DEFM14A: Cantaloupe, Inc. to be Acquired by 365 Retail Markets in $945 Million All-Cash Deal

Cantaloupe, Inc. shareholders are invited to vote on a proposal to approve an all-cash merger agreement with 365 Retail Markets, LLC, valuing each common stock share at $11.20.

Summary

• Cantaloupe, Inc. (CTLP) has entered into a definitive merger agreement to be acquired by 365 Retail Markets, LLC, through its subsidiary Catalyst MergerSub Inc.
• Each outstanding share of Cantaloupe common stock will be converted into the right to receive $11.20 in cash, without interest and less any applicable withholding taxes.
• Cantaloupe's Board of Directors unanimously determined the merger is in the best interests of the company and its shareholders, and unanimously recommends voting FOR the merger proposal.
• The total funds necessary to complete the transaction are approximately $945 million, which will be financed by committed debt financing obtained by 365 Retail Markets.
• The merger is expected to be completed in the second half of calendar year 2025, subject to shareholder and regulatory approvals.
• All outstanding Cantaloupe equity awards (RSUs, PSUs, Restricted Stock Awards, and In-the-Money Options) will become fully vested and be converted into cash at the merger consideration price; Out-of-the-Money Options will be canceled without consideration.
• Shares of Series A Convertible Preferred Stock will be redeemed immediately prior to the merger at $11.00 per share plus accrued and unpaid cumulative dividends, or holders may convert to common stock to receive $11.20 per share.
• The Board members and Hudson Executive Capital LP, collectively representing approximately 17.9% of the voting power, have entered into Voting Agreements to support the merger proposals.

Sentiment

Score: 8

Explanation: The filing presents a highly favorable outcome for shareholders, offering a substantial cash premium and a clear path to liquidity. The unanimous board recommendation and competitive process underscore the value. While standard merger risks and management interests are present, the overall sentiment is strongly positive for investors.

Positives

• The all-cash consideration of $11.20 per share provides immediate liquidity and certainty of value for common shareholders, eliminating exposure to future business or macroeconomic risks.
• The merger consideration represents a significant premium of approximately 34% to Cantaloupe's unaffected stock price of $8.37 on May 30, 2025.
• Cantaloupe's Board of Directors unanimously approved and recommended the merger, indicating strong internal support for the transaction.
• The absence of a financing condition and the presence of committed debt financing from 365 Retail Markets enhance the certainty of closing the transaction.
• A robust and competitive sale process was conducted, involving outreach to 36 potential acquirors and receiving multiple offers, suggesting the achieved price is favorable.
• Existing equity awards held by employees and directors will be fully vested and cashed out, providing immediate financial benefit to award holders.
• Directors and executive officers are entitled to continued indemnification and insurance coverage following the completion of the merger.

Negatives

• Common shareholders will no longer participate in any potential future growth, earnings, or appreciation in value of Cantaloupe or the combined entity.
• The receipt of merger consideration will generally be a taxable event for U.S. federal income tax purposes for U.S. Holders.
• Cantaloupe's business operations are subject to certain restrictions between the agreement date and the merger's effective time, potentially limiting new business opportunities.
• A termination fee of $31.5 million is payable by Cantaloupe under specific circumstances, which could deter alternative acquisition proposals.
• The possibility exists that the merger may not be completed due to various factors, which could negatively impact Cantaloupe's stock price and business operations.
• Shareholder litigation has been initiated, alleging incomplete and misleading proxy statements, which could incur defense costs and potential liabilities.

Risks

• Failure to obtain the required Cantaloupe shareholder approval for the merger.
• Inability to satisfy other closing conditions, including potential prohibition, delay, or refusal of necessary regulatory approvals by governmental authorities.
• The merger may involve unexpected costs, liabilities, or delays.
• Cantaloupe's business may suffer due to uncertainty surrounding the merger, potentially impacting employee retention and relationships with third parties.
• Shareholder litigation related to the merger could affect its timing or occurrence and result in significant defense, indemnification, and liability costs.
• The Debt Financing may not be obtained, potentially impacting 365 Retail Markets' ability to fund the merger, despite the absence of a financing condition.
• Regulatory authorities could challenge the merger on antitrust grounds, potentially seeking to enjoin, rescind, or impose conditional approvals such as divestitures or operational restrictions.
• The termination fee of $31.5 million may deter other potential acquirors from making a superior offer.

Future Outlook

The merger is expected to be completed in the second half of calendar year 2025, contingent upon shareholder and regulatory approvals. Upon completion, Cantaloupe will cease to be an independent public company, and its common stock will be delisted from Nasdaq. Management projections, prepared on a standalone basis, anticipate continued revenue growth from $305 million in FY2025 to $469 million in FY2028, with Adjusted EBITDA margins increasing from approximately 16% in FY2025 to 25% in FY2028.

Management Comments

• The Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of Cantaloupe.
• The Board unanimously approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger.
• The Board unanimously recommended the approval and adoption of the Merger Agreement by Cantaloupe's shareholders and directed that the Merger Agreement be submitted to shareholders for their vote.
• The Board unanimously recommends that you vote FOR the proposal to approve and adopt the Merger Agreement, including the Merger.
• Cantaloupe and the Board believe that the claims asserted in the Demand Letters are without merit and that no further disclosure is required to supplement the proxy statement under applicable laws.

