As filed with the United States Securities and Exchange Commission on October 29, 2021.
Registration No: 333-259054
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
_____________________________
| | 2834 | 86-1691173 | ||
| (State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
c/o Corvex Management LP
667 Madison Avenue
New York, New York 10065
Telephone: (212) 474-6745
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
_____________________________
Eli Casdin
c/o Corvex Management LP
667 Madison Avenue
New York, New York 10065
Telephone: (212) 474-6745
(Name, address, including zip code, and telephone number, including area code, of agent for service)
_____________________________
Copies to:
|
Joel Rubinstein |
William D. Collins |
_____________________________
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the transactions contemplated by the Merger Agreement described in the included proxy statement/prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| | ☒ | Smaller reporting company | | |||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act Rule 14-1(d) (Cross-Border Third-Party Tender Offer) ☐
CALCULATION OF REGISTRATION FEE
|
Title of Each Class of Securities |
Amount to be |
Proposed |
Proposed |
Amount of |
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|
Class A common stock, par value $0.0001 per share |
415,000,000 |
(1) |
$ |
NA |
(2) |
$ |
20,264.22 |
(2) |
$ |
2.21 |
(3)(4) |
||||
|
Total |
|
|
|
|
|
|
|
||||||||
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(1) Based on the maximum number of shares of Class A common stock, par value $0.0001 per share (“CMLS III Class A common stock”), of the registrant estimated to be issued in connection with the business combination described herein (“Business Combination”). Such maximum number of shares of CMLS III Class A common stock is based on (a) up to 365,000,000 shares of CMLS III Class A common stock to be issued to the holders of shares of EQRx, Inc., plus (b) up to 50,000,0000 of CMLS III Class A common stock to be issued as Earn-Out Shares (as defined below).
(2) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended. EQRx, Inc. is a private company, no market exists for its securities, and EQRx, Inc. has an accumulated deficit. Therefore, the proposed maximum aggregate offering price is one-third of the aggregate par value of the EQRx, Inc. securities expected to be exchanged in the Business Combination.
(3) Calculated pursuant to Rule 457 under the Securities Act by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091.
(4) Previously paid.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION DATED OCTOBER 29, 2021
PROXY STATEMENT/PROSPECTUS
DATED , 2021
CM LIFE SCIENCES III INC.
c/o Corvex Management
667 Madison Avenue
New York, New York
Dear Stockholder of CM Life Sciences III Inc.:
You are cordially invited to attend the special meeting of stockholders (“Special Meeting”) of CM Life Sciences III Inc. (“we,” “us,” “our”, “CMLS III” or the “Company”) to be held on [day], [date] at [time] Eastern time at [virtual meeting link]. In light of ongoing developments related to coronavirus (COVID-19), after careful consideration, the Company has determined that the Special Meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance and participation while safeguarding the health and safety of our stockholders, directors and management team. You or your proxyholder will be able to attend and vote at the Special Meeting online by visiting [virtual meeting link] and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the proxy statement/prospectus.
On August 5, 2021, the Company and its wholly owned subsidiary, Clover III Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (as amended by an amendment thereto dated as of September 21, 2021, and an amendment thereto dated as of October 28, 2021, and as may be further amended from time to time, the “Merger Agreement”) with EQRx, Inc. (“EQRx”), a composite copy of which is included as Annex A to this proxy statement/prospectus. If the Merger Agreement is approved by the Company’s stockholders at the Special Meeting (and all other conditions pursuant to the Merger Agreement are either satisfied or waived), Merger Sub will merge with and into EQRx, with EQRx surviving the merger as a wholly owned subsidiary of the Company (“Merger”). In connection with the consummation of the transactions contemplated by the Merger Agreement (“Business Combination”), the Company will change its name to EQRx, Inc. As described in this proxy statement/prospectus, CMLS III’s stockholders are being asked to consider and vote upon, among other things, the Business Combination and the other proposals set forth herein. For ease of reference, certain capitalized terms used in this proxy statement/prospectus are defined below in “Frequently Used Terms.”
Under the Merger Agreement, CMLS III has agreed to acquire all of the outstanding equity interests of EQRx for at least $3.65 billion in aggregate consideration consisting of 365,000,000 shares of CMLS III Class A common stock (the “Closing Merger Consideration”) and up to an additional 50,000,000 shares of CMLS III Class A common stock pursuant to the Earn-Out Shares (as defined below). Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (“Effective Time”), and as further described in this proxy statement/prospectus, (i) each share of EQRx common stock and EQRx preferred stock held in EQRx’s treasury or owned by the Company, Merger Sub or EQRx immediately prior to the Effective Time (each an “Excluded Share”), will be cancelled and no consideration will be paid or payable with respect thereto and (ii) each share of EQRx stock, other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement), that is issued and outstanding immediately prior to the Effective Time will be cancelled and automatically deemed for all purposes to represent the right to receive a portion of the total consideration, with each EQRx’s stockholder (as applicable) being entitled to receive (the consideration in clauses (a) and (b), the “Merger Consideration”):
(a) a number of shares of Class A common stock, par value $0.0001 per share, of CMLS III (“CMLS III Class A common stock”) equal to the quotient of: (i) the product of (x) such stockholder’s total shares of EQRx stock (with the EQRx common stock and preferred
stock (determined on an as-converted basis) included as a single class) multiplied by (y) the per share amount calculated in accordance with the Merger Agreement, divided by (ii) $10.00; and
(b) such stockholder’s earn-out pro rata share of any Earn-Out Shares (as defined below) to which such stockholder is entitled pursuant to the terms of the Merger Agreement.
In addition, at the Effective Time, each outstanding option to purchase EQRx common stock will be exchanged for options to purchase CMLS III Class A common stock, and each outstanding EQRx restricted stock award will be cancelled and converted into restricted stock awards of CMLS III Class A common stock calculated in accordance with the terms of the Merger Agreement.
The exchange ratio is currently estimated to be 0.6267 shares of CMLS III Class A common stock per share of EQRx’s common stock and preferred stock. The exchange ratio will be determined at Closing in accordance with the Merger Agreement and is subject to change.
Following the closing of the Business Combination, and as additional consideration for the Merger and the other transactions, if at any time between the 12-month anniversary of the closing and the 36-month anniversary of the closing (inclusive of the first and last day of such period, the “Earn-Out Period”), the closing sale price of a share of New EQRx common stock (as defined below) as reported on Nasdaq for a period of at least 20 days out of 30 consecutive Trading Days (as defined in the Merger Agreement) ending on the Trading Day immediately prior to the date of determination is greater than or equal to $12.50 (“Triggering Event I”) or $16.50 (“Triggering Event II” and, together with Triggering Event I, the “Triggering Events”), then we will deliver or cause to be delivered to each applicable EQRx stockholder’s Earn-Out Pro Rata shares (as defined in the Merger Agreement) in accordance with such stockholder’s respective earn-out pro rata share (other than holders of Dissenting Shares, as defined in the Merger Agreement), and each employee or individual service provider of EQRx, in each case whom the board of directors of EQRx designates as an Earn-Out Service Provider prior to the Closing and who enters into an earn-out award agreement (such employee or individual service provider, an “Earn-Out Service Provider”) (in accordance with its respective earn-out pro rata share and, in the case of the Earn-Out Service Providers, in accordance with the terms of the applicable earn-out award agreement), 35,000,000 shares of New EQRx common stock upon the occurrence of Triggering Event I (the “Triggering Event I Earn-Out Shares”) and 15,000,000 shares of New EQRx common stock upon the occurrence of Triggering Event II (the “Triggering Event II Earn-Out Shares”, together with the Triggering Event I Earn-Out Shares, the “Earn-Out Shares”) (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to the New EQRx common stock occurring on or after the Closing), upon the terms and subject to the conditions set forth in the Merger Agreement and the other transaction agreements and, in the case of the Earn-Out Service Providers, subject to the additional requirements set forth in the Merger Agreement and the applicable earn-out award agreement.
The Business Combination will have no effect on the CMLS III Class A common stock that is issued and outstanding as of immediately prior to the Effective Time, which will continue to remain outstanding, although it will be reclassified as “common stock”, which we sometimes refer to herein as “New EQRx common stock.” The CMLS III Class B common stock that is held by the Company’s Initial Stockholders and referred to as the Founder Shares will automatically convert into CMLS III Class A common stock concurrently with or immediately following the consummation of the Business Combination on a one-for-one basis and be reclassified as “common stock.”
Upon the Closing, the former EQRx stockholders are expected to hold, in the aggregate, approximately 64.4% of the outstanding shares of New EQRx. Refer to the pro forma post-combination common stock issued and outstanding immediately after the Business Combination and PIPE Investment (as defined below) in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
In connection with the Business Combination, the Company entered into subscription agreements, each dated as of August 5, 2021 (“Subscription Agreements”), with certain institutional investors (collectively, “PIPE Investors”), including certain stockholders of EQRx and certain affiliates of CMLS Holdings III LLC (“Sponsor”), pursuant to which, among other things, the Company agreed to issue and sell to the PIPE Investors, in private placements to close immediately prior to the Closing, an aggregate of 120,000,000 shares of CMLS III Class A common stock at $10.00 per share, for an aggregate purchase price of $1,200,000,000 (“PIPE Investment”).
The Company and EQRx cannot complete the Business Combination unless the Company’s stockholders approve the Business Combination, including the issuance of common stock to EQRx stockholders as Merger Consideration, and certain of the other proposals contained herein. The Company is sending you this proxy statement/prospectus to ask you to vote in favor of the Business Combination Proposal, as described below, and the other matters described in this proxy statement/prospectus.
At the Special Meeting, the Company’s stockholders will be asked to consider and vote upon a proposal (“Business Combination Proposal” or “Proposal No. 1”) to adopt the Merger Agreement, a copy of which is included in the accompanying proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby, including the Business Combination. In addition, you are being asked to consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq Stock Market (“Nasdaq”) listing rules, the issuance of more than 20% of the Company’s outstanding common stock in connection with the Business Combination and the Subscription Agreements, including up to 365,000,000 shares of common stock to the EQRx equityholders, up to 50,000,000 Earn-Out Shares to the applicable EQRx equityholders and Earn-Out Service Providers and 120,000,000 shares of common stock to the PIPE Investors, plus any additional shares pursuant to subscription agreements that we may enter into prior to the Closing (“Nasdaq Stock Issuance Proposal” or “Proposal No. 2”); a proposal to approve the EQRx, Inc. 2021 Stock Option and Incentive Plan, a copy of which is included in the accompanying proxy statement/prospectus as Annex C (“2021 Incentive Plan”) (“Incentive Plan Proposal” or “Proposal No. 3”); a proposal to approve the EQRx, Inc. 2021 Employee Stock Purchase Plan, a copy of which is included in the accompanying proxy statement/prospectus as Annex D (“ESPP”) (“ESPP Proposal” or “Proposal No. 4”); a proposal to adopt the amended and restated certificate of incorporation in the form included in the accompanying proxy statement/prospectus as Annex E (“Charter Amendment Proposal” or “Proposal No. 5”); a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal or the ESPP Proposal (“Adjournment Proposal” or “Proposal No. 6”).
Each of these proposals is more fully described in this proxy statement/prospectus, which each stockholder is encouraged to carefully read.
Pursuant to our current Certificate of Incorporation (“Current Charter”), we are providing our public stockholders with the opportunity to redeem, upon the Closing, shares of common stock for cash equal to the pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the trust account (“Trust Account”) that holds the proceeds of our IPO (including interest not previously released to the Company to pay franchise and income taxes), subject to certain limitations. For illustrative purposes, based on the balance of the Trust Account of approximately $552 million as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Public stockholders may elect to redeem their shares even if they vote for the Business Combination. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. If we receive valid redemption requests from holders of public shares prior to the redemption deadline, we may, at our sole discretion, following the redemption deadline and until the date of Closing, seek and permit withdrawals by
one or more of such holders of their redemption requests. We may select which holders to seek such withdrawals of redemption requests from based on any factors we may deem relevant, and the purpose of seeking such withdrawals may be to increase the funds held in the Trust Account, including where we otherwise would not satisfy the closing condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses.
Each redemption of shares of common stock by our public stockholders will reduce the amount in the Trust Account. The Merger Agreement provides that EQRx’s obligation to consummate the Business Combination is subject to the condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses. This condition to closing in the Merger Agreement is for the sole benefit of, and may be waived by, EQRx. If, as a result of redemptions of common stock by our public stockholders, this condition is not met (or waived by EQRx), then EQRx may elect not to consummate the Business Combination. In addition, in no event will we redeem shares of our common stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Holders of our outstanding public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that none of our public stockholders exercise their redemption rights with respect to their shares of common stock.
Our Sponsor and the Company’s officers and directors at the time of our IPO (together, our “Initial Stockholders”) have agreed to vote their shares of common stock in favor of the Business Combination. Currently, our Initial Stockholders own approximately 20% of our issued and outstanding shares of common stock. In addition, our Initial Stockholders have agreed to waive their redemption rights with respect to such shares.
We are providing the accompanying proxy statement/prospectus and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the Special Meeting (including following any adjournments or postponements of the Special Meeting). Information about the Special Meeting, the Business Combination and other related business to be considered by the Company’s stockholders at the Special Meeting is included in this proxy statement/prospectus. Whether or not you plan to attend the Special Meeting, we urge all Company stockholders to read this proxy statement/prospectus, including the Annexes and the accompanying financial statements of the Company and EQRx, carefully and in their entirety. In particular, we urge you to carefully read the section entitled “Risk Factors” of this proxy statement/prospectus.
After careful consideration, our Board has approved the Merger Agreement and the transactions contemplated therein, and recommends that our stockholders vote “FOR” adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to our stockholders in the accompanying proxy statement/prospectus. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. Please see the section entitled “Proposal No. 1 — The Business Combination — Proposal — Interests of Certain Persons in the Business Combination” for additional information.
Approval of each of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting. Approval of the Charter Amendment Proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of our common stock. The parties have also agreed to condition the Charter Amendment Proposal on the affirmative vote of the holders of a majority of the shares of CMLS III Class A common stock then outstanding and entitled to vote thereon, voting separately as a single series.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the Special Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting. Even if you have voted by proxy, you may still vote during the Special Meeting by visiting [virtual meeting link] with your 12-digit control number assigned by Continental Stock Transfer & Trust Company included on your proxy card or obtained from them via email. The transactions contemplated by the Merger Agreement will be consummated only if the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal are approved at the Special Meeting. The proposals in this proxy statement/prospectus (other than the Adjournment Proposal) are conditioned on the approval of the Business Combination Proposal.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Special Meeting, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting and wish to vote at the Special Meeting, you may revoke your proxy and vote at the Special Meeting.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT THE COMPANY REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO THE COMPANY’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE SCHEDULED DATE OF THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
On behalf of our Board, I would like to thank you for your support of CM Life Sciences III Inc. and look forward to a successful completion of the Business Combination.
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By Order of the Board of Directors, |
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, 2021 |
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/s/ Eli Casdin |
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Eli Casdin |
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Chief Executive Officer |
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated , 2021 and is expected to be first mailed to the Company’s stockholders on or about , 2021.
This proxy statement/prospectus incorporates important information about us that is not included or delivered with this proxy statement/prospectus. We will provide this information to you at no charge upon written or oral request directed to . In order to ensure timely delivery of this information, any request should be made by , 2021, five business days prior to the Special Meeting.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
CM LIFE SCIENCES III INC.
TO BE HELD ON , 2021
To the Stockholders of CM Life Sciences III Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of the stockholders of CM Life Sciences III Inc., a Delaware corporation (“Company”), will be held on [day], [date] at [time] Eastern time at [virtual meeting link] (“Special Meeting”). In light of ongoing developments related to coronavirus (COVID-19), after careful consideration, the Company has determined that the Special Meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance and participation while safeguarding the health and safety of our stockholders, directors and management team. You or your proxyholder will be able to attend and vote at the Special Meeting online by visiting [virtual meeting link] and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the proxy statement/prospectus.
