations agreed upon by the contracting parties,
including being qualified by confidential disclosures made for the purposes of
allocating contractual risk between the parties to the Purchase Agreement
instead of establishing these matters as facts, and may be subject to standards
of materiality applicable to the contracting parties that differ from those
applicable to investors. Investors are not third-party beneficiaries under the
Purchase Agreement 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, information concerning the subject matter
of representations and warranties may change after the date hereof, which
subsequent information may or may not be fully reflected in HealthEquity's
public disclosures.
The foregoing description of the Purchase Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
the Purchase Agreement, a copy of which is filed as Exhibit 2.1 and incorporated
herein by reference.
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Item 7.01. Regulation FD Disclosure
On April 27, 2021, HealthEquity issued a press release announcing that
HealthEquity had entered into Purchase Agreement. A copy of HealthEquity's press
release announcing the transaction is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
The information in this Item 7.01, including the corresponding Exhibit 99.1, is
being furnished with the U.S. Securities and Exchange Commission (SEC) and shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended.
Cautionary Statement Regarding Forward-Looking Statements
This Form 8-K and the exhibits attached hereto and incorporated herein by
reference contain "forward-looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995,
including but not limited to, statements regarding the proposed transaction
between HealthEquity and Fifth Third Bank and the timing of such proposed
transaction. All statements other than statements of historical fact that
address activities, events or developments that HealthEquity expects, believes
or anticipates will or may occur in the future are forward-looking statements.
Forward-looking statements reflect current expectations regarding future events,
results or outcomes, and are typically identified by words such as "will",
"shall" or similar expressions that convey the prospective nature of events or
outcomes. Factors that could cause actual results to differ include, but are not
limited to: the conditions to the completion of the proposed transaction,
including the receipt of all required regulatory approvals; the ability of
HealthEquity to successfully integrate the acquired assets into HealthEquity's
current business; that such integration may be more difficult, time-consuming or
costly than expected; and that operating costs, customer loss and business
disruption (including, without limitation, difficulties in maintaining
relationships with customers or vendors) may be greater than expected following
the proposed transaction or the public announcement of the proposed transaction.
Although HealthEquity believes the expectations reflected in the forward-looking
statements are reasonable, HealthEquity gives no assurance these expectations
will prove to be correct. Actual events, results and outcomes may differ
materially from expectations due to a variety of known and unknown risks,
uncertainties and other factors, including those described above. For a detailed
discussion of other risk factors, please refer to the risks detailed in
HealthEquity's filings with the Securities and Exchange Commission, including,
without limitation, HealthEquity's most recent Annual Report on Form 10-K and
subsequent periodic and current reports. HealthEquity undertakes no intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Forward-looking
statements should not be relied upon as representing views as of any date
subsequent to the date of this Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Description
2.1 Custodial Transfer and Asset Purchase Agreement, dated as of
April 27, 2021, by and between Fifth Third Bank, National Association,
and HealthEquity, Inc.*
99.1 Press Release dated April 27, 2021.
104 Cover Page Interactive Data File (formatted in Inline XBRL and
contained in Exhibit 101)
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. HealthEquity hereby undertakes to furnish supplementally copies
of any of the omitted schedules upon request by the SEC.
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