DEFA14A: Cantaloupe Supplements Merger Proxy Amid Shareholder Suits

Cantaloupe, Inc. has issued a supplement to its definitive proxy statement for the merger with 365 Retail Markets, LLC, addressing shareholder lawsuits alleging disclosure deficiencies.

Summary

• Cantaloupe, Inc. (Cantaloupe) filed a supplement to its definitive proxy statement concerning the proposed merger with 365 Retail Markets, LLC (365).
• The supplement responds to shareholder lawsuits (Eric Young v. Cantaloupe, Inc., et al. and Matthew Wright v. Cantaloupe, Inc., et al.) and demand letters alleging inadequate disclosures in prior proxy statements.
• Cantaloupe denies the allegations, asserting full compliance with applicable law, but voluntarily provided additional disclosures to resolve the purported claims and prevent disruption to the merger process.
• The supplemental disclosures do not alter the merger consideration of $11.20 per share or the scheduled timing of the Special Meeting on September 4, 2025, at 8:00 a.m. Eastern Time.
• Cantaloupe's board of directors maintains its unanimous recommendation for shareholders to vote FOR the merger proposals.
• Key amendments include further details on the formation of a Transaction Committee on March 2, 2025, and updated financial analysis from J.P. Morgan regarding public trading multiples and selected transactions.

Sentiment

Score: 4

Explanation: The filing addresses negative developments (shareholder lawsuits) but the company is taking proactive steps to mitigate them by providing supplemental disclosures and reiterating the board's unanimous recommendation for the merger. The core transaction terms and timeline remain unchanged, suggesting the issues are being managed, but the existence of litigation is a clear negative.

Positives

• Cantaloupe's board of directors continues to unanimously recommend the merger, signaling confidence in the transaction.
• The company proactively provided supplemental disclosures to address shareholder concerns and mitigate potential legal and procedural delays, despite denying the allegations' merit.
• The merger consideration of $11.20 per share and the Special Meeting timeline remain unchanged, indicating the core transaction is proceeding as planned.

Negatives

• Shareholder lawsuits and demand letters allege material disclosure deficiencies in the merger proxy statements.
• The lawsuits seek significant relief, including injunctions against the merger, rescission if consummated without further disclosures, and awards for legal fees and expenses.
• There is a possibility of additional or similar complaints or demand letters being received, which could further complicate the merger process.

Risks

• Inability to complete the potential transaction on the proposed terms or anticipated timeline, including securing necessary regulatory and shareholder approvals.
• The possibility that competing offers or acquisition proposals for Cantaloupe will be made.
• Occurrence of any event, change, or circumstance that could lead to the termination of the merger agreement, potentially requiring Cantaloupe to pay a termination fee.
• Failure to realize the expected benefits of the proposed transaction.
• Significant transaction costs and/or unknown or inestimable liabilities.
• Difficulties in successfully integrating Cantaloupe's business, including implementing systems to prevent security breaches or manage credit and fraud risks.
• 365's ability to obtain the expected financing to consummate the proposed transaction.
• Disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees, or suppliers.
• Inability of Cantaloupe to retain and hire key personnel.
• Diversion of management's attention from ongoing business operations.
• Business, economic, and political conditions in the markets where Cantaloupe operates.
• Impact of new or changes in current laws, regulations, credit card association rules, or other industry standards, including privacy and cybersecurity laws.
• Effects relating to the announcement or consummation of the potential transaction on the market price of Cantaloupe's securities.
• Risk of potential shareholder litigation associated with the potential transaction, including resulting expense or delay.
• Regulatory initiatives and changes in tax laws.
• Impact of pandemics or other events on the operations and financial results of Cantaloupe or the combined company.
• General economic conditions.

Future Outlook

The communication contains forward-looking statements regarding the strategic rationale and benefits of the proposed merger, including future financial and operating results, and the expected timing of completion. However, these statements are subject to significant risks and uncertainties, and actual results could differ materially from expectations. Neither Cantaloupe nor 365 undertakes any obligation to update these statements.

Management Comments

• Cantaloupe believes that the disclosures set forth in the Proxy Statement comply fully with all applicable law and denies the allegations in the Complaints and Demand Letters.
• Cantaloupe specifically denies all allegations that any additional disclosure was or is required or material.
• Cantaloupe's board of directors continues to unanimously recommend that you vote FOR the proposals described in the Proxy Statement to be voted on at the Special Meeting.