At the Special Meeting, you will be asked to consider and vote on proposals to:
1. Proposal No. 1 — The Business Combination Proposal — To approve and adopt the Agreement and Plan of Merger, dated as of August 5, 2021 (as amended by an amendment thereto dated as of September 21, 2021 and an amendment thereto dated as of October 28, 2021, and as may be further amended from time to time, the “Merger Agreement”), by and among the Company, its wholly owned subsidiary, Merger Sub, and EQRx, Inc. (“EQRx”), a copy of which is included in this proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby (“Business Combination”), including the merger of Merger Sub with and into EQRx, with EQRx surviving the Merger as a wholly owned subsidiary of the Company, and the issuance of common stock to EQRx stockholders as Merger Consideration;
2. Proposal No. 2 — The Nasdaq Stock Issuance Proposal — To approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the Company’s outstanding common stock in connection with the Business Combination, including up to 120,000,000 shares of our common stock in connection with the subscription agreements, each dated as of August 5, 2021 (“Subscription Agreements”), with certain institutional investors (collectively, “the PIPE Investors”), which includes affiliates of our Sponsor that subscribed for 10,250,000 shares of common stock, and up to 365,000,000 shares of our common stock to EQRx equityholders and up to 50,000,000 Earn-Out Shares, plus any additional shares pursuant to subscription agreements we may enter into prior to Closing;
3. Proposal No. 3 — The Incentive Plan Proposal — To approve the EQRx, Inc. 2021 Stock Option and Incentive Plan, a copy of which is included in this proxy statement/prospectus as Annex C (“2021 Incentive Plan”), including the authorization of the initial share reserve under the 2021 Incentive Plan;
4. Proposal No. 4 — The ESPP Proposal — To approve the EQRx, Inc. 2021 Employee Stock Purchase Plan, a copy of which is included in this proxy statement/prospectus as Annex D (“ESPP”), including the authorization of the initial share reserve under the ESPP;
5. Proposal No. 5 — The Charter Amendment Proposal — To adopt the A&R Certificate of Incorporation in the form included in the accompanying proxy statement/prospectus as Annex E, including a change to the Company’s stock classes and an increase in the number of authorized shares of the Company; and
i
6. Proposal No. 6 — The Adjournment Proposal — To approve, if necessary, the adjournment of the Special Meeting to a later date or dates to permit further solicitation and votes of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal the Incentive Plan Proposal or the ESPP Proposal. This proposal will only be presented at the Special Meeting if there are not sufficient votes to approve the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal or the ESPP Proposal.
The above matters are more fully described in this proxy statement/prospectus, which also includes, as Annex A, a copy of the Merger Agreement. We urge you to carefully read this proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements of the Company and EQRx.
The record date for the Special Meeting is [day], [date]. Only stockholders of record at the close of business on that date may vote at the Special Meeting or any adjournment thereof. A complete list of our stockholders of record entitled to vote at the Special Meeting will be available for ten days before the Special Meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting and electronically during the Special Meeting at [virtual meeting link].
Pursuant to our Current Charter, we are providing our public stockholders with the opportunity to redeem, upon the Closing, shares of common stock for cash equal to the pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the Trust Account that holds the proceeds of our IPO (including interest not previously released to the Company to pay franchise and income taxes), subject to certain limitations. For illustrative purposes, based on the balance of the Trust Account of approximately $552 million as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Public stockholders may elect to redeem their shares even if they vote for the Business Combination. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. If we receive valid redemption requests from holders of public shares prior to the redemption deadline, we may, at our sole discretion, following the redemption deadline and until the date of Closing, seek and permit withdrawals by one or more of such holders of their redemption requests. We may select which holders to seek such withdrawals of redemption requests from based on any factors we may deem relevant, and the purpose of seeking such withdrawals may be to increase the funds held in the Trust Account, including where we otherwise would not satisfy the closing condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses.
Our Initial Stockholders (as defined above), who own approximately 20% of our issued and outstanding shares of common stock, have agreed to vote their shares of common stock in favor of the Business Combination. In addition, our Initial Stockholders have agreed to waive their redemption rights with respect to such shares, which will be excluded from the pro rata calculation used to determine the per-share redemption price.
Each redemption of shares of common stock by our public stockholders will reduce the amount in the Trust Account. The Merger Agreement provides that EQRx’s obligation to consummate the Business Combination is subject to the condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses. This condition to closing in the Merger Agreement is for the sole benefit of, and may be waived by, EQRx. If, as a result of redemptions of common stock by our public stockholders, this condition is not met (or waived by EQRx), then EQRx may elect not to consummate the Business Combination. In addition,
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in no event will we redeem shares of our common stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Holders of our outstanding public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in this proxy statement/prospectus assumes that none of our public stockholders exercise their redemption rights with respect to their shares of common stock.
In connection with the Business Combination, the Company entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, the Company agreed to issue and sell to the PIPE Investors, in private placements to close immediately prior to the Closing, an aggregate of 120,000,000 shares of common stock at $10.00 per share, for an aggregate purchase price of $1,200,000,000.
A majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote must be present in person or by proxy to constitute a quorum for the transaction of business at the Special Meeting. The Board recommends that you vote “FOR” each of these proposals.
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD SHARES OF OUR CLASS A COMMON STOCK THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SHARES OF OUR CLASS A COMMON STOCK AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST, INCLUDING THE LEGAL NAME, TELEPHONE NUMBER AND ADDRESS OF THE BENEFICIAL OWNER OF THE SHARES FOR WHICH REDEMPTION IS REQUESTED, TO THE TRANSFER AGENT THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH AND (III) DELIVER YOUR SHARES OF OUR CLASS A COMMON STOCK TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DTC’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE THE SECTION ENTITLED “SPECIAL MEETING OF COMPANY STOCKHOLDERS — REDEMPTION RIGHTS” IN THIS PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.
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By Order of the Board of Directors, |
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/s/ Eli Casdin |
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Eli Casdin |
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Chief Executive Officer |
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New York, New York |
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, 2021 |
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ABOUT THIS DOCUMENT
This document, which forms part of a registration statement on Form S-4 filed with the SEC by CMLS III, constitutes a prospectus of CMLS III under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock of CMLS III to be issued to EQRx’s stockholders under the Merger Agreement. This document also constitutes a proxy statement of CMLS III under Section 14(a) of the Exchange Act.
You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to CMLS III stockholders nor the issuance by CMLS III of its common stock in connection with the Business Combination will create any implication to the contrary.
Information contained in this proxy statement/prospectus regarding CMLS III has been provided by CMLS III and information contained in this proxy statement/prospectus regarding EQRx has been provided by EQRx.
This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING |
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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
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THE COMPANY’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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vi
SUMMARY TERM SHEET
This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals for Stockholders” and “Summary of the Proxy Statement/Prospectus,” summarizes certain information contained in this proxy statement/prospectus, but does not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, including the attached Annexes, for a more complete understanding of the matters to be considered at the Special Meeting. In addition, for definitions used commonly throughout this proxy statement/prospectus, including this summary term sheet, please see the section entitled “Frequently Used Terms.”
• CM Life Sciences III Inc., a Delaware corporation, which we refer to as “we,” “us,” “our,” “CMLS III” or the “Company,” is a special purpose acquisition company (“SPAC”) formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
• There are currently 69,000,000 shares of Class A and Class B common stock, par value $0.0001 per share, of the Company, issued and outstanding, consisting of (i) 55,200,000 public shares, and (ii) 13,800,000 Founder Shares held by our Initial Stockholders (“Founder Shares”). There are currently no shares of Company preferred stock issued and outstanding. In addition, we have 11,040,000 public warrants to purchase common stock (originally sold as part of the units issued in our IPO) outstanding along with 8,693,333 private placement warrants issued to our Sponsor in a private placement concurrently with our IPO. Each warrant entitles its holder to purchase one share of our Class A common stock at an exercise price of $11.50 per whole share, to be exercised only for a whole number of shares of our Class A common stock. The warrants will become exercisable after the later of 12 months from the closing of the IPO or 30 days after the completion of the Business Combination, and they expire five years after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. Once the warrants become exercisable, the Company may redeem the outstanding public warrants at a price of $0.01 per warrant, if the last reported sales price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which we give notice of such redemption and provided certain other conditions are met. For more information regarding the public warrants, please see the section entitled “Description of Securities.”
• EQRx, Inc. is a Delaware corporation, which we refer to as “EQRx.” EQRx is a new type of pharmaceutical company committed to developing and delivering innovative medicines to patients at radically lower prices. EQRx’s mission is to improve health for all with great, innovative, affordable medicines so that people with life-changing or chronic conditions can gain access to the medicines they need, physicians can treat patients without barriers to prescribing, and health systems can afford to make those medicines available, without restrictions, to the populations they serve in a financially sustainable manner. Launched in January 2020, EQRx’s “New Pharma” solution starts with assembling a catalog of medicines at significant scale, targeting some of the most innovative clinical opportunities and highest drug cost categories of today and tomorrow, with an initial focus on oncology and immune-inflammatory diseases. EQRx is focused on developing programs that are innovative, branded, and patent-protected that, if approved, have potential to be equivalent or superior to other therapies in their class.
• Under the Merger Agreement, CMLS III has agreed to acquire all of the outstanding equity interests of EQRx for at least $3.65 billion in aggregate consideration consisting of 365,000,000 shares of CMLS III Class A common stock and up to an additional
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50,000,000 shares of CMLS III Class A common stock pursuant to the Earn-Out Shares. Subject to the terms and conditions of the Merger Agreement, at the Effective Time, and as further described in this proxy statement/prospectus, each share of EQRx stock other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement) that is issued and outstanding immediately prior to the Effective Time will be cancelled and automatically deemed for all purposes to represent the right to receive a portion of the total consideration, with each EQRx’s stockholder (as applicable) being entitled to receive: (a) a number of shares of Class A Common Stock equal to the quotient of: (i) the product of (x) such stockholder’s total shares of EQRx stock (with the EQRx common stock and preferred stock (determined on an as-converted basis) included as a single class) multiplied by (y) the per share amount calculated in accordance with the Merger Agreement, divided by (ii) $10.00; and (b) such stockholder’s earn-out pro rata share of any Earn-Out Shares to which such stockholder is entitled pursuant to the terms of the Merger Agreement. In addition, at the Effective Time, each outstanding option to purchase EQRx common stock will be exchanged for options to purchase CMLS III Class A common stock, and each outstanding EQRx restricted stock award will be cancelled and converted into restricted stock awards of CMLS III Class A common stock calculated in accordance with the terms of the Merger Agreement.
Following the closing of the Business Combination, and as additional consideration for the Merger and the other transactions, if during the Earn-Out Period, any Triggering Event occurs, then we will deliver or cause to be delivered to each applicable EQRx stockholder in accordance with such stockholder’s respective earn-out pro rata share (other than holders of Dissenting Shares, as defined in the Merger Agreement), and Earn-Out Service Provider (in accordance with its respective earn-out pro rata share and, in the case of the Earn-Out Service Providers, in accordance with the terms of the applicable earn-out award agreement), the Earn-Out Shares. Such issuance shall be upon the terms and subject to the conditions set forth in the Merger Agreement and the other transaction agreements and, in the case of the Earn-Out Service Providers, subject to the additional requirements set forth in the Merger Agreement and the applicable earn-out award agreement.
• In connection with the Business Combination, CMLS III entered into the Subscription Agreements, each dated as of August 5, 2021, with the PIPE Investors, including certain stockholders of EQRx and certain affiliates of our Sponsor, pursuant to which, among other things, CMLS III agreed to issue and sell to the PIPE Investors, in private placements to close immediately prior to the Closing, an aggregate of 120,000,000 shares of CMLS III Class A common stock at $10.00 per share, for an aggregate purchase price of $1,200,000,000 (“PIPE Investment”).
• It is anticipated that, upon completion of the Business Combination: (i) the Company’s public stockholders (other than the PIPE Investors) will retain an ownership interest, in the aggregate, of approximately 10.4% of the outstanding shares of the post-combination company; (ii) the PIPE Investors will own, in the aggregate, approximately 22.6% of the outstanding shares of the post-combination company (such that public stockholders, including PIPE Investors (including the affiliates of our Sponsor), will own, in the aggregate, approximately 33.0% of the outstanding shares of the post-combination company); (iii) our Initial Stockholders (including our Sponsor) will own, in the aggregate, approximately 2.6% of the outstanding shares of the post-combination company; and (iv) the former EQRx stockholders are expected to hold, in the aggregate, approximately 64.4% of the outstanding shares of the post-combination company. Refer to the pro forma post-combination company common stock issued and outstanding immediately after the Business Combination and PIPE Investment in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
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Upon the Effective Time, each outstanding option to purchase EQRx common stock will be rolled over into options to purchase Company common stock in accordance with the terms of the Merger Agreement, and each outstanding EQRx restricted stock award will be cancelled and converted in to restricted stock awards of the Company common stock calculated in accordance with the terms of the Merger Agreement.
The ownership percentages with respect to the post-combination company following the Business Combination and PIPE Investment are based on aggregate Merger Consideration of 365,000,000 shares of CMLS III Class A Common Stock and assume 342,405,942 shares will be issued at Closing to current holders of issued and outstanding shares of EQRx stock, but does not include the portion of the Closing Merger Consideration that may be allocated to shares underlying options to acquire EQRx stock (totaling, in aggregate, assuming full usage of EQRx’s existing equity pool before completion of the Business Combination and after giving effect to the estimated exchange ratio, 22,594,058 shares of CMLS III Class A common stock) that may be exercised in the future. This calculation also excludes (x) the issuance of any shares following the completion of the Business Combination under the 2021 Incentive Plan or the ESPP, copies of which are included in this proxy statement/prospectus as Annex C and Annex D, respectively, (y) the issuance of any Earn-Out Shares or (z) shares of CMLS III underlying warrants to purchase common stock of CMLS III that will remain outstanding following the Business Combination. In addition, the ownership percentages assume that no public shares are redeemed by the Company. If the actual facts are different than these assumptions, which they are likely to be, the ownership percentages in the post-combination company will be different from the above stated ownership percentages. For more information, please see the sections entitled “Summary of the Proxy Statement/Prospectus — Impact of the Business Combination on the Company’s Public Float,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Proposal No. 3 — The Incentive Plan Proposal” and “Proposal No. 4 — The ESPP Proposal.”
• The Sponsor Support Agreement provides that our Sponsor will vote its shares of common stock in favor of the Business Combination, be bound by certain other covenants and agreements related to the Business Combination and be bound by certain transfer restrictions with respect to its shares of common stock prior to the closing of the Business Combination.
• The Forfeiture Agreement provides that our Sponsor, subject to certain limitations and in accordance with the terms of the agreement, will forfeit up to 50% of its 13,500,000 shares of our Class B common stock determined based on the actual exercise of redemption rights by stockholders of our company in connection with the Business Combination.
• Our management and the Board considered various factors in determining whether to approve the Merger Agreement and the Business Combination. For more information about our decision-making process, see the section entitled “Proposal No. 1 — The Business Combination Proposal — CMLS III Board of Directors’ Reasons for the Approval of the Business Combination.”
• Pursuant to our Current Charter, in connection with the Business Combination, holders of our public shares may elect to have their public shares redeemed for cash at the applicable redemption price per share calculated in accordance with our Current Charter. As of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. If a holder exercises its redemption rights, then such holder will be exchanging its shares of our common stock for cash and will no longer own outstanding shares of the post-combination company. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our Transfer
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Agent, Continental Stock Transfer & Trust Company, at least two business days prior to the scheduled date of the Special Meeting. Please see the section entitled “Special Meeting of Company Stockholders — Redemption Rights.”
