DEFA14A: AvidXchange to be Acquired by TPG in $2 Billion Deal, Corpay to Invest

AvidXchange Holdings, Inc. has entered into a definitive agreement to be acquired by an investment fund affiliated with TPG Global, LLC, with Corpay, Inc. also investing, in a deal valuing the company at approximately $2 billion.

Summary

• AvidXchange Holdings, Inc. will be acquired by Arrow Borrower 2025, Inc., a subsidiary of an investment fund affiliated with TPG Global, LLC.
• Corpay, Inc. will also be a direct or indirect investor in the parent company.
• Each share of AvidXchange common stock will be converted into the right to receive $10.00 in cash, subject to certain exceptions.
• The independent members of AvidXchange's board of directors have unanimously approved the merger agreement.
• A special stockholder meeting will be held to vote on the adoption of the merger agreement.
• If the merger is consummated, AvidXchange's common stock will be delisted from Nasdaq and deregistered, and the company will become privately held.
• Vested company stock options will be cancelled and converted into the right to receive cash equal to the difference between the merger consideration and the exercise price.
• Unvested company stock options will be converted into an award representing the right to receive a cash amount equal to the product of the number of shares and the difference between the merger consideration and the exercise price, subject to the same terms and conditions.
• Outstanding restricted stock units (RSUs) that vest upon the effective time of the merger will be cancelled and converted into the right to receive cash equal to the product of the number of shares and the merger consideration.
• RSUs that do not vest upon the effective time will be converted into an award representing the right to receive a cash amount equal to the product of the number of shares and the merger consideration, subject to the same terms and conditions.
• The closing of the merger is subject to customary conditions, including stockholder approval, regulatory approvals, and the absence of a material adverse effect.
• The merger agreement includes a no-shop provision that restricts AvidXchange's ability to solicit acquisition proposals from third parties.
• AvidXchange may terminate the merger agreement to enter into a superior proposal, subject to certain conditions, including paying a termination fee of $78 million to Parent.
• Parent will be required to pay AvidXchange a termination fee of $133 million under certain circumstances.
• Parent and Merger Sub have secured committed equity and debt financing to complete the transaction.
• Certain officers of AvidXchange have entered into rollover agreements to contribute shares of common stock in exchange for equity interests in the parent company.
• Michael Praeger and affiliated entities have entered into a voting and support agreement to vote in favor of the merger.
• A retention bonus program with an aggregate value of approximately $3 million will be implemented to promote retention and incentivize efforts to consummate the transaction.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The acquisition provides a cash exit for shareholders, and the deal has been approved by the board. However, there are risks associated with regulatory approvals and potential disruptions to the business.

Positives

• Shareholders will receive a cash payment of $10.00 per share.
• The independent board members unanimously approved the deal.
• Committed equity and debt financing is in place to complete the transaction.
• A retention bonus program is in place to retain key employees.

Negatives

• AvidXchange will be delisted from Nasdaq and deregistered.
• The merger agreement includes a no-shop provision, limiting the company's ability to solicit other offers.
• The deal is subject to customary closing conditions, which could delay or prevent completion.

Risks

• The transaction is subject to regulatory approvals, which may not be obtained.
• The company's stockholders may not approve the transaction.
• Litigation relating to the transaction could arise.
• The transaction could have an adverse effect on AvidXchange's ability to retain key personnel and maintain relationships with customers and suppliers.
• Restrictions on AvidXchange's conduct during the pendency of the transaction may impact its ability to pursue certain business opportunities.

Future Outlook

If the Merger is consummated, the Company Common Stock will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended, and the Company will become a privately held company.

Management Comments

• The independent members of the board of directors of the Company unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair, advisable and in the best interests of the Company and its stockholders.

Industry Context

The acquisition reflects the ongoing consolidation trend in the payment processing and financial technology sectors, with private equity firms seeking to capitalize on the growth of digital payments and accounts payable automation.

Comparison to Industry Standards

• Comparable companies in the payment processing space, such as Global Payments Inc. and Fiserv, have seen similar acquisition activity driven by the desire to expand market share and technological capabilities.
• The $10.00 per share offer represents a premium to AvidXchange's recent trading price, which is consistent with industry standards for M&A transactions.
• The termination fees are also within the typical range for deals of this size.
• TPG's involvement aligns with its strategy of investing in high-growth technology companies.
• Corpay's participation as an investor suggests a strategic alignment and potential synergies between the two companies.

Related Party Transactions

• Certain officers of AvidXchange have entered into rollover agreements to contribute shares of common stock in exchange for equity interests in the parent company.
• Michael Praeger and affiliated entities have entered into a voting and support agreement to vote in favor of the merger.

Stakeholder Impact

• Shareholders will receive a cash payment for their shares.
• Employees will be subject to a retention bonus program.
• Customers and suppliers may experience changes as a result of the acquisition.
• The company will become privately held, which may impact transparency and access to information.

Next Steps

• The Company will file a proxy statement with the SEC.
• The Company will hold a special stockholder meeting to vote on the adoption of the Merger Agreement.
• The parties will seek regulatory approvals.
• The parties will work to satisfy the closing conditions and complete the Merger.

Key Dates

Keywords

merger, acquisition, avidxchange, tpg global, corpay, stockholders, financing, agreement, termination fee, delisting