Industry Context

The analysis by J.P. Morgan, Cantaloupe's financial advisor, utilized a selection of publicly traded companies and M&A transactions within the payment processing, fintech, and integrated commerce solutions sectors. This indicates Cantaloupe operates in a dynamic industry characterized by ongoing consolidation and a focus on digital payment infrastructure, with companies like Block, Inc., Shift4 Payments, Inc., and Toast, Inc. serving as comparable benchmarks. The selected transactions further highlight active M&A within this space, suggesting a competitive landscape for strategic acquisitions.

Comparison to Industry Standards

• J.P. Morgan compared Cantaloupe's financial data with selected publicly traded companies including ACI Worldwide, Inc., Block, Inc., EverCommerce Inc., Flywire Corporation, i3 Verticals, Inc., Lightspeed Commerce Inc., Nayax Ltd., PAR Technology Corporation, Paymentus Holdings, Inc., Repay Holdings Corporation, Shift4 Payments, Inc., and Toast, Inc.
• The analysis of public trading multiples showed FV/2025E Adj. EBITDA Multiples ranging from 6.4x (Repay Holdings) to 43.0x (Toast), FV/2026E Adj. EBITDA Multiples from 5.8x (Repay Holdings) to 31.7x (Toast), and FV/2026E uFCF Multiples from 7.9x (Repay Holdings) to 36.8x (Lightspeed Commerce) and 36.3x (Toast).
• J.P. Morgan's selected reference ranges for Cantaloupe were 11.0x to 14.0x for FV/2025E Adj. EBITDA, 8.5x to 12.5x for FV/2026E Adj. EBITDA, and 8.5x to 15.5x for FV/2026E uFCF.
• The implied equity value per share for Cantaloupe based on these multiples ranged from $5.50 to $12.25, which was compared to the unaffected share price of $8.37 and the merger consideration of $11.20.
• Selected M&A transactions reviewed included Global Payments Inc./Worldpay ($24.25 billion, 11.7x FV/NTM EBITDA), Advent International/Nuvei Corporation ($6.3 billion, 12.6x FV/NTM EBITDA), Brookfield Asset Management Ltd./Network International ($3.0 billion, 14.3x FV/NTM EBITDA), Sixth Street and BGH Capital/Pushpay Holdings Ltd ($1.0 billion, 19.0x FV/NTM EBITDA), Nuvei Corporation/Paya Holdings Inc. ($1.3 billion, 16.0x FV/NTM EBITDA), and Global Payments Inc./EVO Payments, Inc. ($4.0 billion, 18.2x FV/NTM EBITDA).
• J.P. Morgan's selected FV/NTM EBITDA Multiple reference range for Cantaloupe was 11.5x to 19.0x, which indicated an implied equity value per share of approximately $9.00 to $15.25. The merger consideration of $11.20 falls within this range.

Corporate Governance

Legal Proceedings

• A lawsuit, Eric Young v. Cantaloupe, Inc., et al., was filed on August 12, 2025, in the Supreme Court of the State of New York, County of New York, by a purported shareholder alleging negligent misrepresentation and concealment and negligence against Cantaloupe and its board members.
• A second lawsuit, Matthew Wright v. Cantaloupe, Inc., et al., was filed on August 13, 2025, in the same court, by a purported shareholder asserting substantially similar claims.
• Both lawsuits seek an injunction enjoining the merger, rescission of the merger if consummated without additional disclosures, and an award of costs, including attorneys' and experts' fees and expenses.
• Cantaloupe has also received various demand letters alleging deficiencies regarding disclosures in the preliminary and definitive proxy statements.

Stakeholder Impact

• Shareholders: Face potential uncertainty due to litigation, but are provided additional disclosures to aid their voting decision on the merger. The merger consideration of $11.20 per share remains unchanged.
• Management: Attention may be diverted from ongoing business operations due to the litigation and the need to prepare supplemental disclosures.
• Employees, Customers, Suppliers: Face potential disruption to business as usual and relationships if the merger process is significantly impacted or delayed by the litigation.

Next Steps

• Cantaloupe shareholders will vote on the merger proposals at the Special Meeting on September 4, 2025, at 8:00 a.m. Eastern Time.
• The company will continue to work towards securing necessary regulatory approvals and satisfying other closing conditions for the merger.

Key Dates

Recommendation

The filing is a procedural update addressing shareholder litigation related to an ongoing merger. The board continues to unanimously recommend the merger, and the core terms and timeline remain unchanged. For existing shareholders, holding the stock to receive the merger consideration of $11.20 per share, as recommended by the board, is a reasonable course of action, assuming the merger proceeds as expected. The supplemental disclosures aim to mitigate the legal risks without altering the transaction's fundamentals.

Keywords

Merger, Proxy Statement, Shareholder Litigation, Cantaloupe, 365 Retail Markets, SEC Filing, Corporate Governance, Financial Advisor Opinion, Acquisition, Fintech, Payments