SCHEDULE 13D/A: Baron Capital Subsidiary Enters Put-Call Agreement for 17.2% Stake in FIGS, Inc. Class A Common Stock

BAMCO, Inc., a subsidiary of Baron Capital Group, Inc., has entered into a put-call agreement with Thomas J. Tull and related entities to potentially acquire up to 27.8 million shares of FIGS, Inc. Class A Common Stock at $6.25 per share.

Summary

• A Put-Call Agreement was signed on January 7, 2025, between BAMCO, Inc. (Buyer) and Thomas J. Tull, the Tull Family Trust, and First Light Investors, LLC (Sellers) regarding FIGS, Inc. Class A Common Stock.
• The agreement covers a total of 27,833,825 shares of Class A Common Stock, representing 17.2% of the outstanding shares as of October 31, 2024.
• The purchase price for all shares under the agreement is fixed at $6.25 per share.
• The agreement is divided into two tranches:
• Tranche I: Sellers have a put option to sell 19,039,999 shares to Buyer from January 11, 2025, until May 7, 2025.
• Tranche II: After Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) clearance, Sellers have a put option and Buyer has a call option on the remaining shares (27,833,825 minus any Tranche I shares sold) until May 7, 2025.
• The Buyer, BAMCO, Inc., is responsible for all HSR Act filing fees.

Sentiment

Score: 7

Explanation: The agreement provides a structured and clear path for a significant block trade, offering liquidity for sellers and a potential acquisition opportunity for the buyer at a fixed price. The terms are well-defined, and the transaction is a standard financial mechanism. The main uncertainties relate to regulatory approval and future stock price movements relative to the fixed price.

Positives

• Provides a clear exit strategy and price floor ($6.25 per share) for Thomas J. Tull and related entities for a significant portion of their FIGS, Inc. holdings.
• Offers BAMCO, Inc. an option to acquire a substantial stake in FIGS, Inc. at a pre-determined price, potentially below future market value.
• The agreement outlines clear terms and conditions for a large block transaction, reducing uncertainty for the involved parties.

Negatives

• The fixed price of $6.25 per share means sellers might miss out on potential upside if FIGS, Inc. stock price significantly increases above this level before the options are exercised.
• The transaction is subject to regulatory clearance under the HSR Act, which could introduce delays or complications.
• The agreement highlights that both parties may possess material, non-public information about FIGS, Inc., and are not relying on the other's representations, which could imply information asymmetry.

Risks

• Regulatory Risk: The transaction is subject to compliance with the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), and failure to obtain clearance or expiration of the waiting period could prevent or delay the transaction.
• Market Price Fluctuation: If FIGS, Inc. stock price falls significantly below $6.25, the buyer might be obligated to purchase shares at a higher-than-market price if the put option is exercised. Conversely, if the price rises above $6.25, the call option becomes more attractive for the buyer, but the sellers are locked into the lower price.
• Termination Risk: The agreement can be terminated if the transactions violate a nonappealable final order from a Governmental Authority or if the shares are not acquired by the Expiration Date (May 7, 2025).

Future Outlook

The agreement sets a framework for a potential significant transfer of FIGS, Inc. Class A Common Stock from Thomas J. Tull and related entities to BAMCO, Inc. at a fixed price of $6.25 per share, contingent on regulatory approvals and option exercises by May 7, 2025. This provides a future liquidity event for the sellers and a potential acquisition opportunity for the buyer.

Industry Context

This transaction represents a significant block trade agreement involving a substantial stake in FIGS, Inc., a company in the healthcare apparel industry. Such agreements are common mechanisms for large shareholders to manage their positions, providing liquidity or a floor price, while allowing institutional investors to acquire significant stakes outside of open market purchases. The involvement of Baron Capital Group, a prominent investment firm, suggests a strategic interest in FIGS, Inc. at the agreed-upon valuation.

Legal Proceedings

• Sellers represent that there is no pending or threatened action, suit, investigation, or proceeding that is reasonably likely to have a Material Adverse Effect on Sellers or challenge the contemplated transactions.
• Buyer represents that there is no pending or threatened action, suit, investigation, or proceeding that is reasonably likely to have a Material Adverse Effect on Buyer or challenge the contemplated transactions.

Related Party Transactions

• The agreement is between Thomas J. Tull (individual capacity), Thomas J. Tull as trustee of the Tull Family Trust, and First Light Investors, LLC (controlled by Thomas J. Tull's spouse, Alba Tull) as Sellers, and BAMCO, Inc. as Buyer. This constitutes a transaction between entities controlled by or related to Thomas J. Tull and an external buyer.

Stakeholder Impact

• Shareholders: The agreement provides a potential floor price for a significant block of shares, which could be seen as a positive for existing shareholders by signaling a valuation, or a negative if the fixed price is below future market expectations. The transaction could also impact liquidity and ownership concentration.
• Company (FIGS, Inc.): While not a direct party to the agreement, the transaction involves a large block of its Class A Common Stock, potentially shifting a significant ownership stake to BAMCO, Inc., which could influence future strategic decisions or governance depending on BAMCO's intentions.

Next Steps

• Sellers may exercise the Tranche I Put Option between January 11, 2025, and May 7, 2025.
• Buyer and Sellers must make an appropriate filing under the HSR Act within 10 days of the agreement date (by January 17, 2025).
• Buyer and Sellers must use reasonable best efforts to obtain HSR Act clearance.
• Upon HSR Satisfaction Date, Sellers may exercise the Tranche II Put Option or Buyer may exercise the Call Option until May 7, 2025.
• Closing of the options (Put-Call Closing) will occur on the first Business Day after the exercise notice.

Key Dates

Keywords

FIGS Inc., Class A Common Stock, Put-Call Agreement, BAMCO Inc., Baron Capital Group, Thomas J. Tull, Tull Family Trust, First Light Investors, SEC Filing, Schedule 13D/A, Stock Options, Block Trade, HSR Act, Share Sale, Investment