• In addition to voting on the proposal to adopt the Merger Agreement and approve the transactions contemplated thereunder, including the Business Combination, at the Special Meeting, the stockholders of the Company will be asked to vote on:
Proposal No. 2 — The Nasdaq Stock Issuance Proposal — To approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the Company’s outstanding common stock in connection with the Business Combination and Subscription Agreements, including up to 120,000,000 shares of our common stock to the PIPE Investors, which includes affiliates of our Sponsor that subscribed for 10,250,000 shares of common stock, and up to 365,000,000 shares of our common stock to EQRx stockholders and up to 50,000,000 Earn-Out Shares, plus any additional shares pursuant to subscription agreements we may enter into prior to Closing;
Proposal No. 3 — The Incentive Plan Proposal — To approve the 2021 Incentive Plan, a copy of which is included in this proxy statement/prospectus as Annex C, including the authorization of the initial share reserve under the 2021 Incentive Plan;
Proposal No. 4 — The ESPP Proposal — To approve the ESPP, a copy of which is included in this proxy statement/prospectus as Annex D, including the authorization of the initial share reserve under the ESPP;
Proposal No. 5 — The Charter Amendment Proposal — To adopt the A&R Certificate of Incorporation in the form included in the accompanying proxy statement/prospectus as Annex E, including a change to the Company’s stock classes and an increase in the number of authorized shares of the Company; and
Proposal No. 6 — The Adjournment Proposal — To approve, if necessary, the adjournment of the Special Meeting to a later date or dates to permit further solicitation and votes of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Charter Amendment Proposal. This proposal will only be presented at the Special Meeting if there are not sufficient votes to approve the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Charter Amendment Proposal.
Please see the sections entitled “Proposal No. 1 — The Business Combination Proposal,” “Proposal No. 2 — The Nasdaq Stock Issuance Proposal,” “Proposal No. 3 — The Incentive Plan Proposal,” “Proposal No. 4 — The ESPP Proposal,” “Proposal No. 5 — The Charter Amendment Proposal,” and “Proposal No. 6 — The Adjournment Proposal.” Proposals in this proxy statement/prospectus (other than the Adjournment Proposal) are conditioned on the approval of the Business Combination Proposal.
• The Merger Agreement may be terminated at any time prior to the consummation of the Business Combination upon mutual written agreement of the parties thereto, or by the Company or EQRx in specified circumstances. For more information about the termination rights under the Merger Agreement, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Termination.”
• The proposed Business Combination involves numerous risks. For more information about these risks, please see the section entitled “Risk Factors.”
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• In considering the recommendation of our Board to vote in favor of the Business Combination, stockholders should be aware that aside from their interests as stockholders, our Sponsor and its affiliates and certain members of our Board and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:
• the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve the Business Combination;
• the fact that our Initial Stockholders will retain up to 13,800,000 Founder Shares upon the Closing;
• the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by April 9, 2023, or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our Current Charter (“applicable deadline”);
• if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
• the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;
• the fact that Eli Casdin will continue as a board member of the post-combination company, and will be entitled to receive compensation for serving on the board of directors of the post-combination company;
• the fact that certain entities with which Mr. Casdin is affiliated collectively own approximately 10.1% of EQRx’s outstanding stock on an as-converted basis, and Mr. Casdin serves on the board of directors of EQRx;
• the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by the applicable deadline;
• the fact that the Initial Stockholders (including entities controlled by the Company’s officers and directors) have made an aggregate average investment per share of CMLS III Class B common stock of less than $0.01 as of the consummation of the Company’s IPO, and as a result of the significantly lower investment per share of the Initial Stockholders as compared with the investment per share of the Company’s public stockholders, a transaction which results in an increase in the value of the investment of the Initial Stockholders may result in a decrease in the value of the investment of the Company’s public stockholders;
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• the fact that simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 8,693,333 warrants at a purchase price of $1.50 per private placement warrant, to the Sponsor and certain of CMLS III’s directors (and/or entities controlled by them) generating gross proceeds to CMLS III of $13,040,000, and if a business combination is not consummated by the applicable deadline, the proceeds from the sale of the private placement warrants will be used to fund the redemption of public shares (subject to the requirements of applicable law), and the private placement warrants will be worthless;
• the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidate;
• the fact that given the differential in purchase price that our Sponsor paid for the Founder Shares as compared to the price of the units sold in the IPO and the substantial number of shares of post-combination company common stock that our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, our Sponsor and its affiliates may realize a positive on such investments even if other CMLS III stockholders experience a negative rate of return following the Business Combination; and
• that funds advised by Casdin Capital LLC and Corvex Management L.P., affiliates of the Sponsor, have entered into Subscription Agreements with the Company, pursuant to which such affiliates have committed to purchase 5,000,000 and 5,250,000 shares of common stock in the PIPE Investment, respectively, for an aggregate commitment of approximately $50,000,000 and $52,500,000, respectively.
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FREQUENTLY USED TERMS
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “CMLS III” refer to CM Life Sciences III Inc., a Delaware corporation, and the term “post-combination company” refers to the company following the consummation of the Business Combination. In this proxy statement/prospectus:
“Aggregate Transaction Proceeds” means an amount equal to the sum of (i) the aggregate cash proceeds available for release to the Company from the Trust Account in connection with the transactions contemplated by the Merger Agreement (after giving effect to any redemptions of public shares, if any) and (ii) the aggregate cash proceeds actually received by CMLS III with respect to the PIPE Investment.
“Aggregate Transaction Proceeds Condition” means the minimum aggregate cash amount that CMLS III must have available from the Aggregate Transaction Proceeds, which amount will not be less than $1,000,000,000.
“A&R Certificate of Incorporation” means the proposed Amended and Restated Certificate of Incorporation of the Company, a form of which is attached hereto as Annex E, which will become the post-combination company’s certificate of incorporation. In case the Business Combination is not consummated, the Current Charter will continue to be the certificate of incorporation of the Company.
“Business Combination” means the transactions contemplated by the Merger Agreement, including the Merger.
“Closing” means the consummation of the Business Combination.
“Closing Date” means the closing date of the Business Combination.
“CMLS III Board”, “our Board” or the “the Board” means the board of directors of CMLS III.
“CMLS III Class A common stock” means the shares of Class A common stock, par value $0.0001 per share, of CMLS III.
“CMLS III Class B common stock” means the shares of Class B common stock, par value $0.0001 per share, of CMLS III.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Share Price” shall mean the share price equal to the closing sale price of one share of CMLS III Class A common stock as reported on Nasdaq (or the exchange on which the shares of CMLS III Class A common stock are then listed) for a period of at least 20 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination (as adjusted as appropriate to reflect any stock splits, reverse stock splits, stock dividends (including any dividend or distribution of securities convertible into CMLS III Class A common stock), extraordinary cash dividend (which adjustment shall be subject to the reasonable mutual agreement of CMLS III and EQRx), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change or transaction with respect to CMLS III Class A common stock).
“Company common stock” means, collectively, the CMLS III Class A common stock and the CMLS III Class B common stock.
“D.F. King” means D.F. King & Co., Inc., proxy solicitor to the Company.
“DGCL” means the General Corporation Law of the State of Delaware.
“DTC” means The Depository Trust Company.
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“Earn-Out Period” shall mean the time period beginning on the date that is the 12-month anniversary of the Closing and ending on the date that is the 36-month anniversary of the Closing (inclusive of the first and last day of such period).
“Earn-Out RSU” shall mean the award of restricted stock units in respect of the Earn-Out Shares granted to the Earn-Out Service Providers pursuant to the earn-out award agreement.
“Earn-Out Service Provider” shall mean each employee or individual service provider of EQRx, in each case whom the EQRx Board designates as an Earn-Out Service Provider prior to the Closing and who enters into an earn-out award agreement.
“Earn-Out Shares” shall mean 50,000,000 shares of CMLS III Class A common stock (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to CMLS III Class A common stock occurring on or after the Closing).
“Earn-Out Pro Rata Share” shall mean for each EQRx Stockholder, such amount determined in accordance with the following formula and as applied by the CMLS III Board of Directors in good faith: (The total number of Earn-Out Shares minus the number of Earn-Out Shares underlying any Earn-Out RSUs) multiplied by (such EQRx Stockholder’s pro rata portion of the Closing Number of Securities divided by the total Closing Number of Securities).
“Effective Time” means, with respect to the Merger, the time on the Closing Date at which the Merger becomes effective.
“EQRx” means EQRx, Inc., a Delaware corporation, to be renamed EQRx International, Inc. in connection with the consummation of the Business Combination.
“EQRx Board” means the board of directors of EQRx.
“EQRx common stock” means the shares of common stock, par value $0.0001 per share, of EQRx.
“EQRx preferred stock” means, collectively, the shares of EQRx Series A preferred stock and EQRx Series B preferred stock.
“EQRx Series A preferred stock” means the shares of Series A convertible preferred stock, par value $0.0001 per share, of EQRx.
“EQRx Series B preferred stock” means, collectively, the shares of Series B convertible preferred stock, par value $0.0001 per share, of EQRx.
“EQRx stock” means, collectively, the EQRx common stock and the EQRx preferred stock.
“EQRx Stockholder Approval” means the approval of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement by the holders of shares of EQRx stock representing a majority of the voting power of EQRx, including the (y) approval of the holders of EQRx preferred stock voting as a separate class and (z) approval of holders of the EQRx preferred stock and EQRx common stock voting as a single class (on an as converted basis).
“EQRx Management” means the management of EQRx following the Closing.
“ESPP” means the EQRx, Inc. Employee Stock Purchase Plan, a copy of which is included in this proxy statement/prospectus as Annex D, to be approved and adopted by the stockholders of CMLS III pursuant to the ESPP Proposal at the Special Meeting.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FASB” means the Financial Accounting Standards Board.
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“Founder Shares” means the aggregate of 13,800,000 shares of CMLS III Class B common stock held by our Initial Stockholders.
“GAAP” means United States generally accepted accounting principles.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“2021 Incentive Plan” means the EQRx, Inc. 2021 Stock Option and Incentive Plan, a copy of which is included in this proxy statement/prospectus as Annex C, to be approved and adopted by the stockholders of CMLS III pursuant to the Incentive Plan Proposal at the Special Meeting.
“Initial Stockholders” means the Sponsor, Dr. Abernethy, Mr. Henry, Mr. Owusu-Kesse, Mr. Robins and Dr. Robins.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“IPO” means CMLS III’s initial public offering, consummated on April 9, 2021, through the sale of an aggregate of 55,200,000 units at $10.00 per unit, including the issuance of 7,200,000 units as a result of the underwriter’s exercise of its over-allotment in full.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.
“Merger” means the merger of Merger Sub with and into EQRx.
“Merger Agreement” means that Merger Agreement dated as of August 5, 2021, as amended by an amendment thereto dated as of September 21, 2021 and an amendment thereto dated as of October 28, 2021, and as may be further amended from time to time, by and among CMLS III, Merger Sub and EQRx, a composite copy of which is included in this proxy statement/prospectus as Annex A.
“Merger Sub” means Clover III Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of CMLS III.
“Nasdaq” means The Nasdaq Stock Market.
“New EQRx” means the post-combination company, after giving effect to the Business Combination.
“Outside Date” means March 31, 2022.
“PIPE Investment” means the issuance of an aggregate of 120,000,000 shares of CMLS III Class A common stock pursuant to the Subscription Agreements to the PIPE Investors immediately prior to the Closing, at a purchase price of $10.00 per share.
“PIPE Investors” means the certain institutional and accredited investors who are party to the Subscription Agreements.
“Private placement warrants” means the 8,693,333 private placement warrants issued to our Sponsor and CMLS III’s independent director nominees concurrently with CMLS III’s IPO.
“Public shares” means shares of CMLS III Class A common stock included in the units issued in CMLS III’s IPO.
“Public stockholders” means the holders of public shares.
“Public warrants” means the warrants included in the units issued in the IPO, each of which is exercisable for one share of CMLS III Class A common stock, in accordance with its terms.
“Registration Rights Agreement” or “Amended and Restated Registration Rights Agreement” means the amended and restated registration rights agreement to be entered into as of the Closing by and among CMLS III, the Sponsor, certain affiliates of the Sponsor, and certain stockholders of CMLS III.
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“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Sponsor” means CMLS Holdings III LLC, a Delaware limited liability company.
“Special Meeting” means the special meeting of the stockholders of CMLS III to consider matters relating to the Business Combination, to be held at a.m., New York City time, on , 2021, in virtual format.
“Subscription Agreements” means the subscription agreements, each dated as of August 5, 2021, by and between CMLS III and the PIPE Investors, pursuant to which CMLS III has agreed to issue an aggregate of 120,000,000 shares of CMLS III Class A common stock to the PIPE Investors immediately prior to the Closing at a purchase price of $10.00 per share.
“Trading Days” means any day on which shares of CMLS III Class A common stock are actually traded on the principal securities exchange or securities market on which shares of CMLS III Class A common stock are then traded.
“Transactions” means the Business Combination, as well as the issuance of 120,000,000 shares of CMLS III Class A common stock to the PIPE Investors pursuant to the PIPE Investment immediately prior to the Closing.
“Transfer Agent” means Continental Stock Transfer & Trust Company.
“Triggering Event I” shall mean if the Common Share Price is greater than or equal to $12.50 during the Earn-Out Period.
“Triggering Event II” shall mean if the Common Share Price is greater than or equal to $16.50 during the Earn-Out Period.
“Triggering Events” shall mean, collectively, Triggering Event I and Triggering Event II.
“Trust Account” means the Trust Account of CMLS III that holds the proceeds from CMLS III’s IPO and the private placement of the private placement warrants.
“Trust Agreement” means that certain Investment Management Trust Agreement, dated as of April 6, 2021, by and between CMLS III and the Trustee.
“Trustee” means Continental Stock Transfer & Trust Company.
“Units” means the units of CMLS III, each consisting of one share of CMLS III Class A common stock and one-fifth of one public warrant of CMLS III.
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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
AND THE SPECIAL MEETING
The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the Special Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to our stockholders. We urge stockholders to carefully read this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Special Meeting, which will be held on [day], [date] at [time] Eastern time at [virtual meeting link].
Q: Why am I receiving this proxy statement/prospectus?
A: Our stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, among other proposals. We have entered into the Merger Agreement, pursuant to which the Company’s wholly owned subsidiary will merge with and into EQRx, with EQRx surviving the Merger as a wholly owned subsidiary of the Company. Subject to the terms of the Merger Agreement, at the Effective Time of the Business Combination, each share of EQRx stock issued and outstanding immediately prior to the Effective Time of the Business Combination, other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement), will convert into the Closing Merger Consideration set forth in the Merger Agreement. A composite copy of the Merger Agreement is included in this proxy statement/prospectus as Annex A.
This proxy statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.
Q: When is the Special Meeting?
A: The Special Meeting will be held on [day], [date] at [time] Eastern time at [virtual meeting link]. In light of ongoing developments related to coronavirus (COVID-19), after careful consideration, the Company has determined that the Special Meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance and participation while safeguarding the health and safety of our stockholders, directors and management team. You or your proxyholder will be able to attend the virtual Special Meeting online, vote, view the list of stockholders entitled to vote at the Special Meeting and submit questions during the Special Meeting by visiting [virtual meeting link] and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the proxy statement/prospectus. Because the Special Meeting is completely virtual and being conducted via live webcast, stockholders will not be able to attend the meeting in person.
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Q: How can I attend and vote at the Special Meeting?
Any stockholder wishing to attend the virtual meeting should register for the meeting by [•], 2021. To register for the Special Meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:
• If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the Special Meeting, go to [virtual meeting link], enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend.
• Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the Special Meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the meeting date in order to ensure access.
Q: What are the specific proposals on which I am being asked to vote on at the Special Meeting?
A: You are being asked to consider and vote on proposals to:
1. Proposal No. 1 — The Business Combination Proposal — To approve and adopt the Merger Agreement, a composite copy of which is included in this proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby, including the merger of Merger Sub with and into EQRx, with EQRx surviving the Merger as a wholly owned subsidiary of the Company, and the issuance of common stock to EQRx stockholders as Merger Consideration;
2. Proposal No. 2 — The Nasdaq Stock Issuance Proposal — To approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the Company’s outstanding common stock in connection with the Business Combination and Subscription Agreements, including up to 120,000,000 shares of our common stock to the PIPE Investors, which includes affiliates of our Sponsor that subscribed for 10,250,000 shares of common stock, and up 365,000,000 shares of our common stock to EQRx stockholders and up to 50,000,000 Earn-Out Shares, plus any additional shares pursuant to subscription agreements we may enter into prior to Closing;
3. Proposal No. 3 — The Incentive Plan Proposal — To approve the 2021 Incentive Plan a copy of which is included in this proxy statement/prospectus as Annex C, including the authorization of the initial share reserve under the 2021 Incentive Plan;
4. Proposal No. 4 — The ESPP Proposal — To approve the ESPP a copy of which is included in this proxy statement/prospectus as Annex D, including the authorization of the initial share reserve under the ESPP;
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5. Proposal No. 5 — The Charter Amendment Proposal — To adopt the A&R Certificate of Incorporation in the form included in the accompanying proxy statement/prospectus as Annex E, including a change to the Company’s stock classes and an increase in the number of authorized shares of the Company; and
6. Proposal No. 6 — The Adjournment Proposal — To approve, if necessary, the adjournment of the Special Meeting to a later date or dates to permit further solicitation and votes of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal or the ESPP Proposal. This proposal will only be presented at the Special Meeting if there are not sufficient votes to approve the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal or the ESPP Proposal.
