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MarketScreener Homepage  >  Equities  >  Nasdaq  >  InnerWorkings, Inc.    INWK

INNERWORKINGS, INC.

(INWK)
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INNERWORKINGS INC : Other Events (form 8-K)

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09/11/2020 | 10:04am EDT

Item 8.01. Other Events.

Litigation Related to the Merger.


As previously disclosed, on July 15, 2020, InnerWorkings, Inc., a Delaware
corporation (the "Company"), entered into an Agreement and Plan of Merger, by
and among HH Global Group Limited, a company registered in England and Wales
("Parent"), HH Global Finance Limited, a company registered in England and Wales
("HH Finance") and Project Idaho Merger Sub, Inc., a Delaware corporation and
wholly owned subsidiary of Parent ("Sub"), and the Company (as amended from time
to time, the "Merger Agreement"). The Merger Agreement provides for, among other
things, Sub to merge with and into the Company, causing the Company to become a
wholly owned subsidiary of Parent (the "Merger").

Lawsuits relating to the merger were filed on August 14, 2020 in the United
States District Court for the Southern District of New York, August 17, 2020 in
the Supreme Court of the State of New York, August 20, 2020 in the United States
District Court for the Eastern District of New York and in the United States
District Court for the District of Delaware, August 25, 2020 in the United
States District Court for the District of Delaware, August 26, 2020 in the
United States District Court for the Southern District of New York andSeptember 4, 2020 in the United States District Court for the Southern District
of New York. The lawsuits, filed by purported stockholders of the Company, are
captioned Bollur v. InnerWorkings, Inc., et. al., No. 1:20-cv-06452, filed as an
individual action (the "Bollur Lawsuit"), Khan v. InnerWorkings, Inc., et. al.,
No. 653867/2020, filed as a putative class action on behalf of the stockholders
of the Company (the "Khan Lawsuit"), Lee v. InnerWorkings, Inc., et. al., No.
1:20-cv-03812, filed as an individual action (the "Lee Lawsuit"), Stein v.
InnerWorkings, Inc., et. al., No. 1:20-cv-01095-UNA, filed as an individual
action (the "Stein Lawsuit"), Franchi v. InnerWorkings, Inc., et. al., No.
1:20-cv-01114-UNA, filed as a putative class action on behalf of the
stockholders of the Company (the "Franchi Lawsuit"), Hinden v. InnerWorkings,
Inc., et. al., No. 1:20-cv-06892, filed as an individual action (the "Hinden
Lawsuit") and Altamirano v. InnerWorkings, Inc., et. al., No. 1:20-cv-07268,
filed as an individual action (the "Altamirano Lawsuit"). The Bollur, Lee,
Stein, Franchi, Hinden and Altamirano Lawsuits allege that the preliminary proxy
statement filed on August 10, 2020 (or, in the case of the Franchi, Hinden and
Altamirano Lawsuits, the definitive proxy statement filed on August 21, 2020),
relating to the transactions contemplated by the merger agreement, omitted
material information in violation of Sections 14(a) and 20(a) of the Exchange
Act and certain rules promulgated thereunder. The Khan Lawsuit alleges, among
other things, that the Company's directors breached their fiduciary duties in
connection with the merger. The lawsuits name as defendants the Company and its
directors and seek, among other relief, injunctive relief. There can be no
assurance regarding the ultimate outcome of these lawsuits.

The Company believes that the claims asserted by the plaintiffs are without
merit. However, in order to moot the plaintiffs' unmeritorious disclosure
claims, alleviate the costs, risks and uncertainties inherent in litigation and
provide additional information to its stockholders, the Company has determined
to voluntarily supplement the definitive proxy statement filed on August 21,
2020 (the "Definitive Proxy Statement") as described in this Current Report on
Form 8-K; plaintiffs agree that the supplemental disclosures moot their claims
and have agreed to withdraw their complaints and demands, respectively, upon the
filing of this Current Report on Form 8-K. Nothing in this Current Report on
Form 8-K shall be deemed an admission of the legal necessity or materiality
under applicable laws of any of the disclosures set forth herein. To the
contrary, the Company specifically denies all allegations by the plaintiffs that
any additional disclosure was or is required.

