Item 1.01.
|
Entry into a Material Definitive Agreement
|
Unit Purchase Agreement
On August 3, 2017, GrubHub Holdings, Inc. (“Purchaser”), a wholly owned subsidiary of Grubhub Inc. (the “Company”) entered into a Unit Purchase Agreement (the “Purchase Agreement”) by and among the Company, Purchaser, Yelp Inc. (“Seller”), and Eat24 LLC, a wholly owned subsidiary of Seller (“Eat24”). Pursuant to the Purchase Agreement, Purchaser agreed to acquire all of the issued and outstanding equity interests of Eat24 from Seller (the “Acquisition”) for $287,500,000 in cash payable at the closing, subject to certain adjustments for net working capital, indebtedness and selling expenses. Of such amount, $28.75 million (the “Escrow Fund”) will be held in escrow for an 18-month period after closing to secure Purchaser’s indemnification rights under the Purchase Agreement.
Seller also agreed to transfer to Eat24 (the “Asset Transfer”) certain assets of Seller immediately prior to the closing of the Acquisition, which will consist of assets that are not then owned by Eat24 that are material to the operation of, or necessary to operate, the online and mobile food ordering service business conducted by Seller and Eat24 (the “Business”). After the closing of the Acquisition, Seller will continue to own and run all of its business operations that are not related to the Business.
The Purchase Agreement contains representations, warranties and covenants customary for a transaction of this nature. Subject to certain limitations, Seller, on the one hand, and Purchaser, on the other hand, have agreed to indemnify each other for breaches of representations, warranties and covenants, certain tax liabilities of Eat24 and the Business for pre-closing periods and other specified matters, and the Seller’s indemnification obligations are secured, in part, by the Escrow Fund.
The consummation of the Acquisition is subject to customary closing conditions, including, but not limited to: the absence of any legal order prohibiting the consummation of the Acquisition; the absence of conditions or circumstances constituting a material adverse effect with respect to Eat24 and the Business, the consummation of the Asset Transfer, receipt of approval, or termination of the waiting period, under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “Antitrust Condition”), the accuracy of the representations and warranties of the parties to the Purchase Agreement, the parties’ performance and compliance in all material respects with the agreements and covenants contained in the Purchase Agreement, the parties’ obtainment of certain third-party consents under material agreements and an agreed upon number of Seller’s employees accepting employment with Eat24.
The Purchase Agreement may be terminated by Seller or Purchaser under certain circumstances specified therein, including the right of Seller or Purchaser, as the case may be, to terminate the Purchase Agreement if the transactions contemplated therein have not been consummated within ninety (90) days after the date of the Agreement (the “Termination Date”), but, if as of such date all other conditions to the closing of the Acquisition have been satisfied or waived other than the conditions relating to antitrust and regulatory approval or the absence of any legal restraint that enjoins or prohibits consummation of the merger relating to antitrust or regulatory approvals, the Termination Date will be automatically extended to the date that is one hundred and eighty (180) days after the date of such extension.
In the event the Purchase Agreement is terminated by either Seller or Purchaser as a result of (i) the failure of the Acquisition to occur on or before the Termination Date (as it may be extended) due to the failure to satisfy the Antitrust Condition or (ii) any antitrust-related final, non-appealable order or injunction prohibiting the closing of the Acquisition, then Purchaser will be required to pay to Seller a termination fee of $15,000,000.
The Purchase Agreement will be filed to provide our stockholders with information regarding its terms. It is not intended to provide any other factual information about Seller, Purchaser, the Company, Eat24 and the Business. The parties to the Purchase Agreement have made customary representations and warranties in the Purchase Agreement, which were made solely for the benefit of the parties to the Purchase Agreement and:
|
•
|
should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
|
•
|
may have been qualified in the Purchase Agreement by disclosures that were made to the other parties in connection with the negotiation of the Purchase Agreement;
|
|
•
|
may apply contractual standards of “materiality” that are different from “materiality” under applicable securities laws; and
|
|
•
|
were made only as of the date o
f the Purchase Agreement or such other date or dates as may be specified in the Purchase Agreement.
|
The above description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, copies of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2017.