Q: Are the proposals conditioned on one another?
A: Yes. Under the Merger Agreement, the approval of the condition precedent proposals presented at the Special Meeting is a condition to the consummation of the Business Combination. The adoption of each condition precedent proposal in this proxy statement/prospectus (other than the Adjournment Proposal) is conditioned on the approval of all of the condition precedent proposals. If our stockholders do not approve of each of the condition precedent proposals, the Business Combination may not be consummated. Therefore, approval of the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Charter Amendment Proposal are conditioned upon stockholders’ approval of the Business Combination Proposal. Moreover, the transactions contemplated by the Merger Agreement will be consummated only if the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, ESPP Proposal and the Charter Amendment Proposal are approved at the Special Meeting.
It is important for you to note that in the event that the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Charter Amendment Proposal do not receive the requisite vote for approval, we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination by the applicable deadline, we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public stockholders.
Q: Why is the Company providing stockholders with the opportunity to vote on the Business Combination?
A: Under our Current Charter, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote, rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Business Combination Proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the Closing. The adoption of the Merger Agreement is required under Delaware law and the approval of the Business Combination is required under our Current Charter. In addition, such approval is also a condition to the Closing under the Merger Agreement.
Q: What will happen in the Business Combination?
A: Pursuant to the Merger Agreement, EQRx will become a wholly-owned subsidiary of the Company as a result of the Merger of the Company’s wholly owned subsidiary, Merger Sub, with and into EQRx, with EQRx surviving the Merger as a wholly owned subsidiary of the Company.
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Q: Following the Business Combination, will the Company’s securities continue to trade on a stock exchange?
A: Yes. We intend to apply to list the post-combination company’s common stock and warrants on Nasdaq under symbols “EQRX” and “EQRXW,” respectively, upon the Closing. Our units will automatically separate into the component securities upon consummation of the Business Combination and, as a result, will no longer trade as a separate security.
It is a condition of the consummation of the Business Combination that we receive confirmation from Nasdaq that our Class A common stock issued in connection with the Business Combination has been approved for listing on Nasdaq. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition in the Business Combination is waived by EQRx. It is important for you to know that, at the time of our special meeting, we may not have received confirmation that our Class A common stock to be issued in connection with the Business Combination has been approved, or that the parties will obtain prior to the consummation of the Business Combination approval, for listing on Nasdaq, and it is possible that such condition to the consummation of the Business Combination may be waived by the parties. As a result, you may be asked to vote to approve the Business Combination and the other proposals included in the accompanying proxy statement/prospectus without such confirmation, and, further it is possible that such confirmation may never be received and the Business Combination could still be consummated if such condition is waived by the parties and therefore our Class A common stock and public warrants would not be listed on any nationally recognized securities exchange.
Q: How has the announcement of the Business Combination affected the trading price of the Company’s common stock?
A: On August 5, 2021, the trading date before the public announcement of the Business Combination, the Company’s units and common stock closed at $10.50 and $10.01, respectively. On September 30, 2021, the trading date immediately prior to the date of this proxy statement/prospectus, the Company’s units, common stock and warrants closed at $10.25, $9.92 and $2.14, respectively.
Q: How will the Business Combination impact the shares of the Company outstanding after the Business Combination?
A: After the Business Combination and the consummation of the transactions contemplated thereby, including the PIPE Investment, the amount of common stock outstanding will increase by approximately 670.2% to approximately 531.4 million shares of common stock (assuming that no shares of common stock are redeemed). Additional shares of common stock may be issuable in the future as a result of the issuance of additional shares that are not currently outstanding, including the issuance of shares of common stock upon exercise or settlement of the public warrants, private placement warrants, Earn-Out Shares, options and Earn-Out RSUs issued in connection with the Business Combination after the Business Combination. The issuance and sale of such shares in the public market could adversely impact the market price of our common stock, even if our business is doing well.
Q: Is the Business Combination the first step in a “going private” transaction?
A: No. The Company does not intend for the Business Combination to be the first step in a “going private” transaction. One of the primary purposes of the Business Combination is to provide a platform for EQRx to access the U.S. public markets.
Q: Will the management of EQRx change in the Business Combination?
A: We anticipate that all of the executive officers of EQRx serving as of the date hereof will remain with the post-combination company. The current directors of the Company will resign at the time of the Business Combination, other than Dr. Abernethy, who has been
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nominated by CMLS III, subject to the approval of the EQRx Board, to serve as a director of the post-combination company upon completion of the Business Combination, and Eli Casdin, who has been nominated by EQRx to serve as a director of the post-combination company upon completion of the Business Combination. The remaining director nominees will be designated by EQRx in accordance with the terms of the Merger Agreement. Please see the section entitled “Management After the Business Combination.”
Q: What equity stake will current stockholders of the Company, PIPE Investors and the EQRx stockholders hold in the post-combination company after the Closing?
A: It is anticipated that, upon completion of the Business Combination: (i) the Company’s public stockholders (other than the PIPE Investors) will retain an ownership interest, in the aggregate, of approximately 10.4% of the outstanding shares of the post-combination company; (ii) the PIPE Investors will own, in the aggregate, approximately 22.6% of the outstanding shares of the post-combination company (such that public stockholders, including PIPE Investors (including the affiliates of our Sponsor), will own, in the aggregate, approximately 33.0% of the outstanding shares of the post-combination company); (iii) our Initial Stockholders (including our Sponsor) will own, in the aggregate, approximately 2.6% of the outstanding shares of the post-combination company; and (iv) the former EQRx stockholders are expected to hold, in the aggregate, approximately 64.4% of the outstanding shares of the post-combination company. Refer to the pro forma post-combination company common stock issued and outstanding immediately after the Business Combination and PIPE Investment in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
The ownership percentages with respect to the post-combination company following the Business Combination and PIPE Investment are based on aggregate Merger Consideration of 365,000,000 shares of CMLS III Class A Common Stock and assume 342,405,942 shares will be issued at Closing to current holders of issued and outstanding shares of EQRx stock, but does not include the portion of the Closing Merger Consideration that will be allocated to shares underlying options to acquire EQRx stock (totaling, in aggregate, assuming full usage of EQRx’s existing equity pool before completion of the Business Combination and after giving effect to the estimated exchange ratio, 22,594,058 shares of CMLS III Class A common stock) that may be exercised in the future. This calculation also excludes (x) the issuance of any shares following the completion of the Business Combination under the 2021 Incentive Plan or the ESPP, copies of which are included in this proxy statement/prospectus as Annex C and Annex D, respectively, (y) the issuance of any Earn-Out Shares or (z) shares of CMLS III underlying warrants to purchase common stock of CMLS III that will remain outstanding following the Business Combination. In addition, the ownership percentages assume that no public shares are redeemed by the Company. If the actual facts are different than these assumptions, which they are likely to be, the ownership percentages in the post-combination company will be different from the above stated ownership percentages. For more information, please see the sections entitled “Summary of the Proxy Statement/Prospectus — Impact of the Business Combination on the Company’s Public Float,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Proposal No. 3 — The Incentive Plan Proposal” and “Proposal No. 4 — The ESPP Proposal.”
Q: Will the Company obtain new financing in connection with the Business Combination?
A: Yes. The PIPE Investors have agreed to purchase 120,000,000 shares of common stock, in the aggregate, for $1,200,000,000 of gross proceeds, pursuant to the Subscription Agreements. The Subscription Agreements are contingent upon, among other things, stockholder approval of the Business Combination Proposal and the Closing. See the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreements.” The Company does not currently anticipate obtaining any new debt financing to fund the Business Combination.
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Q: What conditions must be satisfied to complete the Business Combination?
A: There are a number of closing conditions in the Merger Agreement, including the approval by the stockholders of the Company of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Charter Amendment Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement.”
Q: Are there any arrangements to help ensure that the Company will have sufficient funds, together with the proceeds in its Trust Account and from the PIPE Investment, to fund the aggregate purchase price?
A: Unless waived by EQRx, the Merger Agreement provides that EQRx’s obligation to consummate the Business Combination is conditioned on the funds in the Trust Account, together with the funding of any amounts payable under the Subscription Agreements, being equal to no less than an aggregate amount of $1,000,000,000 after payment of redemptions and Company and EQRx transaction expenses. The PIPE Investors have agreed to purchase approximately 120,000,000 shares of common stock at $10.00 per share for gross proceeds to the Company of approximately $1,200,000,000 pursuant to Subscription Agreements entered into at the signing of the Merger Agreement. The PIPE Investment is contingent upon, among other things, stockholder approval of the Business Combination Proposal and the Closing.
The Company will use the proceeds of the PIPE Investment, together with the funds in the Trust Account, to pay certain fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by the Company and other parties to the Merger Agreement in connection with the transactions contemplated by the Merger Agreement, including the Business Combination, and pursuant to the terms of the Merger Agreement.
Q: Why is the Company proposing the Nasdaq Stock Issuance Proposal?
A: We are proposing the Nasdaq Stock Issuance Proposal in order to comply with Nasdaq Listing Rules 5635(a) and (d), which require stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power or shares of common stock outstanding before the issuance of stock or securities.
In connection with the Business Combination, we expect to issue (i) up to 365,000,000 shares of common stock in the Business Combination plus up to 50,000,000 Earn-Out Shares, and (ii) approximately 120,000,000 shares of common stock in the PIPE Investment. Because we may issue 20% or more of our outstanding common stock when considering together the Stock Consideration and the PIPE Investment, we are required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rules 5635(a) and (d). For more information, please see the section entitled “Proposal No. 2 — The Nasdaq Stock Issuance Proposal.”
Q: Why is the Company proposing the Incentive Plan Proposal?
A: The purpose of the Incentive Plan Proposal is to further align the interests of the eligible participants with those of stockholders by providing long- term incentive compensation opportunities tied to the performance of the post-combination company. Please see the section entitled “Proposal No. 3 — The Incentive Plan Proposal” for additional information.
Q: Why is the Company proposing the ESPP Proposal?
A: The purpose of the ESPP Proposal is to provide eligible employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing common stock on favorable terms and to pay for such purchases through payroll deductions.
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The Company believes by providing eligible employees with an opportunity to increase their proprietary interest in the success of the Company, the ESPP will motivate participants to offer their maximum effort to the Company and help focus them on the creation of long-term value consistent with the interests of the Company’s stockholders. For more information about the ESPP, please see the section entitled “Proposal No. 4 — The ESPP Proposal.”
Q: Why is the Company proposing the Charter Amendment Proposal?
A: The A&R Certificate of Incorporation that we are asking our stockholders to adopt in connection with the Business Combination provides for certain amendments to our Current Charter. The A&R Certificate of Incorporation provides for various changes that the Company’s Board believes are necessary to address the needs of the post-combination company, including, among other things: (i) the change of the Company’s name to “EQRx, Inc.”; (ii) the increase of the total number of authorized shares (and subsequent reclassification of our common stock into one class of common stock) of all classes of capital stock, par value of $0.0001 per share, from 401,000,000 shares, consisting of 380,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock and 1,000,000 shares of preferred stock, to 1,252,000,000 shares, consisting of 1,250,000,000 shares of post-combination company “common stock” and 2,000,000 shares of “preferred stock.” Pursuant to Delaware law, we are required to submit the Charter Amendment Proposal to the Company’s stockholders for adoption. The A&R Certificate of Incorporation will not be adopted if the Business Combination is not consummated. For additional information please see the section entitled “Proposal No. 5 — The Charter Amendment Proposal.”
Q: Why is the Company proposing the Adjournment Proposal?
A: We are proposing the Adjournment Proposal to allow our Board to adjourn the Special Meeting to a later date or dates to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal or the ESPP Proposal, but no other proposal if the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Charter Amendment Proposal are approved. Please see the section entitled “Proposal No. 5 — The Adjournment Proposal” for additional information.
Q: What happens if I sell my shares of common stock before the Special Meeting?
A: The record date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of common stock after the record date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of common stock because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of common stock prior to the record date, you will have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account.
Q: What constitutes a quorum at the Special Meeting?
A: A majority of the voting power of all outstanding shares of the capital stock of the Company entitled to vote must be present in person or by proxy (which would include presence at the virtual Special Meeting) to constitute a quorum for the transaction of business at the Special Meeting. Abstentions will be counted as present for the purpose of determining a quorum. Our Initial Stockholders, who currently own approximately 20% of our issued and outstanding shares of common stock, will count towards this quorum. In the absence of a
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quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, a majority of the outstanding shares of our common stock would be required to achieve a quorum.
Q: What vote is required to approve the proposals presented at the Special Meeting?
A: Proposal No. 1 — The Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, a Company stockholder’s failure to vote, as well as an abstention from voting and a broker non-vote, will have no effect on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Business Combination Proposal. Our Initial Stockholders have agreed to vote their shares of common stock “FOR” the Business Combination Proposal.
Proposal No. 2 — The Nasdaq Stock Issuance Proposal: The approval of the Nasdaq Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, under Delaware law, a Company stockholder’s failure to vote, as well as an abstention and broker non-vote, will have no effect on the Nasdaq Stock Issuance Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established. Our Initial Stockholders have agreed to vote their shares of common stock “FOR” the Nasdaq Stock Issuance Proposal.
Proposal No. 3 — The Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, under Delaware law, a Company stockholder’s failure to vote by proxy, as well as an abstention and broker non-vote, will have no effect on the Incentive Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established. Our Initial Stockholders have agreed to vote their shares of common stock “FOR” the Incentive Plan Proposal.
Proposal No. 4 — The ESPP Proposal: The approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, under Delaware law, a Company stockholder’s failure to vote by proxy, as well as an abstention and broker non-vote, will have no effect on the ESPP Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established. Our Initial Stockholders have agreed to vote their shares of common stock “FOR” the ESPP Proposal.
Proposal No. 5 — The Charter Amendment Proposal: The approval of the Charter Amendment Proposal requires the affirmative vote of at least a majority of the outstanding shares of CMLS III common stock. The parties have also agreed to condition the Charter Amendment Proposal on the affirmative vote of the holders of a majority of the shares of CMLS III Class A common stock then outstanding and entitled to vote thereon, voting separately as a single series. Accordingly, a Company stockholder’s failure to vote, as well as an abstention from voting and a broker non-vote, will have the same effect as a vote “AGAINST” such Charter Amendment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established. Our Initial Stockholders have agreed to vote their shares of common stock “FOR” the Charter Amendment Proposal.
Proposal No. 6 — The Adjournment Proposal: The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, a Company stockholder’s failure to vote, as well as an abstention from voting and a broker non-vote, will have no effect on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Adjournment Proposal.
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Q: What happens if the Business Combination Proposal is not approved?
A: If the Business Combination Proposal is not approved and we do not consummate a business combination by the applicable deadline, we will be required to dissolve and liquidate our Trust Account.
Q: May the Company, its Sponsor or the Company’s directors or officers or their affiliates purchase shares in connection with the Business Combination?
A: In connection with the stockholder vote to approve the proposed Business Combination, we, our Sponsor, or our directors or officers or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the Trust Account. None of our directors or officers or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such selling stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such selling stockholder to vote such shares in a manner directed by the purchaser. In the event that our Sponsor, directors or officers or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are below or in excess of the per-share pro rata portion of the Trust Account.
Q: How many votes do I have at the Special Meeting?
A: Our stockholders are entitled to one vote on each proposal presented at the Special Meeting for each share of common stock held of record as of [•], 2021, the record date for the Special Meeting. As of the close of business on the record date, there were 55,200,000 outstanding shares of our common stock.
Q: How do I vote?
A: If you were a stockholder of record on [•], 2021, you may vote by granting a proxy. Specifically, you may vote:
By Mail — You may vote by mail by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. Votes submitted by mail must be received by 5:00 pm Eastern time on [•], 2021.
