Item 1.01 Entry into a Material Definitive Agreement.
On January 21, 2022, Verisk Analytics, Inc. ("Verisk") entered into a Stock
Purchase Agreement (the "Purchase Agreement") by and among Verisk, Tamarack
Buyer, L.L.C. ("Buyer") and, solely for the limited purpose set forth therein,
3E Company Environmental, Ecological and Engineering, a subsidiary of Verisk.
Buyer is an entity that was formed on behalf of, and is controlled by, certain
investment funds affiliated with New Mountain Capital, L.L.C. ("New Mountain").
Pursuant to the Purchase Agreement, Verisk agreed, on the terms and subject to
the conditions set forth therein, to sell its 3E business ("3E") to Buyer by
means of a sale of certain subsidiaries of Verisk which operate 3E for a
potential aggregate cash consideration of up to $950 million (the
"Transaction"). The purchase price consists of $630 million of cash
consideration to be paid at the closing of the Transaction (subject to customary
purchase price adjustments for, among other things, the cash, working capital
and indebtedness of 3E as of the closing), up to $50 million of earnout payments
based on 3E's financial performance in 2023 and 2024, and up to $270 million of
additional deferred payments based on New Mountain's future return on its
investment in 3E.
Buyer has secured financing, consisting of equity financing to be provided by
certain investment funds affiliated with New Mountain and committed debt
financing, to consummate the Transaction. The closing of the Transaction is not
subject to a financing condition, but is subject to other customary conditions,
including the expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Act. There can be no assurance that these closing
conditions will be satisfied. In addition, the Purchase Agreement provides that
the closing of the Transaction may not occur prior to February 20, 2022 without
the consent of Buyer.
The Purchase Agreement contains representations, warranties and covenants of the
parties that are customary for transactions of this type and that are subject,
in some cases, to specified exceptions and qualifications. Until the
consummation of the Transaction, Verisk has agreed, subject to certain
exceptions, to, and to cause its subsidiaries to, conduct 3E's business in the
ordinary course consistent with past practice. The parties are required to use
their respective commercially reasonable efforts to take, or cause to be taken,
all actions necessary, proper or advisable under applicable laws to consummate
the Transaction.
The Purchase Agreement contains certain termination rights that are customary
for a transaction of this type, including if the closing of the Transaction has
not occurred on or prior to May 21, 2022, and provides that, upon termination of
the Purchase Agreement under circumstances in which Buyer fails to consummate
the closing at a time when the conditions to the obligations of the parties to
close the Transaction have been satisfied or waived, Buyer will pay to Verisk a
cash termination fee of $43,750,000. Certain investment funds affiliated with
New Mountain have provided a limited guarantee to Verisk guaranteeing the
payment of such termination fee and certain other obligations of Buyer under the
Purchase Agreement.
Pursuant to the Purchase Agreement, Verisk and Buyer will enter into a
transition services agreement at the closing of the Transaction to ensure an
orderly transition in effecting the Transaction.
The foregoing description of the Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Purchase Agreement, which is attached to this Current Report on Form 8-K as
Exhibit 2.1 and is incorporated herein by reference.
A copy of the Purchase Agreement has been included in this Current Report on
Form 8-K to provide Verisk shareholders and other security holders with
information regarding its terms and is not intended to provide any factual
information about Verisk or any of its affiliates. The representations,
warranties and covenants contained in the Purchase Agreement: have been made
solely for the purposes of the Purchase Agreement and as of specific dates; were
solely for the benefit of the parties to the Purchase Agreement, are not
intended as statements of fact to be relied upon by Verisk shareholders or other
security holders, but rather as a way of allocating the risk between the parties
in the event the statements therein prove to be inaccurate; have been modified
or qualified by certain confidential disclosures that were made between the
parties in connection with the negotiation of the Purchase Agreement, which
disclosures are not reflected in the Purchase Agreement itself; may no longer be
true as of a given date; and may apply standards of materiality in a way that is
different from what may be viewed as material by Verisk shareholders or other
security holders. Verisk shareholders and other security holders 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 Verisk or any of
its affiliates. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Purchase
Agreement, which subsequent information may or may not be fully reflected in
Verisk's public disclosures.
Item 8.01 Other Events.
On January 24, 2022, Verisk issued a press release announcing its entry into the
Purchase Agreement and the Transaction, a copy of which is attached as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
2.1 Purchase Agreement, dated as of January 21, 2022, by and among Verisk
Analytics, Inc., Tamarack Buyer, L.L.C. and, solely for the limited
purpose set forth therein, 3E Company Environmental, Ecological and
Engineering.*
99.1 Press Release, dated January 24, 2022, issued by Verisk.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. Verisk agrees to furnish supplementally a copy of such schedules
and exhibits, or any section thereof, to the SEC upon request.
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