Supplemental Disclosures.


The following disclosures supplement the disclosures contained in the Definitive
Proxy Statement and should be read in conjunction with the disclosures contained
in the Definitive Proxy Statement, which should be read in its entirety. To the
extent the information set forth herein differs from or updates information
contained in the Definitive Proxy Statement, the information set forth herein
shall supersede or supplement the information in the Definitive Proxy Statement.
All page references are to pages in the Definitive Proxy Statement, and terms
used below, unless otherwise defined, have the meanings set forth in the
Definitive Proxy Statement.

--------------------------------------------------------------------------------
The fourth and fifth sentences of the fourth full paragraph on page 37 under the
header "Background of the Merger" of the Definitive Proxy Statement are hereby
amended and restated as follows:

In addition, each of the confidentiality agreements (other than the agreement
with Party C) prohibited the counterparty from requesting that the Company (or
the Board or the Company's representatives) amend, waive, grant any consent or
otherwise not enforce any provision of the standstill provision. However, each
confidentiality agreement (including the confidentiality agreement with Party C)
permitted the counterparty to make unsolicited private proposals to the Board
from and after the time the Company entered into a definitive agreement to
engage in a change of control transaction.

The third and fourth sentences of the paragraph under the subheader "Discounted Cash Flow Analysis" on page 57 of the Definitive Proxy Statement are hereby amended and restated as follows:


Citi calculated implied terminal values for the Company by applying to the
Company's terminal year unlevered, after-tax free cash flow a selected range of
perpetuity growth rates of 3.0% to 4.0%, which range was selected based on
Citi's professional judgment and taking into account, among other things,
Company management forecasts and the long-term expected growth potential for the
geographic markets in which the Company operates. The present values (as of
June 30, 2020) of the cash flows and terminal values were then calculated using
both a selected range of discount rates of 13.0% to 15.2% derived from a
weighted average cost of capital calculation taking into account, among other
things, the Company's pre-global COVID-19 pandemic market capitalization
(approximately $200 million as of February 19, 2020) and, as a sensitivity
reflective of the potential for a higher cost of capital for the Company given
taking into account the Company's lower market capitalization (approximately
$70 million as of July 14, 2020) following the onset of the global COVID-19
pandemic, a selected range of discount rates of 15.7% to 18.8%.

The first sentence of the third paragraph under the subheader "Selected Precedent Transactions Analysis" on page 57 of the Definitive Proxy Statement is hereby amended and restated as follows:


The low and high LTM adjusted EBITDA multiples observed for the selected
precedent transactions were 4.6x and 5.4x. Citi applied the range of LTM
adjusted EBITDA multiples derived from the selected precedent transactions of
4.6x to 5.4x both to the Company's LTM estimated adjusted EBITDA (as of June 30,
2020) and, as a sensitivity given, based on Company management forecasts, the
continued impact on the Company of the global COVID-19 pandemic, to the
Company's next 12 months estimated adjusted EBITDA (for the period ending
June 30, 2021).

The third bullet point under the header "Certain Additional Information" on page 58 of the Definitive Proxy Statement is hereby amended and restated as follows:

• enterprise values as a multiple of calendar year 2021 estimated adjusted

EBITDA, and closing stock prices (as of July 14, 2020) as a multiple, to

          the extent meaningful, of calendar year 2021 estimated earnings as
          adjusted for certain non-recurring items, as applicable (referred to as

adjusted earnings), of six selected companies in the print and business

process outsourcing industry consisting of Avery Dennison Corporation,

CCL Industries Inc., Cimpress plc, Deluxe Corporation, Matthews

International Corporation and R.R. Donnelley & Sons Company (referred to

as the selected print/BPO companies) and four selected companies in the

          marketing services industry consisting of The Interpublic Group of
          Companies, Inc., Omnicom Group Inc., Publicis Groupe and WPP plc
          (referred to as the selected marketing services companies), based on