• You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity.
• We encourage you to sign and return the proxy card even if you plan to attend the Special Meeting so that your shares will be voted if you are unable to attend the Special Meeting.
• If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.
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Voting at the Special Meeting — We will be hosting the Special Meeting via live webcast. If you attend the Special Meeting, you may submit your vote at the Special Meeting online at [virtual meeting link], in which case any votes that you previously submitted will be superseded by the vote that you cast at the Special Meeting.
If you hold your shares in street name, you must submit voting instructions to your broker, bank or other nominee. In most instances, you will be able to do this over the Internet, by telephone or by mail. Please refer to information from your bank, broker, or other nominee on how to submit voting instructions.
Q: What will happen if I abstain from voting or fail to vote at the Special Meeting?
A: At the Special Meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, a failure to vote or an abstention will have no effect on the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal. A failure to vote or an abstention will have the same effect as a vote against the Charter Amendment Proposal.
Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?
A: Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Special Meeting.
Q: If I am not going to attend the Special Meeting, should I return my proxy card instead?
A: Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/prospectus carefully. If you are a stockholder of record of our common stock as of the close of business on the record date, you can vote by proxy by mail by following the instructions provided in the enclosed proxy card. Please note that if you are a beneficial owner of our common stock, you may vote by submitting voting instructions to your broker, bank or nominee, or otherwise by following instructions provided by your broker, bank or nominee. Telephone and internet voting may be available to beneficial owners. Please refer to the vote instruction form provided by your broker, bank or nominee.
Q: What is the difference between a stockholder of record and a “street name” holder?
A: If your shares are registered directly in your name with the Company’s transfer agent, Continental Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a stock brokerage account or by a bank or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in “street name.” Access to proxy materials is being provided to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares.
Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A: No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee.
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We believe that all of the proposals presented to the stockholders at this Special Meeting will be considered non-routine and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting. Accordingly, if your broker submits a proxy for your shares, but you do not submit voting instructions on the proposals, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Special Meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.
Q: How will a broker non-vote impact the results of each proposal?
A: Broker non-votes will not have any effect on the outcome of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal. An abstention or broker non-vote will have the same effect as a vote against the Charter Amendment Proposal.
Q: May I change my vote after I have returned my signed proxy card or voting instruction form?
A: Yes. If you are a holder of record of our common stock as of the close of business on the record date, whether you vote by mail, you can change or revoke your proxy before it is voted at the Special Meeting by:
• delivering a signed written notice of revocation to our Secretary at CM Life Sciences III Inc., 667 Madison Ave, New York, NY 10065, bearing a date later than the date of the proxy, stating that the proxy is revoked;
• signing and delivering a new proxy, relating to the same shares and bearing a later date; or
• attending and voting at the Special Meeting and voting, although attendance at the Special Meeting will not, by itself, revoke a proxy.
If you are a beneficial owner of our common stock as of the close of business on the record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
Q: What should I do if I receive more than one set of voting materials?
A: You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.
Q: How will the Company’s Sponsor, directors and officers vote?
A: Prior to our IPO, we entered into agreements with our Sponsor and each of our directors and officers, pursuant to which each agreed to vote any shares of common stock owned by them in favor of the Business Combination Proposal. None of our Sponsor, directors or officers has purchased any shares of our common stock during or after our IPO and, as of the date of this proxy statement/prospectus, neither we nor our Sponsor, directors or officers have entered into agreements, and are not currently in negotiations, to purchase shares
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prior to the consummation of the Business Combination. Currently, our Initial Stockholders own approximately 20% of our issued and outstanding shares of common stock, including all of the Founder Shares, and will be able to vote all such shares at the Special Meeting.
Q: What interests do the Sponsor and the Company’s current officers and directors have in the Business Combination?
A: Our Sponsor and certain members of our Board and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include:
• the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve the Business Combination;
• the fact that our Initial Stockholders will retain up to 13,800,000 Founder Shares upon the Closing;
• the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by the applicable deadline;
• if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
• the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;
• the fact that Eli Casdin and Dr. Amy Abernethy will continue as board members of the post-combination company, and shall be entitled to receive compensation for serving on the board of directors of the post-combination company;
• the fact that certain entities with which Mr. Casdin is affiliated collectively own approximately 10.1% of EQRx’s outstanding capital stock on an as-converted basis, following these entities’ investment of approximately $90.0 million since EQRx’s inception, which shares will have a value of approximately $342.4 million based on $9.92 per share, the closing price for the CMLS Class A common stock on September 30, 2021, or a value of approximately $345.1 million, based on an implied transaction value of $10.00 per share, and Mr. Casdin serves on the board of directors of EQRx;
• the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by the applicable deadline;
• the fact that the Initial Stockholders (including entities controlled by the Company’s officers and directors) have made an aggregate average investment per share of CMLS III Class B common stock of less than $0.01 as of the consummation of the Company’s IPO, and as a result of the significantly lower investment per share of the Initial Stockholders as compared with the investment per share of the Company’s stockholders, a transaction which results in an increase in the value of the investment of the Initial Stockholders may result in a decrease in the value of the investment of the Company’s public stockholders;
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• the fact that simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 8,693,333 warrants at a purchase price of $1.50 per private placement warrant, to the Sponsor and certain of the Company’s directors (and/or entities controlled by them) generating gross proceeds to the Company of approximately $13,040,000, and if a business combination is not consummated by the applicable deadline, the proceeds from the sale of the private placement warrants will be used to fund the redemption of public shares (subject to the requirements of applicable law), and the private placement warrants will be worthless;
• the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidate;
• the fact that given the differential in purchase price that our Sponsor paid for the Founder Shares as compared to the price of the units sold in the IPO and the substantial number of shares of post-combination company common stock that our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, our Sponsor and its affiliates may realize a positive on such investments even if other CMLS III stockholders experience a negative rate of return following the Business Combination; and
• that funds advised by Casdin Capital LLC and Corvex Management L.P., affiliates of the Sponsor, have entered into Subscription Agreements with the Company, pursuant to which such affiliates have committed to purchase 5,000,000 and 5,250,000 shares of common stock in the PIPE Investment, respectively, for an aggregate commitment of approximately $50,000,000 and $52,500,000, respectively.
These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination.
Q: What happens if I vote against the Business Combination Proposal?
A: If you vote against the Business Combination Proposal but the Business Combination Proposal still obtains the affirmative vote of a majority of the votes cast by holders of our common stock represented in person or by proxy and entitled to vote at the Special Meeting, then the Business Combination Proposal will be approved and, assuming the approval of the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Charter Amendment Proposal and the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Merger Agreement.
If you vote against the Business Combination Proposal and the Business Combination Proposal does not obtain the affirmative vote of a majority of the votes cast by holders of our of common stock represented in person or by proxy and entitled to vote at the Special Meeting, then the Business Combination Proposal will fail and we will not consummate the Business Combination. If we do not consummate the Business Combination, we may continue to try to complete a business combination with a different target business until the applicable deadline. If we fail to complete an initial business combination by the applicable deadline, then we will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to our public stockholders.
Q: Do I have redemption rights?
A: Pursuant to our Current Charter, we are providing our public stockholders with the opportunity to redeem, upon the Closing, shares of common stock for cash equal to the pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the Trust Account that holds the proceeds of our IPO (including interest not previously released to the Company to pay franchise and income taxes), subject to certain limitations. For illustrative purposes, based on the balance of the Trust Account
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of approximately $552 million as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Public stockholders may elect to redeem their shares even if they vote for the Business Combination. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. If we receive valid redemption requests from holders of public shares prior to the redemption deadline, we may, at our sole discretion, following the redemption deadline and until the date of Closing, seek and permit withdrawals by one or more of such holders of their redemption requests. We may select which holders to seek such withdrawals of redemption requests from based on any factors we may deem relevant, and the purpose of seeking such withdrawals may be to increase the funds held in the Trust Account, including where we otherwise would not satisfy the closing condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, after the payment of redemptions and satisfaction of Company and EQRx transaction expenses.
Our Initial Stockholders have agreed to waive their redemption rights with respect to such shares, which will be excluded from the pro rata calculation used to determine the per-share redemption price.
Each redemption of shares of common stock by our public stockholders will reduce the amount in the Trust Account. The Merger Agreement provides that EQRx’s obligation to consummate the Business Combination is subject to the condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses. This condition to closing in the Merger Agreement is for the sole benefit of, and may be waived by, EQRx. If, as a result of redemptions of common stock by our public stockholders, this condition is not met (or waived by EQRx), then EQRx may elect not to consummate the Business Combination. In addition, in no event will we redeem shares of our common stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Holders of our outstanding public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in this proxy statement/prospectus assumes that none of our public stockholders exercise their redemption rights with respect to their shares of common stock.
Q: Can the Initial Stockholders redeem their Founder Shares in connection with consummation of the Business Combination?
A: No. Our Initial Stockholders, officers and directors have agreed to waive their redemption rights with respect to their shares of common stock in connection with the consummation of our Business Combination. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our common stock they may hold in connection with the consummation of the Business Combination. Our Initial Stockholders did not receive separate consideration for their waiver of redemption rights.
Q: Is there a limit on the number of shares I may redeem?
A: We have no specified maximum redemption threshold under our Current Charter. Each redemption of shares of common stock by our public stockholders will reduce the amount in the Trust Account. The Merger Agreement provides that EQRx’s obligation to consummate the Business Combination is subject to the condition that the amount in the Trust Account and the proceeds from the PIPE Investment equal or exceed $1,000,000,000, following payment of the aggregate amount of cash proceeds that will be required to satisfy any redemptions and payment of all Company and EQRx transaction expenses. This condition to closing in the Merger Agreement is for the sole benefit of, and may be waived by, EQRx.
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If, as a result of redemptions of common stock by our public stockholders, this condition is not met (or waived by EQRx), then EQRx may elect not to consummate the Business Combination. In addition, in no event will we redeem shares of our common stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Holders of our outstanding public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in this proxy statement/prospectus assumes that none of our public stockholders exercise their redemption rights with respect to their shares of common stock.
Q: Is there a limit on the total number of shares that may be redeemed?
A: Yes. Our Current Charter provides that we may not redeem our public shares in an amount that would result in the Company’s failure to have net tangible assets in excess of $5,000,001 (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the Merger Agreement. Other than this limitation, our Current Charter does not provide a specified maximum redemption threshold. In addition, the Merger Agreement provides that the obligation of EQRx to consummate the Business Combination is conditioned on the amount in the Trust Account and the proceeds from the PIPE Investment equaling or exceeding $1,000,000,000, after the payment of redemptions and satisfaction of Company and EQRx transaction expenses. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Merger Agreement exceeds the aggregate amount of cash available to us, we may not complete the Business Combination or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
Based on the amount of approximately $552 million in our Trust Account as of June 30, 2021, and taking into account the anticipated gross proceeds of approximately $1.2 billion from the PIPE Investment, approximately 55.2 million shares of common stock may be redeemed and still enable us to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement. We refer to this as the maximum redemption scenario.
Q: Will how I vote affect my ability to exercise redemption rights?
A: No. You may exercise your redemption rights whether you vote your shares of common stock for or against, or whether you abstain from voting on the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq.
Q: How do I exercise my redemption rights?
A: In order to exercise your redemption rights, you must (i)(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and (ii) prior to 5:00 p.m. Eastern time on [•], 2021 (two business days before the scheduled date of the Special Meeting) (a) submit a written request to the Transfer Agent that the Company redeem your public shares for cash and (b) deliver your public shares to the Transfer Agent, physically or electronically through DTC. Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing.
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The Transfer Agent’s address is as follows:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
Email: mzimkind@continentalstock.com
Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, we do not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to our Transfer Agent prior to the date set forth in these proxy materials, or up to two business days prior to the scheduled vote on the proposal to approve the Business Combination at the Special Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (“DTC”) Deposit/Withdrawal At Custodian (“DWAC”) system, at such stockholder’s option. The requirement for physical or electronic delivery prior to the Special Meeting ensures that a redeeming stockholder’s election to redeem is irrevocable once the Business Combination is approved.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming stockholder. However, this fee would be incurred regardless of whether or not we require stockholders seeking to exercise redemption rights to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.
Q: What are the U.S. federal income tax consequences of exercising my redemption rights?
A: The U.S. federal income tax consequences to stockholders who exercise their redemption rights to receive cash in exchange for their public shares depend on the stockholder’s particular facts and circumstances. Such stockholder generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the public shares redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution to a redeeming stockholder for U.S. federal income tax purposes if the redemption does not effect a sufficient reduction (as determined under applicable federal income tax law) in the redeeming stockholder’s percentage ownership in us (whether such ownership is direct or through the application of certain attribution and constructive ownership rules). Any amounts treated as such a distribution will constitute a dividend to the extent not in excess of our current and accumulated earnings and profits as measured for U.S. federal income tax purposes. Any amounts treated as a distribution and that are in excess of our current and accumulated earnings and profits will reduce the redeeming stockholder’s basis in his or her redeemed public shares, and any remaining amount will be treated as gain realized on the sale or other disposition of public shares. These tax consequences are described in more detail in the
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section titled “Proposal No. 1 — The Business Combination Proposal — Certain Material U.S. Federal Income Tax Considerations of the Redemption.” We urge you to consult your tax advisor regarding the tax consequences of exercising your redemption rights.
Q: What are the material U.S. federal income tax consequences of the Business Combination to me?
A: Certain material U.S. federal income tax considerations that may be relevant to you in respect of the Business Combination are discussed in more detail in the section entitled “Certain Material U.S. Federal Income Tax Considerations.” The discussion of the U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all of the U.S. federal income tax considerations that are applicable to you in respect of the Business Combination, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws.
TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF THE BUSINESS COMBINATION WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE BUSINESS COMBINATION TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
Q: If I am a Company warrant holder, can I exercise redemption rights with respect to my public warrants?
A: No. The holders of our public warrants have no redemption rights with respect to our public warrants.
Q: Do I have appraisal rights if I object to the proposed Business Combination?
A: No. Appraisal rights are not available to holders of our common stock in connection with the Business Combination.
Q: What happens to the funds held in the Trust Account upon consummation of the Business Combination?
A: The funds held in the Trust Account (together with the proceeds from the PIPE Investment) will be used to pay certain fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by the Company and other parties to the Merger Agreement in connection with the transactions contemplated by the Merger Agreement, including the Business Combination, and pursuant to the terms of the Merger Agreement.
Q: What happens if the Business Combination is not consummated?
A: There are certain circumstances under which the Merger Agreement may be terminated. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement” for information regarding the parties’ specific termination rights.
If we do not consummate the Business Combination, we may continue to try to complete a business combination with a different target business until the applicable deadline. If we fail to complete an initial business combination by the applicable deadline, then we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem our public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to the Company to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish our public stockholders’ rights as stockholders (including the
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right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the IPO price per unit in the IPO. Please see the section entitled “Risk Factors — Risks Related to CMLS III and the Business Combination.”
Holders of our Founder Shares have waived any right to any liquidation distribution with respect to such shares and the underwriters of our IPO agreed to waive their rights to the business combination marketing fee held in the Trust Account in the event we do not complete our initial business combination within the required period. In addition, if we fail to complete a business combination by the applicable deadline, there will be no redemption rights or liquidating distributions with respect to our outstanding warrants, which will expire worthless.
Q: When is the Business Combination expected to be completed?
A: The closing of the Business Combination is expected to take place on or prior to the second business day following the satisfaction or waiver of the conditions described below in the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Conditions to Closing the Business Combination.” The closing is expected to occur in the fourth quarter of 2021. The Merger Agreement may be terminated by the Company or EQRx if the Closing has not occurred by March 31, 2022.
For a description of the conditions to the completion of the Business Combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Conditions to Closing the Business Combination.”
Q: What do I need to do now?
A: You are urged to carefully read and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.
Q: Who will solicit and pay the cost of soliciting proxies for the Special Meeting?
