MERGER AGREEMENT WITH ALLIANCE DATA SYSTEMS (Alliance Data Systems [Member])

9 Months Ended

Sep. 30, 2014

Alliance Data Systems [Member]

Business Acquisition [Line Items]

Merger Agreement with Alliance Data Systems

MERGER AGREEMENT WITH ALLIANCE DATA SYSTEMS

On September 11, 2014, Conversant entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alliance Data and Merger Sub. The Merger Agreement provides for the merger of Conversant with and into Merger Sub, with Merger Sub continuing as the surviving company and a direct wholly-owned subsidiary of Alliance Data (the “Merger”).

Subject to the terms and conditions of the Merger Agreement, holders of Conversant common stock will receive, for each share of Conversant common stock entitled to the Merger consideration, consideration valued at $35.00 per share, or approximately $2.3 billion in the aggregate (based on the closing price of Alliance Data common stock on September 11, 2014). Each outstanding share of Conversant common stock will be exchanged in the Merger for consideration consisting of (i) 0.07037 shares of Alliance Data common stock and (ii) an amount in cash such that (based on the 15-day volume weighted average price of Alliance Data common stock as of the close of business on the second business day prior to closing (the “Closing VWAP”)), the total consideration per share equals $35.00 (together, the “Standard Merger Consideration”), with a final mix of consideration being determined following the determination of the Closing VWAP. However, the maximum amount of cash Alliance Data will pay per share of Conversant common stock will not exceed $18.62 and the minimum amount of cash Alliance Data will pay per share of Conversant common stock will not be less than $14.98 (the “Collar Range”).

In the event that the maximum or minimum cash amount is reached, the amount of cash per share (i.e. either $18.62 or $14.98) and the stock exchange ratio of 0.07037 would remain fixed at these levels and the value received by Conversant shareholders would float below or above $35.00 respectively outside of the Collar Range. 

As an alternative to the Standard Merger Consideration, Conversant stockholders may instead elect to receive, for each share of Conversant common stock, all stock or all cash consideration, subject to pro ration amongst electing stockholders such that the aggregate amount of cash paid and the aggregate number of shares of Alliance Data common stock issued in the Merger is the same that would be paid and issued if each share of Conversant common stock had been converted into the Standard Merger Consideration. As long as Alliance Data common stock consists of 40% or more in the aggregate of the merger consideration as valued at one day prior to closing, the stock consideration is expected to be tax free to Conversant stockholders.

The respective Boards of Directors of Alliance Data and Conversant have unanimously approved the Merger Agreement, and the Board of Directors of Conversant has agreed to recommend that the Conversant stockholders adopt the Merger Agreement, subject to certain exceptions set forth in the Merger Agreement.

The Merger Agreement contains customary representations, warranties and covenants made by each of Conversant, Alliance Data and Merger Sub. Conversant may not solicit competing acquisition proposals, or, subject to certain exceptions with respect to unsolicited proposals, engage in discussions concerning, or provide confidential information in connection with, any alternative business combinations. Conversant is required to keep Alliance Data promptly and reasonably informed of all unsolicited alternative business combination proposals. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain circumstances, including in connection with the acceptance of an alternative transaction or a material breach of the no-shop covenants, Conversant may be required to pay Alliance Data a termination fee equal to $65 million.

Completion of the Merger is subject to customary conditions, including approval of the Merger by Conversant stockholders and listing of the shares of Alliance Data common stock to be issued in the Merger on the New York Stock Exchange.