Okta, Inc. (NasdaqGS:OKTA) entered into a definitive agreement to acquire Auth0, Inc. for approximately $6.5 billion on March 3, 2021. Okta will acquire Auth0 in a stock transaction and acquire all outstanding Class A shares of Auth0 capital stock, restricted stock units, options to purchase Auth0 capital stock, and phantom units will be and converted into the right to receive aggregate consideration of $6.5 billion, subject to customary purchase price adjustments and certain customary cash payouts in lieu of stock based on a fixed number of Okta shares and an Okta share price of $276.2147 per share. All corresponding options to purchase Okta stock or corresponding restricted stock units of Okta; provided, that (a) shares of Auth0 capital stock held by unaccredited stockholders may receive cash in lieu of the Stock Consideration, (b) certain specified awards of Auth0 will be converted into cash awards and (c) any unvested outstanding options to purchase Auth0 capital stock and unvested phantom units to purchase Auth0 capital stock, in each case, held by any former employees, will be for no consideration. No Auth0 warrants shall be assumed by Okta, and each such warrant shall be or exercised in accordance with its terms prior to the closing. In addition, Okta will establish a retention pool in an aggregate amount of $25 million in a form to be determined in Okta's discretion that will be granted to Auth0 employees in accordance with the terms of the merger agreement. A portion of the aggregate consideration will be held back by Okta to secure the indemnification obligations of the Auth0 securityholders.

The purchase price represents a revenue multiple that is slightly lower than Okta's FY '23 revenue multiple based on current consensus estimates. The proposed transaction is subject to customary closing conditions, including, but not limited to, the requisite adoption of the merger agreement and approval of the merger by the stockholders of Auth0; the receipt of specified regulatory approvals and the expiration or termination of applicable waiting periods, including the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (HSR Act); the shares of Okta Class A common stock to be issued in the merger being approved for listing on the Nasdaq Global Select Market; certain key employees of Auth0 remaining employed by Auth0 as of immediately prior to the closing of the merger; subject to certain materiality exceptions and satisfaction or waiver of other customary closing conditions. The boards of directors of Okta and Auth0 have each approved the transaction. Transaction is expected to close during Okta's second quarter of fiscal year 2022, the quarter ending July 31, 2021. Transaction is expected to be accretive to the FY '22 revenue guidance that Bill outlined earlier. It is expected that combined company to remain cash flow positive on an annual basis, excluding the impact of integration and transaction-related costs.

Morgan Stanley & Co. LLC is serving as financial advisor and Tad Freese, Rick Kline, Mark Bekheit, Sarah Axtell, James Metz, Mandy Reeves, Kelly Fayne, Katharine Moir, Anthony Klein, Arielle Singh, Michael Rubin, Fiona Maclean, Les Carnegie and Erin Brown Jones of Latham & Watkins LLP acted as legal advisors to Okta. Qatalyst Partners LP is serving as financial advisor and David Clarke, Nick Davis, David Martinez, Andrew Moore, Tom Cristy, Kelly Reinholdtsen, Julie Lucht, Sam Hong, Bryan Smith, Barry Reingold, Jeremy Keeney and Betsy Kristoferson of Perkins Coie LLP acted as legal advisors to Auth0.

Okta, Inc. (NasdaqGS:OKTA) completed the acquisition of Auth0, Inc. on May 3, 2021. Okta provided total consideration of approximately 20.4 million aggregate shares of Class A Common Stock of Okta, $267.7 million in cash, and equity awards with a fair market value of $700.2 million. The total consideration includes approximately $92 million of acquired cash, resulting in a net aggregate purchase price of $6.5 billion.