A: The Company is soliciting proxies on behalf of its Board. The Company will pay the cost of soliciting proxies for the Special Meeting. The Company has engaged D.F. King to assist in the solicitation of proxies for the Special Meeting. The Company has agreed to pay D.F. King a fee of $25,000, plus disbursements, and will reimburse D.F. King for its reasonable out-of-pocket expenses and indemnify D.F. King and its affiliates against certain claims, liabilities, losses, damages and expenses. The Company will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Company common stock for their expenses in forwarding soliciting materials to beneficial owners of the Company common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
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Q: Who can help answer my questions?
A: If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:
c/o Corvex Management LP
667 Madison Avenue
New York 10065
Attn: Eli Casdin
Email: Eli@casdincapital.com
You may also contact our proxy solicitor at:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Stockholders Call (toll-free): (866) 864-7961
Banks and Brokers Call: (212) 269-5550
Email: CMLT@dfking.com
To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the Special Meeting.
You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”
If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to our Transfer Agent prior to the Special Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your stock, please contact our Transfer Agent:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
Email: mzimkind@continentalstock.com
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information contained in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should carefully read this entire proxy statement/prospectus, including the Annexes and accompanying financial statements of the Company and EQRx, to fully understand the proposed Business Combination (as described below) before voting on the proposals to be considered at the Special Meeting (as described below). Please see the section entitled “Where You Can Find More Information” of this proxy statement/prospectus.
Unless otherwise specified, the ownership percentages with respect to the post-combination company following the Business Combination and PIPE Investment are based on aggregate Merger Consideration of 365,000,000 shares of CMLS III Class A Common Stock and assume 342,405,942 shares will be issued at Closing to current holders of issued and outstanding shares of EQRx stock, but does not include the portion of the Closing Merger Consideration that will be allocated to shares underlying options to acquire EQRx stock (totaling, in aggregate, assuming full usage of EQRx’s existing equity pool before completion of the Business Combination and after giving effect to the estimated exchange ratio, 22,594,058 shares of CMLS III Class A common stock) that may be exercised in the future. This calculation also excludes (x) the issuance of any shares following the completion of the Business Combination under the 2021 Incentive Plan or the ESPP, copies of which are included in this proxy statement/prospectus as Annex C and Annex D, respectively, (y) the issuance of any Earn-Out Shares or (z) shares of CMLS III underlying warrants to purchase common stock of CMLS III that will remain outstanding following the Business Combination. In addition, the ownership percentages assume that no public shares are redeemed by the Company.
Parties to the Business Combination
The Company
The Company is a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
The mailing address of the Company’s principal executive office is 667 Madison Avenue, New York, New York 10065.
Merger Sub
Merger Sub, a Delaware corporation, is a wholly-owned subsidiary of the Company, formed by the Company in Delaware, to consummate the Business Combination. In the Business Combination, Merger Sub will merge with and into EQRx, with EQRx surviving the Merger as a wholly-owned subsidiary of the Company.
The mailing address of Merger Sub’s principal executive office is 667 Madison Avenue, New York, New York 10065.
EQRx
EQRx is a new type of pharmaceutical company committed to developing and delivering innovative medicines to patients at radically lower prices. EQRx’s mission is to improve health for all with great, innovative, affordable medicines so that people with life-changing or chronic conditions can gain access to the medicines they need, physicians can treat patients without barriers to prescribing, and health systems can afford to make those medicines available, without restrictions, to the populations they serve in a financially sustainable manner. Launched in January 2020, EQRx’s “New Pharma” solution starts with assembling a catalog of medicines at significant scale, targeting some of the most innovative clinical opportunities
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and highest drug cost categories of today and tomorrow, with an initial focus on oncology and immune-inflammatory diseases. EQRx is focused on developing programs that are innovative, branded, and patent-protected that, if approved, have potential to be equivalent or superior to other therapies in their class. EQRx does not have any products approved for commercial sale and has not generated any revenue to date, and so may never become profitable. In addition, EQRx’s business and pricing model is untested and may never be successful or generate sufficient revenue to lead to profitability.
The mailing address of EQRx’s principal executive office is 50 Hampshire Street, Cambridge, Massachusetts 02139.
The Business Combination Proposal
On August 5, 2021, the Company and Merger Sub entered into the Merger Agreement with EQRx. The EQRx stockholders have adopted and approved the Merger Agreement. CMLS III Class A common stock is currently listed on Nasdaq. If the Merger Agreement is approved by Company stockholders at the Special Meeting, Merger Sub will merge with and into EQRx, with EQRx surviving the merger as a wholly owned subsidiary of the Company. For more information about the transactions contemplated by the Merger Agreement, please see the section entitled “Proposal No. 1 — The Business Combination Proposal.” A composite copy of the Merger Agreement is included in this proxy statement/prospectus as Annex A.
Merger Consideration to the EQRx Stockholders
Under the Merger Agreement, CMLS III has agreed to acquire all of the outstanding equity interests of EQRx for at least $3.65 billion in aggregate consideration consisting of 365,000,000 shares of CMLS III Class A common stock and up to an additional 50,000,000 shares of CMLS III Class A common stock pursuant to the Earn-Out Shares. Subject to the terms and conditions of the Merger Agreement, at the Effective Time, and as further described in this proxy statement/prospectus, each share of EQRx stock, other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement), that is issued and outstanding immediately prior to the Effective Time will be cancelled and automatically deemed for all purposes to represent the right to receive a portion of the total consideration, with each EQRx’s stockholder (as applicable) being entitled to receive:
(a) a number of shares of CMLS III Class A Common Stock equal to the quotient of: (i) the product of (x) such stockholder’s total shares of EQRx stock (with the EQRx common stock and preferred stock (determined on an as-converted basis) included as a single class) multiplied by (y) the per share amount calculated in accordance with the Merger Agreement, divided by (ii) $10.00; and
(b) such stockholder’s earn-out pro rata share of any Earn-Out Shares to which such stockholder is entitled pursuant to the terms of the Merger Agreement.
In addition, at the Effective Time, each outstanding option to purchase EQRx common stock will be exchanged for options to purchase CMLS III Class A common stock, and each outstanding EQRx restricted stock award will be cancelled and converted into restricted stock awards of CMLS III Class A common stock calculated in accordance with the terms of the Merger Agreement.
Following the closing of the Business Combination, and as additional consideration for the Merger and the other transactions, if during the Earn-Out Period, a Triggering Event occurs, then we will deliver or cause to be delivered to each applicable EQRx stockholder in accordance with such stockholder’s respective Earn-Out Pro Rata Share (other than holders of Dissenting Shares, as defined in the Merger Agreement), and Earn-Out Service Provider (in accordance with its respective Earn-Out Pro Rata Share and, in the case of the Earn-Out Service Providers, in accordance with the terms of the applicable earn-out award agreement), the applicable Earn-Out Shares. Such issuance shall be upon the terms and subject to the conditions set forth
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in the Merger Agreement and the other transaction agreements and, in the case of the Earn-Out Service Providers, subject to the additional requirements set forth in the Merger Agreement and the applicable earn-out award agreement.
After consideration of the factors identified and discussed in the section titled “The Business Combination Proposal — CMLS III Board of Directors’ Reasons for the Approval of the Business Combination,” the CMLS III Board concluded that the Business Combination met all of the requirements disclosed in the prospectus for CMLS III’s IPO, including that the aggregate fair market value of the proposed Business Combination was at least 80% of the net assets held in the Trust Account. For more information about the transactions contemplated by the Merger Agreement, please see the section entitled “The Business Combination Proposal.”
For further details, please see the section entitled “The Business Combination Proposal — Merger Consideration.”
Material U.S. Federal Income Tax Consequences of the Business Combination
The Company and EQRx intend that the Merger qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Code. Certain material U.S. federal income tax considerations that may be relevant to you in respect of the Business Combination are discussed in more detail in the section entitled “Certain Material U.S. Federal Income Tax Considerations.” The discussion of the U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all of the U.S. federal income tax considerations that are applicable to you in respect of the Business Combination, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws.
TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF THE BUSINESS COMBINATION WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE BUSINESS COMBINATION TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
Related Agreements
This section describes the material provisions of the Related Agreements, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements. Forms of the Forfeiture Agreement, Stockholder Support Agreement, Sponsor Support Agreement and Subscription Agreement are attached hereto as Annexes G, H, I, and J, respectively. Stockholders and other interested parties are urged to read such Related Agreements in their entirety prior to voting on the proposals presented at the Special Meeting.
Amended and Restated Registration Rights Agreement
In connection with the closing of the Business Combination, the Company, the Sponsor and certain other parties thereto (collectively, the “rights holders”) expect to enter the Amended and Restated Registration Rights Agreement, which will amend and restate in its entirety the existing registration rights agreement, dated April 6, 2021, by and between CMLS III and the parties thereto. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, CMLS III is to prepare and file with the SEC, no later than 30 days after the Closing Date, a shelf registration statement for an offering to be made on a continuous basis from time to time with respect to the resale of the registrable shares under the Amended and Restated Registration Rights Agreement. CMLS III is further required to use commercially reasonable efforts to cause such shelf registration statement to be declared effective as soon as possible after filing, but in no event later than the earlier of 60 days following the filing date thereof and five business days after the SEC notifies CMLS III that it will not review such registration statement, subject to extension in the event that the registration is subject comments from the SEC.
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In addition, pursuant to the terms of the Amended and Restated Registration Rights Agreement and subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised, the rights holders may demand at any time or from time to time, that CMLS III file a registration statement on Form S-1 or Form S-3 to register certain shares of CMLS III Class A common stock held by such rights holders. The Amended and Restated Registration Rights Agreement will also provide the rights holders with “piggy-back” registration rights, subject to certain requirements and customary conditions. The Company will bear the expenses incurred in connection with the filing of any such registration statement.
Forfeiture Agreement
In connection with the execution of the Merger Agreement, the Company and the Sponsor entered into the Forfeiture Agreement whereby the Sponsor agreed to forfeit certain of its 13,500,000 shares of CMLS III Class B common stock. Under the Forfeiture Agreement, up to 50% of Sponsor’s shares are subject to forfeiture based on the extent of redemptions from the Trust Account, such that Sponsor shall forfeit the full 50% of such shares if there are redemptions for 100% of the Trust Account and no shares if there are 0% redemptions (with the portion of such 50% of Sponsor’s shares that are forfeited adjusting on a linear basis in between 100% and 0% redemptions from the Trust Account).
Stockholder Support Agreement
In connection with the execution of the Merger Agreement, CMLS III entered into the Stockholder Support Agreement with certain stockholders of EQRx, pursuant to which, among other things, such stockholders have agreed, respectively, to execute written consents with respect to their shares of EQRx stock held of record or thereafter acquired in favor of the Merger and related matters, in each case, on the terms and subject to the conditions set forth in the Stockholder Support Agreement.
Sponsor Support Agreement
In connection with the execution of the Merger Agreement, the Sponsor entered into the Sponsor Support Agreement with the Company and EQRx, pursuant to which, among other things, the Sponsor agreed to vote all shares of Company common stock beneficially owned by the Sponsor in favor of each of the proposals and any other matters necessary or reasonably requested by EQRx for consummation of the Merger and the other transactions contemplated by the Merger Agreement, and against any other competing business combination proposal.
The Sponsor also agreed, subject to certain exceptions, not to (a) transfer any of its CMLS III Class B common stock or private placement warrants, (b) enter into any swap or other arrangement that transfers to another the Sponsor’s CMLS III Class B common stock or private placement warrants, and (c) publicly announce any intention to effect any transaction specified by the foregoing until the earlier of (i) the Effective Time, (ii) such date and time as the Merger Agreement is terminated in accordance with its terms (the earlier of (i) and (ii), the “Expiration Time”), and (iii) the liquidation of the Company subsequent to the Closing.
The Sponsor Support Agreement shall terminate and be of no further force or effect upon the earliest of: (i) the Expiration Time, (ii) the liquidation of the Company, and (iii) the written agreement of the Company, Sponsor and EQRx. Upon such termination of the Sponsor Support Agreement, all obligations of the parties under such agreement will terminate, without any liability or other obligation on the part of any party to any person in respect hereof or the transactions contemplated hereby, and no party shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of the Sponsor Support Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Sponsor Support Agreement prior to such termination.
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Insider Letter Amendment
In connection with the execution of the Merger Agreement, the Company, the Sponsor and certain other insiders entered into an amendment (the “Insider Letter Amendment”) to the letter agreement, dated as of April 6, 2021 (the “Insider Letter”).
Pursuant to the Insider Letter Amendment, the Sponsor agreed:
• with respect to 50% of its Founder Shares (or any shares of CMLS III Class A common stock issuable upon conversion of its Founder Shares) not to transfer any such Founder Shares (or any shares of Class A common stock issuable upon conversion thereof) until the earlier of (A) one year after the Closing and (B) after the Business Combination, (x) the first date that the closing price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within any 30 trading-day period commencing at least 150 days after the Closing Date, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class A Common Stock for cash securities or other property (the “Initial Sponsor Shares Lock-up Period”);
• with respect to any of its Founder Shares not subject to the Initial Sponsor Shares Lock-up Period, not to Transfer any such Founder Shares (or any shares of CMLS III Class A common stock issuable upon conversion thereof) until the expiration of the period ending on the second anniversary of the Closing (the “Final Sponsor Shares Lock-up Period”, and together with the Initial Sponsor Shares Lock-up Period, the “Sponsor Shares Lock-up Period”); and
• with respect to its private placement warrants, not to transfer any such private placement warrants until 30 days after the Closing of the Business Combination.
Each insider also agreed to the same lock-up period as the Initial Sponsor Shares Lock-up Period with respect to his or her Founder Shares (in the case of each insider, the “Founder Shares Lock-up Period”) and not to transfer any private placement warrants (or any shares of Class A common stock issued or issuable upon exercise of the private placement warrants), until 30 days after the Closing of the Business Combination.
Subscription Agreements
In connection with the Business Combination, the Company entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, the Company agreed to issue and sell to the PIPE Investors, in private placements to close immediately prior to the Closing, an aggregate of 120,000,000 shares of common stock at $10.00 per share, for an aggregate purchase price of $1,200,000,000. The obligations to consummate the subscriptions are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement. The PIPE Investment will be consummated substantially concurrently with the Closing.
Lock-up Agreements
In connection with the execution of the Merger Agreement, EQRx agrees to use reasonable best efforts to obtain a Stockholder Lock-Up Agreement from each EQRx stockholder holding more than 1% of the outstanding capital stock of EQRx. Pursuant to such Stockholder Lock-Up Agreement, each stockholder agrees, from the Closing Date until the earliest of (a) the date that is 180 calendar days from the Closing Date, and (b) the date following the Closing Date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Company capital stock for cash, securities or other property; not to (i) sell, offer to
34
sell, contract or agree to sell, hypothecate pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to shares of CMLS III Class A common stock issued to such shareholder pursuant to the Merger Agreement (such shares of CMLS III Class A common stock, the “Lock-up Shares”), (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Lock-up Shares, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).
Incentive Plan
Our Board approved the 2021 Incentive Plan on August 5, 2021, subject to stockholder approval of the 2021 Incentive Plan at the Special Meeting. The purpose of the 2021 Incentive Plan is to promote the long-term success of the post-combination company and the creation of stockholder value by encouraging service providers to focus on critical long-range corporate objectives, encouraging the attraction and retention of service providers, employees and directors with exceptional qualifications and linking service providers directly to stockholder interests through increased stock ownership. These incentives are provided through the grant of stock options, including incentive stock options, and nonqualified stock options, stock appreciation rights, restricted stock, unrestricted stock awards, restricted stock units, and cash-based awards. For more information about the 2021 Incentive Plan, please see the section entitled “Proposal No. 3 — The Incentive Plan Proposal — Summary of Material Features of the 2021 Incentive Plan.”
Employee Stock Purchase Plan
Our Board approved the ESPP on August 5, 2021, subject to stockholder approval of the ESPP at the Special Meeting. The purpose of the ESPP Proposal is to provide eligible employees with an opportunity to increase their proprietary interest in the success of the post-combination company by purchasing common stock on favorable terms and to pay for such purchases through payroll deductions. We believe by providing eligible employees with an opportunity to increase their proprietary interest in the success of the post-combination company, the ESPP will motivate participants to offer their maximum effort to the post-combination company and help focus them on the creation of long-term value consistent with the interests of the post-combination company’s stockholders. For more information about the ESPP, please see the section entitled “Proposal No. 4 — The ESPP Proposal.”
