Transaction Delivers Substantial 55% Premium
Over Closing Share Price on November 30, 2022
Definitive Agreement Unanimously Recommended
by Special Committee of Independent Directors of Board of Arco
Following Independent and Thorough Evaluation Process and
Negotiations
Founders to Maintain Controlling Ownership
Stake and Company Leadership
Arco Platform Limited (Nasdaq: ARCE) (“Arco” or “Company”), a
leading operating system for K-12 schools, today announced that it
has entered into a definitive agreement and plan of merger (the
“Agreement”) with Achieve Holdings (“Bidders’ HoldCo”) and Achieve
Merger Sub, a wholly owned subsidiary of Bidders' HoldCo (“Merger
Sub”), pursuant to which investment entities affiliated with
General Atlantic L.P. (“General Atlantic”) and Dragoneer Investment
Group, LLC (“Dragoneer” and, together with General Atlantic, the
“Bidders”) have agreed to acquire all of the outstanding Class A
common shares of the Company (the “Shares”), that are not held by
such parties or Oto Brasil de Sá Cavalcante and Ari de Sá
Cavalcante Neto (together, the “Founders”) or their respective
affiliates or the Rollover Shareholders (as defined below) (the
“Public Shares”), for a purchase price of US$14.00 per Share in
cash without interest (the “Per Share Merger Consideration”).
The Per Share Merger Consideration represents a 55% premium over
the closing price of US$9.04 per Share on November 30, 2022, the
last trading day before the Company disclosed receipt of the
Bidders’ proposal (the “Proposal”) to acquire all of the Public
Shares, and premiums of approximately 38% and approximately 28% to
the volume-weighted average trading price of the Shares during the
30 trading days and 60 trading days, respectively, prior to and
including November 30, 2022. The Per Share Merger Consideration
also represents a 28% premium over the initial proposed purchase
price of US$11.00 per Share as disclosed on November 30, 2022, and
an 8% premium over the revised proposed purchase price of US$13.00
per Share as disclosed on May 1, 2023. The Per Share Merger
Consideration values Arco at a total enterprise value of
approximately US$1.5 billion.
As previously disclosed, the Board of Directors of the Company
(the “Board”) formed a special committee (the “Special Committee”)
consisting of four independent directors to consider the Proposal.
Following a comprehensive evaluation of the Proposal, the Special
Committee and its financial and legal advisors engaged in extensive
negotiations with the Bidders on pricing and other terms, including
increases in price by the Bidders from the initial proposed
purchase price of $11.00 per Share to the $14.00 per Share price
agreed to by the parties. The Special Committee, following
extensive review and analysis with the assistance of its financial
advisors, determined that the Per Share Merger Consideration is
fair to the holders of the Public Shares, and that the merger
contemplated by the Agreement (the “Merger”) and the other
transactions contemplated by the Agreement are in the best
interests of the Company. Upon receiving the unanimous
recommendation of the Special Committee, the Board approved the
Agreement, the Merger and the other transactions contemplated by
the Agreement.
Following the Merger, Bidders' HoldCo will be owned by (a) Mr.
Ari de Sá Cavalcante Neto, Chief Executive Officer of the Company,
(b) investment entities affiliated with General Atlantic and
Dragoneer, (c) ASCN Investments Ltda., an entity controlled by Mr.
de Sá Cavalcante Neto, (d) OSC Investments, Ltd., an entity
controlled by Oto Brasil de Sá Cavalcante, Chairman of the Board,
and (e) certain other shareholders and employees of the Company
(collectively, the “Rollover Shareholders”), who will be rolling
over some or all of their Shares and/or equity awards, as
applicable, in the Merger.
At the effective time of the Merger, the Public Shares, other
than Shares held by dissenting shareholders of the Company, if any,
and investment entities affiliated with General Atlantic and
Dragoneer will be cancelled in exchange for the Per Share Merger
Consideration. The Company's equity awards held by current and
former officers, directors and employees of the Company will be
cashed out, cancelled or rolled over into equity incentives of
Bidders’ HoldCo, as applicable.
