FORG ForgeRock Inc

The paragraphs under the caption “Litigation Relating to the Merger” on page 14 are amended and restated by replacing them with the following:

 

On November 28, 2022, an individual action was filed against ForgeRock, the current members of the ForgeRock Board, and former ForgeRock directors David DeWalt and Paul Madera by a purported ForgeRock stockholder in the U.S. District Court for the Southern District of New York.  That action is captioned O’Dell v. ForgeRock, Inc., et al., No. 1:22-cv-10077-ALC (which we refer to as the “O’Dell action” “stockholder litigation”).  The complaint O’Dell action generally alleges that ForgeRock’s preliminary proxy statement contained false or misleading statements regarding the merger in violation of Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9.  Specifically, the complaint alleges that the preliminary proxy statement contains materially incomplete and misleading information concerning the financial projections prepared by ForgeRock management and the financial analysis performed by J.P. Morgan in connection with rendering its fairness opinion.  The O’Dell action seeks, among other things, to (1) enjoin defendants from consummating the merger unless and until defendants disseminate revised disclosures; (2) rescind the merger and recover damages; and (3) reasonable attorneys’ and expert fees and expenses.

 

 

ForgeRock believes that the stockholder litigation is without merit, but there can be no assurance that ForgeRock will ultimately prevail in the stockholder litigation or other such lawsuits.  Additional lawsuits may be filed before the special meeting and/or the consummation of the merger.

 

Under the caption “Background of the Merger,” the fourth full paragraph on page 36 is amended and restated by replacing it with the following:

 

On June 29, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The representatives of J.P. Morgan reviewed a preliminary financial analysis of the May proposal. The Strategic Committee reviewed J.P. Morgan’s relationship disclosure letter, which disclosed fees received by J.P. Morgan from ForgeRock and Thoma Bravo and their respective affiliates. Mr. Rosch also provided an update on ForgeRock’s anticipated results for the second quarter of 2022, including relative to ForgeRock’s publicly issued guidance for this period (which we refer to as the “Q2 2022 results”). It was noted that ForgeRock would not meet its publicly issued guidance for annual recurring revenue for the second quarter of 2022.

Under the caption “Background of the Merger,” the fourth full paragraph on page 39 is amended and restated by replacing it with the following:

On September 14, 2022, the ForgeRock Board met, with representatives of management and Wilson Sonsini in attendance. The Strategic Committee updated the ForgeRock Board on the status of discussions with Thoma Bravo, Sponsor A, Sponsor B and Sponsor C. Representatives of management reviewed management’s then-updated business plan as of September 14, 2022, including the unaudited financial prospective financial information for fiscal years 2022 through 2024 included in the business plan as of September 2022 (which we refer to as the “September 2022 business plan”). Additional information about the preparation and substance of the September 2022 business plan is contained in the section of this proxy statement captioned “-Unaudited Prospective Financial Information.” The ForgeRock Board authorized sharing the September 2022 business plan with interested potential acquirors. The September 2022 business plan was provided to Thoma Bravo, Sponsor A and Sponsor B in due diligence, and also J.P. Morgan for purposes of its ongoing financial analyses.

Under the caption “Public Trading Multiples,” the last paragraph on page 48 and the bullets and first and second paragraphs on page 49 are amended and restated by replacing them with the following:

 

 

 

 

 

 

 

The companies selected by J.P. Morgan (collectively, the “Selected Companies”) were chosen because they are publicly traded companies with operations and businesses that, for the purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to those of ForgeRock and/or one or more of its businesses. The Selected Companies may be considered similar to ForgeRock or such businesses based on the nature of their assets and operations; however, none of the companies selected is identical or directly comparable to ForgeRock or such businesses, and certain of these companies may have characteristics that are materially different from those of ForgeRock or such businesses. J.P. Morgan’s analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect ForgeRock or such businesses.

Under the caption “Selection Transaction Analysis,” the table and second paragraph on page 50 are amended and restated by replacing them with the following:

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Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and professional judgment, J.P. Morgan selected a multiple reference range of 6.0x to 10.0x for FV/NTM Revenue and applied it to ForgeRock’s projected revenue for the 12 months ended June 30, 2023, derived from the September 2022 business plan (totaling $244 million), to derive a range of firm values for ForgeRock, which was then adjusted to take into account ForgeRock’s net debt totaling $(307.0 million) in the aggregate as of June 30, 2022, to derive a range of implied equity values for ForgeRock. This analysis indicated a range of implied equity values per share of our common stock, rounded to the nearest $0.05, of $18.15 to $27.80, which was compared to (1) the closing price per share of our Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.