publicly available research analysts' estimates; applying the overall low

to high selected range of calendar year 2021 estimated adjusted EBITDA

multiples derived from the selected print/BPO companies and selected

marketing services companies of 4.7x to 11.8x and 4.4x to 7.5x,

respectively, to corresponding data of the Company based on Company

management forecasts indicated approximate implied equity value reference

ranges for the Company of $3.05 to $10.05 per share and $2.75 to $5.90

per share, respectively, and applying the overall low to high selected

range of calendar year 2021 estimated adjusted earnings multiples derived

from the selected print/BPO companies and selected marketing services

companies of 4.4x to 17.6x and 6.3x to 10.5x, respectively, to

corresponding data of the Company based on Company management forecasts

          indicated approximate implied equity value reference ranges for the
          Company of $0.70 to $2.80 per share and $1.00 to $1.70 per share,
          respectively.

--------------------------------------------------------------------------------

The first sentence of the second paragraph under the header "Miscellaneous" on page 58 of the Definitive Proxy Statement is hereby amended and restated as follows:


As the Board was aware, Citi and its affiliates in the past have provided and in
the future may provide investment banking, commercial banking and other similar
financial services to the Company unrelated to the proposed merger, including,
during the approximately two-year period prior to the date of Citi's opinion,
having provided financial advisory services in respect of certain potential
transactions that were not consummated (and, accordingly, for which fees were
not received).

The table titled "Financial Projections Summary(1)" on page 61 within the "Financial Projections" section of the Definitive Proxy Statement is hereby supplemented by adding the following disclosure as the final rows:




Non-GAAP income before taxes(3)            $ (4,649 )$ 13,965      $ 

40,940 $ 46,264$ 54,139 Non-GAAP income after cash taxes(4) $ (9,685 )$ 8,965$ 34,440$ 38,264$ 45,139

(3) Excludes non-cash non-recurring items, including goodwill impairment

         expense.



(4) Excludes non-cash non-recurring items, including goodwill impairment

         expense, and reflects taxes projected to be payable in cash for the
         period.

Additional Information and Where to Find It


This communication does not constitute an offer to sell or the solicitation of
an offer to buy the securities of the Company or the solicitation of any vote or
approval. This communication is being made in respect of the proposed Merger,
among other things. The proposed Merger is being submitted to the stockholders
of the Company for their consideration. In connection therewith, the Company has
filed relevant materials with the SEC, including the Definitive Proxy Statement,
regarding the proposed Merger, which has been mailed to the stockholders of the
Company. BEFORE MAKING ANY VOTING OR ANY INVESTMENT DECISION, INVESTORS AND
SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT
REGARDING THE PROPOSED MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain free copies of
the Definitive Proxy Statement regarding the proposed Merger, any amendments or
supplements thereto and other documents containing important information about
the Company through the website maintained by the SEC at www.sec.gov. Copies of
the documents filed with the SEC by the Company are available free of charge on
the Company's website at www.inwk.com under the heading "SEC Filings" in the
"Investor Relations" portion of the Company's website.

Participants in the Solicitation


The Company and its directors, executive officers and certain other members of
Company management and Company employees may, under the rules of the SEC, be
deemed to be participants in the solicitation of proxies in connection with the
proposed Merger. Information about the directors and executive officers of the
Company is set forth in the Company's proxy statement for its 2020 annual
meeting of stockholders, which was filed with the SEC on April 28, 2020, its
annual report on Form 10-K for the fiscal year ended December 31, 2019, which
was filed with the SEC on March 17, 2020, and in subsequent documents filed with
the SEC, each of which can be obtained free of charge from the sources indicated
above. Other information regarding the participants in the proxy solicitation of
the stockholders of the Company and a description of their direct and indirect
interests, by security holdings or otherwise, is contained in the Definitive
Proxy Statement regarding the proposed Merger and may be contained in other
relevant materials filed with the SEC.

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses


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