The Merger will be funded through a combination of (i) cash
contributions from the Bidders pursuant to equity commitment
letters and (ii) equity rollovers by the Founders, the Bidders and
the Rollover Shareholders of common shares they beneficially own in
the Company.
In the Merger, Merger Sub will merge with and into the Company,
with the Company continuing as the surviving company and becoming a
wholly owned subsidiary of Bidders' HoldCo.
The Merger is currently expected to close during the fourth
quarter of 2023 or the first quarter of 2024, subject to various
closing conditions. These including, among other conditions,
required regulatory approval and the authorization and approval of
the Agreement by the affirmative vote of shareholders representing
at least two-thirds of the voting power of the Company's common
shares present and voting in person or by proxy at a general
meeting of the Company’s shareholders. The Founders, who
beneficially own all of the Company's Class B common shares, the
Rollover Shareholders and the Bidders have agreed to vote all of
the Company's common shares they beneficially own, which represent
approximately 91% of the voting power of the outstanding common
shares as of the date of the Agreement, in favor of the
authorization and approval of the Agreement, the Merger and the
other transactions contemplated by the Agreement. Accordingly, they
own a sufficient number of common shares to assure shareholder
approval. Upon completion of the Merger, Arco will become a
privately held company and its Shares will no longer be listed on
the NASDAQ Global Market. The Founders will maintain a controlling
voting interest of approximately 88% post-Merger in Arco, lead the
Company, and manage its portfolio of leading education brands.
Advisors to the Special Committee
The Special Committee retained (i) Evercore Group L.L.C. and
Seneca Evercore Advisors Ltda. as its financial advisor, (ii)
Skadden, Arps, Slate, Meagher & Flom LLP as its U.S. legal
counsel, (iii) Carey Olsen Cayman Limited as its Cayman Islands
legal counsel and (iv) BMA - Barbosa Müssnich Aragão Advogados as
its Brazilian legal counsel, in each case to assist it in its
mandate.
Advisors to the Bidders and the Company
Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as
U.S. legal counsel to General Atlantic and Ropes & Gray LLP is
acting as U.S. legal counsel to Dragoneer. Walkers is acting as
Cayman Islands legal counsel to the Bidders and Mattos Filho is
acting as Brazilian legal counsel to the Bidders.
Davis Polk & Wardwell LLP is acting as U.S. legal counsel to
Arco, Lobo de Rizzo Advogados is acting as Brazilian legal counsel
to Arco and Maples Group is acting as Cayman Islands legal counsel
to Arco.
Additional Information About the Merger
The Company will furnish to the U.S. Securities and Exchange
Commission (the “SEC”) a current report on Form 6-K regarding the
Merger, which will include as an exhibit thereto the Agreement. All
parties desiring details regarding the Merger are urged to review
these documents, which will be available at the SEC’s website
(http://www.sec.gov).
In connection with the Merger, the Company will prepare and mail
to its shareholders a proxy statement that will include a copy of
the Agreement. In addition, in connection with the Merger, the
Company and certain other participants in the Merger will prepare
and disseminate to the Company’s shareholders a Schedule 13E-3
Transaction Statement that will include the Company’s proxy
statement (the “Schedule 13E-3”). The Schedule 13E-3 will be filed
with the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ
CAREFULLY AND IN THEIR ENTIRETY THE SCHEDULE 13E-3 AND OTHER
MATERIALS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE MERGER,
AND RELATED MATTERS. Shareholders also will be able to obtain these
documents, as well as other filings containing information about
the Company, the Merger and related matters, without charge from
the SEC’s website (http://www.sec.gov).
The Company and its directors and certain of its executive
officers and other employees may be deemed to be participants in
the solicitation of proxies from the Company’s shareholders with
respect to the proposed Merger. Information regarding the persons
who may be considered “participants” in the solicitation of proxies
will be set forth in the Schedule 13E-3 and proxy statement when
filed with the SEC.