Under the caption “Discounted Cash Flow Analysis,” the last paragraph on page 50 going on to page 51 is amended and restated by replacing it with the following:

J.P. Morgan calculated the present value of the future standalone unlevered after-tax free cash flows for fiscal year 2023 through fiscal year 2032 (which we refer to as the ‘‘DCF Projection Period’’) based upon the September 2022 business plan and the September 2022 extrapolations. J.P. Morgan also calculated a range of terminal values for ForgeRock by applying a range of perpetuity growth rates, as provided by management of ForgeRock, ranging from 4.0% to 5.0%, of the unlevered free cash flows of ForgeRock during the final year of the DCF Projection Period. The unlevered free cash flows and the range of terminal values were then discounted from December 31 of each year to present values as of December 31, 2022 using a mid-year convention and a range of discount rates from 10.00% to 12.00%. The discount rate range was selected by J.P. Morgan based on J.P. Morgan’s analysis of the weighted average cost of capital for ForgeRock. As inputs to the weighted average cost of capital, J.P. Morgan took into account, among other things, risk-free rate, equity risk premium, levered beta, pre-tax cost of debt, post-tax cost of debt, and target debt to total capitalization ratio. The present values of the unlevered free cash flows and range of terminal values were then aggregated, and adjusted by the amount of ForgeRock’s estimated net debt of approximately $(295.2 million) as of December 31, 2022, as provided by ForgeRock management.

 

Under the caption “Analyst Price Targets” on page 51, the paragraph is amended and restated by replacing it with the following:

 

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed the certain publicly available equity research analyst price targets range for the Class A common stock as of October 7, 2022, obtained from FactSet, and noted that such price target range was $17.00 per share to $26.00 per share, and compared that price target range to (1) the closing price per share of Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.

Under the caption “Unaudited Prospective Financial Information,” the third paragraph on page 55 and adjoining table on pages 55 to 56 are amended and restated by replacing them with the following:

 

The following table presents a summary of the September 2022 business plan, together with the September 2022 extrapolations. The September 2022 business plan and the September 2022 extrapolations included estimated Unlevered Free Cash Flow for fiscal years 2023 through 2032 prepared by ForgeRock management for use by J.P. Morgan in connection with its opinion delivered to the ForgeRock Board as to the fairness, from a financial point of view, of the consideration to be paid to the holders of our common stock and related financial analyses (as described in more detail in the section of this proxy statement captioned “-Opinion of J.P. Morgan Securities LLC”). The September 2022 business plan was updated by ForgeRock management to reflect ForgeRock’s results through the third quarter of 2022 and business trends that were available as of the time it was prepared on September 14, 2022. ForgeRock management made various assumptions when preparing the unaudited prospective financial information for fiscal years 2022 through 2024 included in the September 2022 business plan, including 32% year-over-year growth in ARR for fiscal years 2023 and 2024 and other revenue and expense assumptions generally consistent with the July 2022 business plan. The extrapolations of such unaudited prospective financial information for fiscal years 2025 through 2032 included in the September 2022 extrapolations were prepared using various assumptions, including (1) deceleration in year-over-year growth in Total Revenue from 29% to 15% from fiscal years 2025 through 2032; (2) gross margins in fiscal years 2025 through 2032 consistent with estimates for fiscal years 2023 and 2024; and (3) over the extrapolated period, revenue growth outpacing operating expense growth.

 

 

The following section is added beneath the section entitled “Employment Arrangements Following the Merger” on page 61:

 

 

The paragraphs under the caption “Litigation Relating to the Merger” on page 72 are amended and restated by replacing them with the following:

On November 28, 2022, an individual action was filed against ForgeRock, the current members of and the ForgeRock Board, and former ForgeRock directors David DeWalt and Paul Madera by a purported ForgeRock stockholder in the U.S. District Court for the Southern District of New York.  That action is captioned O’Dell v. ForgeRock, Inc., et al., No. 1:22-cv-10077-ALC.  The complaint O’Dell action generally alleges that ForgeRock’s preliminary proxy statement contained false or misleading statements regarding the merger in violation of Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9.  Specifically, the complaint alleges that the preliminary proxy statement contains materially incomplete and misleading information concerning the financial projections prepared by ForgeRock management and the financial analysis performed by J.P. Morgan in connection with rendering its fairness opinion.  The O’Dell action seeks, among other things, to (1) enjoin defendants from consummating the merger unless and until defendants disseminate revised disclosures; (2) rescind the merger and or recover damages in the event that the merger is completed; and (3) reasonable attorneys’ and expert fees and expenses.

ForgeRock believes that the stockholder litigation is without merit, but there can be no assurance that ForgeRock will ultimately prevail in the stockholder litigation or other such lawsuits. Additional lawsuits may be filed before the special meeting and/or the consummation of the merger.

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If you have any questions concerning the special meeting, the proxy statement or this amendment, would like additional copies of the proxy statement or this amendment, or need help submitting your proxy or voting your shares of common stock, please contact our proxy solicitor:

 

1407 Broadway, 27^th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

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