Redemption Rights
Pursuant to our Current Charter, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to the Company to pay its franchise and income taxes, by (ii) the total number of then-outstanding public shares; provided that the Company will not redeem any shares of common stock issued in the IPO to the extent that such redemption would result in the Company’s failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) in excess of $5,000,001. As of June 30, 2021, the estimated per share redemption price would have been approximately $10.00.
If a holder exercises its redemption rights, then such holder will be exchanging its shares of our common stock for cash and will no longer own shares of the post-combination company. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures described herein. Please see the section entitled “Special Meeting of Company Stockholders — Redemption Rights” for the procedures to be followed
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if you wish to redeem your shares for cash. Any request for redemption may be withdrawn until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing.
Impact of the Business Combination on the Company’s Public Float
It is anticipated that, upon completion of the Business Combination: (i) the Company’s public stockholders (other than the PIPE Investors) will retain an ownership interest, in the aggregate, of approximately 10.4% of the outstanding shares of the post-combination company; (ii) the PIPE Investors will own, in the aggregate, approximately 22.6% of the outstanding shares of the post-combination company (such that public stockholders, including PIPE Investors (including the affiliates of our Sponsor), will own, in the aggregate, approximately 33.0% of the outstanding shares of the post-combination company); (iii) our Initial Stockholders (including our Sponsor) will own, in the aggregate, approximately 2.6% of the outstanding shares of the post-combination company; and (iv) the former EQRx stockholders are expected to hold, in the aggregate, approximately 64.4% of the outstanding shares of the post-combination company. Refer to the pro forma post-combination company common stock issued and outstanding immediately after the Business Combination and PIPE Investment in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The PIPE Investors have agreed to purchase 120,000,000 shares of common stock, in the aggregate, for $1,200,000,000 of gross proceeds.
The ownership percentages with respect to the post-combination and PIPE Investment are based on aggregate Merger Consideration of 365,000,000 shares of CMLS III Class A Common Stock and assume 342,405,942 shares will be issued at Closing to current holders of issued and outstanding shares of EQRx stock, but does not include the portion of the Closing Merger Consideration that will be allocated to shares underlying options to acquire EQRx stock (totaling, in aggregate, assuming full usage of EQRx’s existing equity pool before completion of the Business Combination and after giving effect to the estimated exchange ratio, 22,594,058 shares of CMLS III Class A common stock) that may be exercised in the future. This calculation also excludes (x) the issuance of any shares following the completion of the Business Combination under the 2021 Incentive Plan or the ESPP, copies of which are included in this proxy statement/prospectus as Annex C and Annex D, respectively, (y) the issuance of any Earn-Out Shares or (z) shares of CMLS III underlying warrants to purchase common stock of CMLS III that will remain outstanding following the Business Combination. In addition, the ownership percentages assume that no public shares are redeemed by the Company. If the actual facts are different than these assumptions, which they are likely to be, the ownership percentages in the post-combination company will be different from the above stated ownership percentages. For more information, please see the sections entitled “Summary of the Proxy Statement/Prospectus — Impact of the Business Combination on the Company’s Public Float,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Proposal No. 3 — The Incentive Plan Proposal” and “Proposal No. 4 — The ESPP Proposal.”
The following table illustrates varying ownership levels in the Company, assuming no redemptions by the Company’s public stockholders and the maximum redemptions by the Company’s stockholders:
|
# of shares assuming no redemptions |
% assuming no redemptions |
# of shares assuming maximum redemptions |
% assuming maximum redemptions |
|||||||
|
Public stockholders |
55,200,000 |
10.4 |
% |
— |
— |
% |
||||
|
PIPE investors(1) |
120,000,000 |
22.6 |
% |
120,000,000 |
25.6 |
% |
||||
|
Initial stockholders |
13,800,000 |
2.6 |
% |
7,050,000 |
1.5 |
% |
||||
|
Former EQRx stockholders(2) |
342,405,942 |
64.4 |
% |
342,405,942 |
72.9 |
% |
||||
|
531,405,942 |
100.0 |
% |
469,455,942 |
100.0 |
% |
|||||
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____________
(1) The PIPE Investors includes 10,250,000 shares held by affiliates of our Sponsor.
(2) Please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
Other Proposals
In addition, the stockholders of the Company will be asked to vote on:
• a proposal to approve, for purposes of complying with applicable Nasdaq Listing Rules, the issuance of more than 20% of the Company’s issued and outstanding common stock pursuant to the Business Combination and the PIPE Investment (Proposal No. 2);
• a proposal to approve and adopt the 2021 Incentive Plan, a copy of which is included in this proxy statement/prospectus as Annex C, including the authorization of the initial share reserve under the 2021 Incentive Plan (Proposal No. 3);
• a proposal to approve and adopt the ESPP, a copy of which is included in this proxy statement/prospectus as Annex D, including the authorization of the initial share reserve under the ESPP (Proposal No. 4);
• a proposal to adopt the A&R Certificate of Incorporation, a copy of which is included in this proxy statement/prospectus as Annex E, including a change to the Company’s stock classes and an increase in the number of authorized shares of the Company (Proposal No. 5); and
• a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Charter Amendment Proposal (Proposal No. 6).
Please see the sections entitled “Proposal No. 2 — The Nasdaq Stock Issuance Proposal,” “Proposal No. 3 — The Incentive Plan Proposal,” “Proposal No. 4 — The ESPP Proposal,” “Proposal No. 5 — The Charter Amendment Proposal,” and “Proposal No. 6 — The Adjournment Proposal” for more information.
Date and Time of Special Meeting
The Special Meeting will be held on [day], [date] at [time] Eastern time at [virtual meeting link], or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals. The Special Meeting will be conducted exclusively via live webcast and so stockholders will not be able to attend the meeting in person. Stockholders may attend the Special Meeting online and vote at the Special Meeting by visiting [virtual meeting link] and entering your 12-digit control number, which is either included on the proxy card you received or obtained through Continental Stock Transfer & Trust Company.
Registering for the Special Meeting
Any stockholder wishing to attend the virtual meeting should register for the meeting by [date] at [virtual meeting link]. To register for the Special Meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:
• If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only Special Meeting, go to [virtual meeting link], enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend.
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• Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the meeting date in order to ensure access.
Voting Power; Record Date
Only Company stockholders of record at the close of business on [•], 2021, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. You are entitled to one vote for each share of Company common stock that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 69,000,000 shares of Company common stock outstanding and entitled to vote, of which 55,200,000 are public shares and 13,800,000 are Founder Shares held by our Initial Stockholders.
Accounting Treatment
The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, the Company will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of EQRx issuing stock for the net assets of the Company, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.
Appraisal Rights
Appraisal rights are not available to our stockholders in connection with the Business Combination.
Proxy Solicitation
The Company is soliciting proxies on behalf of its Board. Proxies may be solicited by mail. The Company has engaged D.F. King to assist in the solicitation of proxies.
If a stockholder grants a proxy, it may still vote its shares at the Special Meeting if it revokes its proxy before the Special Meeting. A stockholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “Special Meeting of Company Stockholders — Revoking Your Proxy.”
Interests of Certain Persons in the Business Combination
In considering the recommendation of our Board to vote in favor of the Business Combination, stockholders should be aware that aside from their interests as stockholders, our Sponsor and certain members of our Board and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination.
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These interests include, among other things:
• the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve the Business Combination;
• the fact that our Initial Stockholders will retain up to 13,800,000 Founder Shares upon the Closing;
• the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by the applicable deadline;
• if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
• the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;
• the fact that Eli Casdin and Dr. Amy Abernethy will continue as board members of the post-combination company, and will be entitled to receive compensation for serving on the board of directors of the post-combination company;
• the fact that certain entities with which Mr. Casdin is affiliated collectively own approximately 10.1% of EQRx’s outstanding capital stock on an as-converted basis, following these entities’ investment of approximately $90.0 million since EQRx’s inception, with an estimated value of $345.1 million at the Closing based on an implied transaction value of $10.00, and Mr. Casdin serves on the board of directors of EQRx;
• the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by the applicable deadline;
• the fact that the Initial Stockholders (including entities controlled by the Company’s officers and directors) have made an aggregate average investment per share of CMLS III Class B common stock of less than $0.01 as of the consummation of the Company’s IPO, and as a result of the significantly lower investment per share of the Initial Stockholders as compared with the investment per share of the Initial Stockholders, a transaction which results in an increase in the value of the investment of the Initial Stockholders may result in a decrease in the value of the investment of the Company’s public stockholders;
• the fact that simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 8,693,333 warrants at a purchase price of $1.50 per private placement warrant, to the Sponsor and certain of the Company’s directors (and/or entities controlled by them) generating gross proceeds to the Company of approximately $13,040,000, and if a business combination is not consummated by the applicable deadline, the proceeds from the sale of the private placement warrants will be used to fund the redemption of public shares (subject to the requirements of applicable law), and the private placement warrants will be worthless;
• the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidate;
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• the fact that given the differential in purchase price that our Sponsor paid for the Founder Shares as compared to the price of the units sold in the IPO and the substantial number of shares of post-combination company common stock that our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, our Sponsor and its affiliates may realize a positive on such investments even if other CMLS III stockholders experience a negative rate of return following the Business Combination; and
• that funds advised by Casdin Capital LLC and Corvex Management L.P., affiliates of the Sponsor, have entered into Subscription Agreements with the Company, pursuant to which such affiliates have committed to purchase 5,000,000 and 5,250,000 shares of common stock in the PIPE Investment, respectively, for an aggregate commitment of approximately $50,000,000 and $52,500,000, respectively.
Reasons for the Approval of the Business Combination
We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We sought to do this by utilizing the networks and industry experience of both our Sponsor and our Board to identify, acquire and operate one or more businesses within or outside of the United States, although we were not limited to a particular industry or sector, we focused on the life sciences sector.
In particular, our Board considered the following positive factors, although not weighted or in any order of significance:
• Opportunities Arising from EQRx’s Business and Growth Model. The company’s collaborative payer partnerships and modern drug development approach, combined with its strong business development efforts in-licensing assets and forming joint ventures, uniquely position it to disrupt large therapeutic markets with lower cost, high quality, innovative drugs and take share in these markets in an efficient and profitable manner.
• Committed and Capable Management and Scientific Team. Our Board considered that EQRx has an experienced and professional management team. Alexis Borisy, EQRx’s Chairman and CEO at such time, has founded more than a dozen innovative biotech companies. Melanie Nallicheri, EQRx’s President and COO at such time is an accomplished leader and executive, with decades of experience across the biopharma and payer value chain. EQRx’s CFO Jami Rubin brings extensive BioPharma and capital markets expertise.
• Fairness Opinion. The financial analysis reviewed by Houlihan Lokey Capital Inc. (“Houlihan Lokey”) with our Board as well as the oral opinion of Houlihan Lokey rendered to our Board on August 5, 2021 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to our Board dated August 5, 2021), as to the fairness, from a financial point of view, to CMLS III of the Closing Merger Consideration to be issued by CMLS III in the Merger pursuant to the Merger Agreement.
• Potential for Development of Payer Partnerships. Our Board considered publicly available information regarding current and anticipated EQRx efforts to develop a Global Buyers Club through its existing and future partnerships with payers and pharmacy benefit managers (“PBMs”) in the industry, including collaboration agreements with payers that cover that over 20% of the U.S. insured population.
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• Existing Drug Programs and Future Pipeline. Our Board considered the current status of the drug programs in the EQRx pipeline, including that two such programs have positive data from registration enabling studies in China. Regulatory factors for approval in EQRx geographies were also considered.
• Benefit of Adding Members of the CMLS III Board to the EQRx Board. Our Board considered that the addition of members of our Board to the EQRx Board as part of the Business Combination provides additional board members experienced in the life sciences industry and public companies.
For a complete list of the factors considered by the CMLS III Board, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — CMLS III Board of Directors’ Reasons for the Approval of the Business Combination.”
Conditions to Closing the Business Combination
Conditions to Each Party’s Obligations
The respective obligations of the Company and EQRx to complete the Business Combination are subject to the satisfaction of the following conditions:
• the approval of the Merger Agreement and the transactions contemplated by the Merger Agreement by the requisite vote of the Company stockholders;
• the Company must have $5,000,001 of net tangible assets, as more fully described in “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Conditions to the Merger”;
• the applicable waiting period(s) under the HSR Act and, if required, any other applicable antitrust law in respect of the transactions contemplated by the Merger Agreement must have expired or been terminated and the parties to the Merger Agreement have received or been deemed to have received all other necessary pre-closing authorizations, consents, clearances, waivers and approvals of all governmental entities in connection with the execution, delivery and performance of the Merger Agreement and the related transactions set forth on the disclosure schedules; and
• there must be no legal requirement prohibiting, enjoining or making illegal the consummation of the transactions contemplated by the Merger Agreement and no restraining order prohibiting, enjoining or making illegal the consummation of such transactions may be in effect, as more fully described in “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Conditions to the Merger.”
Conditions to Obligations of the Company
The obligation of the Company to complete the Merger is also subject to the satisfaction, or waiver by the Company, of the following conditions:
• the representations and warranties of EQRx related to organization, qualification, subsidiaries, due authorization, brokers and third party expenses, and absence of certain business practices must be true and correct in all material respects (without giving effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation contain herein) on and as of the date of the Merger Agreement and on as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date);
• the representations and warranties of EQRx set forth in the capitalization representation must be true and correct in all respects on and as of the date of the Agreement and
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on as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date), except for any de minimis inaccuracies;
• all other representations and warranties of EQRx set forth in the Merger Agreement must be true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation contained herein) on and as of the date of the Merger Agreement and on as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date), except where the failure of such representations and warranties of EQRx to be so true and correct, individually or in the aggregate, has not had and is not reasonably likely to have a material adverse effect;
• EQRx must have performed or complied with all agreements and covenants required by the Merger Agreement to be performed or complied with by it at or prior to the Closing Date, in each case in all material respects;
• EQRx must have delivered to the Company a certificate signed by an executive officer of EQRx certifying that the preceding conditions have been satisfied;
• the EQRx Stockholder Approval shall have been obtained;
• no material adverse effect may have occurred since the date of the Merger Agreement that is continuing; and
• EQRx must have delivered, or caused to have been delivered, or must stand ready to deliver all of the certificates, instruments, contracts and other documents specified to be delivered by it hereunder, including copies of the documents to be delivered by the company pursuant to the Merger Agreement, duly executed by the applicable signatory or signatories specified therein, if any.
Conditions to Obligations of EQRx
The obligation of EQRx to complete the Merger is also subject to the satisfaction or waiver by EQRx of the following conditions:
• the representations and warranties of the Company related to organization, subsidiaries, authority in relation to the Merger Agreement and business activities and liabilities must be true and correct in all material respects (without giving effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation contain herein) on and as of the date of the Merger Agreement and on and as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date);
• the representations and warranties of the Company set forth in the capitalization representation must be true and correct in all respects on and as of the date of the Merger Agreement and on as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date), except for any de minimis inaccuracies;
• all other representations and warranties of the Company set forth in the Merger Agreement must be true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation contained herein) on and as of the date of the Merger Agreement and on as of the Closing Date as though
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made on and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date), except where the failure of such representations and warranties of the Company to be so true and correct, individually or in the aggregate, has not had and is not reasonably likely to have a material adverse effect;
• the Company and Merger Sub must have performed or complied with all agreements and covenants required by the Merger Agreement to be performed or complied with by them on or prior to the Closing Date, in each case in all material respects;
• the Company must have delivered to EQRx a certificate, signed by an executive officer of the Company and dated as of the Closing Date, certifying that the preceding conditions have been satisfied;
• the Company must have delivered or must stand ready to deliver all of the certificates, instruments, contracts and other documents specified to be delivered by it hereunder, including copies of the documents to be delivered by the Company pursuant to the Merger Agreement, duly executed by the Company and Merger Sub, as applicable;
• the Company must have made appropriate arrangements to have the Trust Account, less amounts paid and to be paid pursuant the Merger Agreement, available to the Company for payment of the cash payment amount to be paid at Closing, and the Company and EQRx transaction costs at the Closing;
• the funds (i) contained in the Trust Account, plus (ii) the funds to be received pursuant to the Subscription Agreements substantially concurrently with the Closing, minus (iii) payment of the aggregate amount of cash proceeds that will be required to satisfy any exercise of the redemptions by the Company stockholders (prior to payment of transaction expenses), must equal or exceed $1,000,000,000;
• the shares of Company common stock to be issued in connection with the Merger must have been approved for listing on the Nasdaq; and
• no material adverse effect must have occurred since the date of the Merger Agreement and be continuing.