This announcement is neither a solicitation of proxy, an offer
to purchase nor a solicitation of an offer to sell any securities,
and it is not a substitute for any proxy statement or other
materials that may be filed with or furnished to the SEC should the
proposed merger proceed.
About Arco Platform Limited (Nasdaq: ARCE)
Arco has empowered millions of students to rewrite their futures
through education. Our data-driven learning methodology,
proprietary adaptable curriculum, interactive hybrid content, and
high-quality pedagogical services allow students to personalize
their learning experience while enabling schools to thrive.
About General Atlantic L.P.
General Atlantic is a leading global growth equity firm with
more than four decades of experience providing capital and
strategic support for over 500 growth companies throughout its
history. Established in 1980 to partner with visionary
entrepreneurs and deliver lasting impact, the firm combines a
collaborative global approach, sector specific expertise, a
long-term investment horizon and a deep understanding of growth
drivers to partner with great entrepreneurs and management teams to
scale innovative businesses around the world. General Atlantic has
more than $75 billion in assets under management inclusive of all
products as of June 30, 2023, and more than 220 investment
professionals based in New York, Amsterdam, Beijing, Hong Kong,
Jakarta, London, Mexico City, Miami, Mumbai, Munich, San Francisco,
São Paulo, Shanghai, Singapore, Stamford and Tel Aviv. For more
information on General Atlantic, please visit:
www.generalatlantic.com.
About Dragoneer Investment Group, LLC
Dragoneer Investment Group is a growth-oriented investment firm
with over $20 billion under management and a flexible mandate to
invest in high-quality businesses in both the public and private
markets. For over a decade, Dragoneer has partnered with management
teams growing exceptional companies, characterized by sustainable
differentiation and superior economic models. The firm seeks to
deliver attractive returns while maintaining a focus on capital
preservation and margin of safety. Dragoneer looks to partner with
the best businesses globally and has been an investor in companies
such as Airbnb, Alibaba, AmWINS, Atlassian, AppFolio, Bytedance,
Ceridian, Datadog, Doordash, Duck Creek, Farfetch, Livongo, Nubank,
PointClickCare, Procore, ServiceNow, Slack, Snowflake, Spotify,
Square, Twilio, Uber, and others.
Forward-Looking Statements
This announcement contains forward-looking statements including,
but not limited to, the anticipated timing of closing the
transaction and statements regarding the funding and consummation
of the transactions. These forward-looking statements can be
identified by terminology such as “will,” “expects,” “anticipates,”
“future,” “intends,” “plans,” “believes,” “estimates,” “confident”
and similar statements. Statements that are not historical or
current facts, including statements about beliefs and expectations,
are forward-looking statements. Forward-looking statements involve
factors, risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in these
forward-looking statements. Such factors, risks and uncertainties
include the possibility that the Merger will not occur on the
timeline anticipated, or at all, if events arise that result in the
termination of the Agreement, or if one or more of the various
closing conditions to the Merger are not satisfied or waived, or if
the regulatory review process takes longer than anticipated and
other risks and uncertainties discussed in documents filed with the
SEC by the Company as well as the Schedule 13E-3 and the proxy
statement to be filed by the Company. All information provided in
this press release is as of the date of the press release, and the
Company undertakes no duty to update such information, except as
required under applicable law.
Further information on these and other factors is included in
filings the Company makes with the SEC from time to time, including
the section titled “Risk Factors” in the Company’s most recent Form
20-F, as well as the Form 6-K and Schedule 13E-3 (which will
include the proxy statement) to be filed by the Company. These
documents are available (or will be available when filed) on the
SEC Filings section of the Investor Relations section of the
Company’s website at: https://investor.arcoplatform.com/.
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version on businesswire.com: https://www.businesswire.com/news/home/20230810660401/en/
Investor Relations Contact
Arco Platform Limited IR@arcoeducacao.com.br
https://investor.arcoplatform.com/
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