Industry Context

Cantaloupe, a global technology leader in self-service commerce, offers a comprehensive suite of solutions including micro-payment processing, self-checkout kiosks, mobile ordering, connected POS systems, and enterprise cloud software. 365 Retail Markets is a leading innovator in unattended retail technology, providing integrated SaaS software, payment processing, and POS hardware for food service operators. This acquisition signifies a strategic consolidation within the rapidly evolving unattended retail and self-service commerce sectors, aiming to combine complementary technologies and market reach to enhance operational efficiency and consumer engagement across various environments like micro markets, vending, and corporate food service.

Comparison to Industry Standards

• J.P. Morgan's Public Trading Multiples analysis compared Cantaloupe to a peer group including ACI Worldwide, Block, EverCommerce, Flywire, i3 Verticals, Lightspeed Commerce, Nayax, PAR Technology, Paymentus Holdings, Repay Holdings, Shift4 Payments, and Toast.
• J.P. Morgan's Selected Transactions Analysis considered comparable public transactions such as Global Payments Inc.'s acquisitions of Worldpay and EVO Payments, Advent International's acquisition of Nuvei Corporation, and Nuvei Corporation's acquisition of Paya Holdings Inc.
• The $11.20 per share merger consideration represents a 33.8% premium to Cantaloupe's unaffected stock price, which the Board considered a significant value for shareholders.
• The termination fee of $31.5 million (approximately 3.7% of equity value based on the June 12, 2025 proposal) was assessed by the Board as being within the customary range for transactions of this type and reasonable, suggesting it would not unduly deter a superior proposal.

Management Changes

Corporate Governance

Legal Proceedings

• As of July 23, 2025, there are no pending lawsuits directly challenging the merger.
• Cantaloupe has received demand letters from purported shareholders alleging that the preliminary proxy statement filed with the SEC was materially incomplete and misleading, in violation of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9.
• Cantaloupe and its Board believe these claims are without merit and that no further disclosure is required.
• The filing notes that future lawsuits or demand letters challenging the merger or proxy statement may be filed.

Related Party Transactions

• Douglas G. Bergeron (Chairman of the Board) and Jeffrey Dumbrell (Chief Revenue Officer) have had preliminary discussions with 365 Retail Markets regarding potential rollover arrangements for up to 1,032,559 shares and 20,000 shares of common stock, respectively, though no definitive agreements have been reached.
• The Board members and Hudson Executive Capital LP, collectively representing approximately 17.9% of the voting power, have entered into Voting Agreements with 365 Retail Markets to vote in favor of the merger proposals.
• Certain executive officers, including Scott Stewart ($200,000) and Anna Novoseletsky ($100,000), received Transaction Bonuses that are repayable to Cantaloupe if the merger does not close.
• J.P. Morgan, Cantaloupe's financial advisor, has existing commercial and investment banking relationships with Cantaloupe and Providence Equity Partners (a significant affiliate of 365 Retail Markets), for which it has received customary compensation, including acting as joint lead arranger on Cantaloupe's credit facilities and providing services to Providence portfolio companies.

Stakeholder Impact

• Shareholders (Common Stock): Will receive a significant cash premium of $11.20 per share, providing immediate liquidity and a certain return on investment, but will no longer participate in Cantaloupe's future growth or earnings.
• Shareholders (Preferred Stock): Will have their shares redeemed at $11.00 per share plus accrued dividends, or can convert to common stock to receive $11.20 per share, ensuring a cash exit.
• Employees: Equity awards will vest and be cashed out. For 12 months post-closing, base salary/wage rate and target cash incentive compensation opportunities will be no less favorable, and employee benefits substantially comparable. Severance benefits are provided for certain terminations, offering some stability.
• Customers: The merger is expected to enhance operational efficiency and consumer engagement through the combined entity's comprehensive solutions in self-service commerce and unattended retail technology.
• Suppliers: The company aims to maintain satisfactory relationships with suppliers, indicating continuity in business operations.
• Creditors: Existing debt under the Credit Agreement will be repaid in full at the closing of the merger, resolving current debt obligations.

Next Steps

• Cantaloupe shareholders are required to vote on the Merger Proposal, Advisory Compensation Proposal, and Adjournment Proposal at a Special Meeting on September 4, 2025.
• Cantaloupe will file the definitive Proxy Statement with the SEC and mail it to shareholders.
• The parties must obtain all necessary regulatory approvals, including the expiration or termination of the HSR Act waiting period.
• Cantaloupe is required to redeem all outstanding shares of preferred stock immediately prior to the merger's consummation.
• The merger is expected to close in the second half of calendar year 2025.
• Upon completion of the merger, Cantaloupe's common stock will be delisted from the Nasdaq Global Market, and its registration under the Securities Exchange Act of 1934 will be terminated.

Key Dates

Recommendation

The all-cash offer of $11.20 per share represents a substantial 34% premium over the unaffected stock price, providing immediate and certain value to shareholders. The unanimous recommendation by the Board, coupled with a competitive bidding process and committed financing, significantly de-risks the transaction. While there are standard regulatory and litigation risks, the high premium and clear path to closing make this an attractive exit for current shareholders, warranting a strong buy recommendation for those seeking to capture the merger arbitrage spread.

Keywords

Cantaloupe Inc., CTLP, 365 Retail Markets, Merger, Acquisition, Cash Deal, Proxy Statement, SEC Filing, Self-Service Commerce, Unattended Retail Technology, Payment Processing, Micro Markets, Vending, Corporate Governance, Shareholder Vote, J.P. Morgan, Hudson Executive Capital