Termination
The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, among others, the following:
• by mutual written agreement of CMLS III and EQRx at any time;
• by either CMLS III or EQRx (i) if the Transactions shall not have been consummated by the Outside Date; provided, however, that the right to terminate the Merger Agreement will not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the transactions to occur on or before such date and such action or failure to act constitutes a breach of the Merger Agreement; (ii) if a governmental entity has issued an order or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions, including the Merger, which order or other action is final and non-appealable; (iii) at the Special Meeting (including any adjournments thereof), the Company’s stockholder matters are not duly adopted by stockholders of CMLS III by the requisite vote under the DGCL and our Current Charter; or (iv) if the redemptions by the Company stockholders results in the Aggregate Transaction Proceeds Condition becoming incapable of being satisfied at the Closing;
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• by EQRx, upon a breach of any representation, warranty, covenant or agreement set forth in the Merger Agreement on the part of CMLS III or Merger Sub, or if any representation or warranty of CMLS III or Merger Sub has become untrue, in either case such that the conditions set forth in the Merger Agreement would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue; provided, that if such breach by CMLS III or Merger Sub is curable by CMLS III or Merger Sub prior to the Closing, then EQRx must first provide written notice of such breach and may not terminate the Merger Agreement in accordance with Section 9.1(d) thereof until the earlier of: (i) 30 days after delivery of written notice from EQRx to CMLS III of such breach; and (ii) the Outside Date; provided, further, that each of CMLS III and Merger Sub continues to exercise commercially reasonable efforts to cure such breach (it being understood that EQRx may not terminate the Merger Agreement pursuant to Section 9.1(d) thereof if: (A) it has materially breached the Merger Agreement and such breach has not been cured; or (B) if such breach by CMLS III or Merger Sub is cured during such 30-day period);
• CMLS III, upon a breach of any representation, warranty, covenant or agreement set forth in the Merger Agreement on the part of EQRx or if any representation or warranty of EQRx has become untrue, in either case such that the conditions set forth in the Merger Agreement would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue; provided, that if such breach is curable by EQRx prior to the Closing, then CMLS III must first provide written notice of such breach and may not terminate the Merger Agreement under Section 9.1(e) thereof until the earlier of: (i) 30 days after delivery of written notice from the Company to the EQRx of such breach; and (ii) the Outside Date; provided, further, that EQRx continues to exercise commercially reasonable efforts to cure such breach (it being understood that CMLS III may not terminate the Merger Agreement pursuant to Section 9.1(e) thereof if: (A) it has materially breached this Agreement and such breach has not been cured; or (B) if such breach by EQRx is cured during such 30-day period); or
• by either of CMLS III or EQRx, if the redemptions by the Company stockholders results in the Aggregate Transaction Proceeds Condition becoming incapable of being satisfied at the Closing.
Regulatory Matters
Under the HSR Act and the rules that have been promulgated thereunder by the U.S. Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. If the FTC or the Antitrust Division makes a request for additional information or documentary material related to the Business Combination (a “Second Request”), the waiting period with respect to the Business Combination will be extended for an additional period of 30 calendar days, which will begin on the date on which the Company and EQRx each certify compliance with the Second Request. Complying with a Second Request can take a significant period of time. On August 19, 2021, the Company and EQRx filed the required forms under the HSR Act with the Antitrust Division and the FTC.
At any time before or after consummation of the Business Combination, notwithstanding any termination of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination. Private parties may also seek to take legal action under the antitrust laws under
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certain circumstances. We cannot assure you that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result. Neither the Company nor EQRx is aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of Company stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the common stock outstanding on the record date and entitled to vote at the Special Meeting is represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum.
The approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our common stock represented in person or by proxy and entitled to vote at the Special Meeting.
The approval of the Charter Amendment Proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of our common stock. The parties have also agreed to condition the Charter Amendment Proposal on the affirmative vote of the holders of a majority of the shares of CMLS III Class A common stock then outstanding and entitled to vote thereon, voting separately as a single series.
A failure to vote, broker non-vote or an abstention will have no effect on the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal. An abstention, failure to vote or broker non-vote will have the same effect as a vote against the Charter Amendment Proposal.
The proposals in this proxy statement/prospectus (other than the Adjournment Proposal) are conditioned on the approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Charter Amendment Proposal.
It is important for you to note that in the event that the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Charter Amendment Proposal do not receive the requisite vote for approval, we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination by the applicable deadline, we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to our public stockholders.
Recommendation to Company Stockholders
Our Board believes that each of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Charter Amendment Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of the Company and our stockholders and recommends that its stockholders vote “FOR” each of the proposals.
When you consider the recommendation of our Board in favor of approval of the Business Combination Proposal, you should keep in mind that our Sponsor and certain members of our Board and officers have interests in the Business Combination that are different from or in addition to (or which may conflict with) your interests as a stockholder. Stockholders should
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take these interests into account in deciding whether to approve the proposals presented at the Special Meeting, including the Business Combination Proposal. Please see the section entitled “Special Meeting of Company Stockholders — Recommendation to Company Stockholders.”
Risk Factors Summary
In evaluating the proposals to be presented at the Special Meeting, a CMLS III stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section titled “Risk Factors.”
Some of the risks related to EQRx’s business and industry and CMLS III’s business are summarized below. References in the summary below to “EQRx” generally refer to EQRx, Inc. in the present tense or the post-combination company from and after the Business Combination.
• EQRx does not have any products approved for commercial sale and has not generated any revenue to date, and so may never become profitable.
• EQRx’s business and pricing model is untested and may never be successful or generate sufficient revenue to lead to profitability.
• EQRx’s business model requires it to scale its pipeline through drug engineering collaborations, in-licensing or otherwise acquiring additional product candidates, and developing such product candidates, which it may be unable to successfully achieve or maintain.
• EQRx’s failure to manage growth effectively could cause its business to suffer and have an adverse effect on its ability to execute its business strategy, as well as operating results and financial condition.
• EQRx may be unsuccessful in achieving broad market education and acceptance or changing prescribing or purchasing habits of healthcare system participants, or keeping up to date with recent developments in the medical field regarding treatment options.
• EQRx may be unable to continue to attract, acquire and retain third-party collaborators, including payers, collaboration partners and licensors, or may fail to do so in an effective manner. EQRx’s collaborations with third-party collaborators are also subject to certain risks.
• EQRx’s financial projections are subject to significant risks, assumptions, estimates and uncertainties, and its actual results may differ materially.
• If EQRx’s preclinical studies and clinical trials are not sufficient to support regulatory approval of any of its product candidates, it may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of such product candidate.
• EQRx has never successfully completed the regulatory approval process for any of its product candidates and it may be unable to do so for any product candidates it acquires or develops.
• If regulators do not accept data from EQRx’s license partners generated in other jurisdictions as a basis for regulatory approvals in its target markets, or it experiences delays in obtaining data from its license partners, or if EQRx experience delays or difficulties in the initiation or enrollment of its clinical trials, its receipt of necessary regulatory approvals could be delayed or prevented.
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• EQRx’s current or future product candidates may cause adverse or other undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
• Even if EQRx receives regulatory approval for any of its current or future product candidates, it will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
• If EQRx is unable to obtain and maintain patent and other intellectual property protection for its technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, its competitors could develop and commercialize technology and drugs similar or identical to EQRx’s, and its ability to successfully commercialize its technology and drugs may be impaired.
• Sponsor, certain members of the Board and officers of CMLS III have interests in the Business Combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.
• The public stockholders of CMLS III will experience dilution as a consequence of, among other transactions, the issuance of common stock as consideration in the Business Combination and the PIPE Investment. Having a minority share position may reduce the influence that current stockholders of CMLS III have on the management of the post-combination company.
• The exercise of discretion by the CMLS III directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of the stockholders of CMLS III.
• Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect CMLS III’s business, investments and results of operations.
• There is no guarantee that a stockholder’s decision whether to redeem its shares for a pro rata portion of the Trust Account will put the stockholder in a better future economic position.
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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma condensed combined financial information has been derived from the unaudited pro forma condensed combined balance sheet as of June 30, 2021 and the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2021 and for the year ended December 31, 2020 included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
The summary unaudited pro forma condensed combined financial information should be read in conjunction with the unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed combined statements of operations, and the accompanying notes included elsewhere herein. In addition, the unaudited condensed combined pro forma financial information was based on and should be read in conjunction with the historical financial statements of CMLS III and EQRx, including the accompanying notes, which are included elsewhere in this proxy statement/prospectus.
The Business Combination is expected to be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, because EQRx has been determined to be the accounting acquirer in accordance with GAAP. Accordingly, for accounting purposes, the financial statements of the post-combination company will represent a continuation of the consolidated financial statements of EQRx with the Business Combination treated as the equivalent of EQRx issuing stock for the net assets of CMLS III, accompanied by a recapitalization. The net assets of CMLS III are stated at historical cost. Operations prior to the Business Combination are those of EQRx.
The unaudited pro forma condensed combined balance sheet as of June 30, 2021 combines the unaudited condensed balance sheet of CMLS III as of June 30, 2021 with the unaudited condensed consolidated balance sheet of EQRx as of June 30, 2021, giving effect to the Business Combination and PIPE Investment as if they had been consummated on June 30, 2021. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 combines the unaudited condensed statement of operations of CMLS III for the period from January 25, 2021 (inception) through June 30, 2021 with the unaudited condensed consolidated statement of operations of EQRx for the six months ended June 30, 2021 as if the Business Combination and PIPE Investment had been consummated on January 1, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 adjusts the audited consolidated statement of operations of EQRx for the year ended December 31, 2020 as if the Business Combination and PIPE Investment had been consummated on January 1, 2020. The unaudited pro forma condensed combined financial information presented gives effect to the Business Combination and PIPE Investment, as summarized below:
• the conversion of CMLS III Class B common stock into CMLS III Class A common stock on a one-for-one basis;
• the filing of the A&R Certificate of Incorporation to increase the authorized share capital, reclassify all outstanding shares of CMLS III Class A common stock and Class B common stock as common stock and change its corporate name to “EQRx, Inc.”;
• the merger of Merger Sub, a wholly owned subsidiary of CMLS III, with and into EQRx, with EQRx surviving the Merger as a wholly owned subsidiary of CMLS III;
• the issuance of 120,000,000 shares of post-combination company common stock for aggregate proceeds of $1.2 billion from consummation of the PIPE Investment;
• the conversion of EQRx’s outstanding redeemable convertible preferred stock (on an as-converted basis) into post-combination company common stock pursuant to the estimated exchange ratio of 0.6267 effective immediately prior to the Closing;
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• the payment of transaction costs incurred by CMLS III and EQRx; and
• the payment of deferred legal fees, underwriting commissions and other costs incurred in connection with the Business Combination and PIPE Investment.
The exchange ratio is currently estimated to be 0.6267 shares of post-combination company common stock per share of EQRx’s common stock. The exchange ratio will be determined at Closing in accordance with the Merger Agreement and is subject to change.
The summary pro forma information has been presented for informational purposes only and is not necessarily indicative of what the post-combination company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the summary pro forma information does not purport to project the future financial position or operation results of the post-combination company.
The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption, which produce different allocations of the total post-combination company equity between holders of the common stock:
• No Redemption Scenario — This scenario assumes that no shares of CMLS III Class A common stock are redeemed;
• Maximum Redemption Scenario — This scenario assumes that all of the public stockholders of CMLS III exercise redemption rights with respect to their CMLS III Class A common stock. This scenario assumes that 55,200,000 shares of CMLS III Class A common stock are redeemed for an aggregate redemption payment of $552.0 million. This maximum redemption scenario is based on the maximum number of redemptions that may occur but that would still provide the minimum aggregate Business Combination and PIPE Investment proceeds of $1.0 billion, consisting of CMLS III’s Trust Account and PIPE Investment proceeds less CMLS III’s and EQRx’s unpaid transaction expenses, to be delivered at the Closing of the Business Combination and the PIPE Investment. This scenario also assumes the forfeiture of 50% of the 13,500,000 shares of CMLS III Class B common stock by our Sponsor, pursuant to the Forfeiture Agreement.
The following summarizes the pro forma post-combination company common stock issued and outstanding immediately after the Business Combination and PIPE Investment, presented under the two redemption scenarios:
|
No Redemption |
Maximum Redemption Scenario |
|||||||||
|
Shares |
% |
Shares |
% |
|||||||
|
Public stockholders |
55,200,000 |
10.4 |
% |
— |
— |
% |
||||
|
PIPE investors |
120,000,000 |
22.6 |
% |
120,000,000 |
25.6 |
% |
||||
|
Initial stockholders |
13,800,000 |
2.6 |
% |
7,050,000 |
1.5 |
% |
||||
|
Former EQRx stockholders(1) |
342,405,942 |
64.4 |
% |
342,405,942 |
72.9 |
% |
||||
|
531,405,942 |
100.0 |
% |
469,455,942 |
100.0 |
% |
|||||
____________
(1) Amount excludes shares underlying outstanding option awards under the 2019 Plan and remaining shares available for issuance under such plan to acquire EQRx common stock (estimated to total, in the aggregate and after giving effect to the estimated exchange ratio, 22,594,058 shares of post-combination company common stock) that may be exercised in the future.
49
The two alternative levels of redemptions assumed in the unaudited pro forma condensed combined balance sheet and statements of operations are based on the assumption that there are no adjustments to the pro forma shares outstanding for CMLS III private placement and public warrants issued in connection with its IPO, as such securities are not exercisable until 30 days after the Closing.
The following summary data derived from the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2021 and for the year ended December 31, 2020 and the summary data derived from the unaudited pro forma condensed combined balance sheet as of June 30, 2021 under the no redemption scenario and maximum redemption scenario are based on the historical financial statements of CMLS III and EQRx. If the actual facts are different than these assumptions, which they are likely to be, the ownership percentages in the post-combination company will be different from the above stated ownership percentages.
|
Historical |
Pro Forma |
|||||||||||||||
|
(dollars in thousands, except for per share amounts) |
CMLS III |
EQRx |
No |
Maximum |
||||||||||||
|
Statement of Operations Data – For the Period from January 25, 2021 (Inception) through June 30, 2021 and For the Six Months Ended June 30, 2021, respectively |
|
|
|
|
|
|
|
|
||||||||
|
Total operating expenses |
$ |
236 |
|
$ |
61,598 |
|
$ |
70,140 |
|
$ |
70,140 |
|
||||
|
Loss from operations |
|
(236 |
) |
|
(61,598 |
) |
|
(70,140 |
) |
|
(70,140 |
) |
||||
|
Net loss |
|
(31,840 |
) |
|
(61,343 |
) |
|
(101,496 |
) |
|
(101,496 |
) |
||||
|
Basic and diluted net loss |
|
(2.45 |
) |
|
(1.68 |
) |
|
(0.19 |
) |
|
(0.22 |
) |
||||
|
Statement of Operations Data – For the Year Ended December 31, 2020 |
|
|
|
|
|
|
|
|
||||||||
|
Total operating expenses |
$ |
— |
|
$ |
250,080 |
|
$ |
266,692 |
|
$ |
266,692 |
|
||||
|
Loss from operations |
|
— |
|
|
(250,080 |
) |
|
(266,692 |
) |
|
(266,692 |
) |
||||
|
Net loss |
|
— |
|
|
(249,983 |
) |
|
(266,595 |
) |
|
(266,595 |
) |
||||
|
Basic and diluted net loss |
|
— |
|
|
(9.81 |
) |
|
(0.50 |
) |
|
(0.57 |
) |
||||
|
Historical |
Pro Forma |
||||||||||||
|
(dollars in thousands) |
CMLS III |
EQRx |
No |
Maximum |
|||||||||
|
Balance Sheet Data – as of June 30, 2021 |
|
|
|
|
|
||||||||
|
Total current assets |
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