UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Rule 14d-101)
Solicitation/Recommendation Statement
under Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. 3)
THE ACTIVE
NETWORK, INC.
(Name of Subject Company)
THE ACTIVE NETWORK, INC.
(Name of Person Filing Statement)
Common Stock,
$0.001 par value per share
(Title of Class of Securities)
00506D100
(CUSIP Number
of Class of Securities)
David M. Eisler, Esq.
Senior Vice President, General Counsel and Corporate Secretary
The Active Network, Inc.
10182 Telesis Court
San
Diego, California 92121
(858) 964-3800
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
With copies to:
Michael S. Kagnoff, Esq.
DLA Piper LLP (US)
4365
Executive Drive, Suite 1100
San Diego, California 92121
(858) 638-6722
¨
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Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
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This Amendment No. 3 (this
Amendment No. 3
) to Schedule 14D-9
amends and supplements the Schedule 14D-9 (as amended and supplemented from time to time, the
Schedule 14D-9
) previously filed by The Active Network, Inc., a Delaware corporation (the
Company
),
with the Securities and Exchange Commission on October 8, 2013, relating to the offer by (i) Athlaction Holdings, LLC, a Delaware limited liability company (
Parent
), (ii) Athlaction Merger Sub, Inc., a
Delaware corporation and wholly-owned subsidiary of Parent (
Purchaser
), and (iii) Vista Equity Partners Fund III, L.P. and Vista Equity Partners Fund IV, L.P., affiliates of each of Parent and Purchaser, to purchase
all of the outstanding shares of common stock, par value $0.001 per share, of the Company (the
Shares
), for a purchase price of $14.50 per Share, net to the seller in cash, without interest, subject to any applicable
withholding taxes, if any, upon the terms and conditions set forth in the offer to purchase dated October 8, 2013, and in the related letter of transmittal, each of which may be amended or supplemented from time to time.
Except as set forth below, the information set forth in the Schedule 14D-9 remains unchanged and is incorporated herein by reference as
relevant to the items in this Amendment No. 3.
Item 2. Identity and Background of Filing Person.
Item 2(b) of the Schedule 14D-9 is hereby amended and supplemented by inserting the following sentence at the end of the third paragraph under
the section entitled Tender Offer on page 2 of the Schedule 14D-9:
References in this Schedule 14D-9 to
consummation of the Offer
refer to the first time at which Parent deposits funds with the payment agent for payment of Shares tendered and not withdrawn pursuant to the Offer.
Item 4. The Solicitation or Recommendation.
Item 4 of the Schedule 14D-9 is hereby amended and supplemented as follows:
By inserting the following new paragraph immediately after the subsection heading entitled Reasons for the Recommendation on page 23 of the
Schedule 14D-9:
In the course of reaching its determination to approve the Merger Agreement and the Transactions contemplated
thereby, including the Offer and the Merger, and to recommend that the Companys stockholders accept the Offer and tender their Shares pursuant to the Offer and, if applicable, adopt the Merger Agreement and approve the Merger, the Company
Board and the Committee considered a number of factors, including the material factors and benefits of the Offer and Merger described below, each of which the Board believed supported its recommendation.
By amending and restating each of the bullet points under the subsection entitled Reasons for the Recommendation Financial Condition, Prospects
of the Company on page 24 of the Schedule 14D-9 in its entirety as follows:
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The Committee considered the Companys current and historical business, financial condition, results of operations, competitive position, strategic options and prospects, as well as the Companys long-term
business plan and prospects if it were to remain an independent public company, including the Financial Projections (as defined below), and the potential impact of those factors on the future trading price of the Common Stock, and in light thereof,
the Committee believed that the Offer Price offered greater certainty of value to Company stockholders than continuing to operate the Company as a stand-alone public entity.
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The Committee believed after a review of the prospective risks to the Company as a stand-alone public entity, including the risks and uncertainties with respect to (i) achieving the Companys long-term
business plan in light of the current and foreseeable business and market conditions, including the risks and uncertainties of successfully implementing the operational improvements necessary to achieve its long-term business plans; (ii) the
risks and uncertainties associated with the U.S. economy and the economies of the foreign jurisdictions in which the Company conducts or planned to conduct business; (iii) general stock market conditions and volatility, including the
performance of broad-based stock market indices and exchanges, and (iv) the other risks and uncertainties identified in the Companys filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q and its other filings with the SEC, that, in light of these risks and the potential adverse impact of these risks on the Companys business and financial condition, the Offer and the Merger represented the
Companys best reasonably available prospect for maximizing stockholder value.
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Following the Committees analysis of the recent market performance of the Common Stock, and after taking into account the Companys recent operational performance, the members of the Committee believed that
the Offer Price would provide the Companys stockholders a higher per share price than the Common Stock was likely to reach for a significant period of time.
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By amending and restating the first paragraph under the subsection entitled Reasons for the Recommendation
Board of Directors on page 27 of the Schedule 14D-9 in its entirety as follows:
In the course of reaching its
determination and recommendation, the Company Board considered, among other things, the same factors considered by the Committee in its deliberations and adopted the same reasons for its recommendation described above, each of which the Board
believed supported its recommendation.
By inserting the following new paragraph and table immediately following the sixth paragraph included under
the subsection entitled Certain Financial Projections on page 30 of the Schedule 14D-9:
The following table is a
reconciliation of GAAP Income (Loss) From Operations to Adjusted EBITDA.
Reconciliation of Adjusted EBITDA to Income (Loss) From Operations:
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Extrapolations As
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(In Millions)
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Financial Projections
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Described Above
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2013
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2014
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2015
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2016
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2017
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2018
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Income (Loss) From Operations
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($
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30
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)
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($
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4
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)
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$
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8
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$
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43
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$
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63
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$
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81
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Depreciation and Amortization
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61
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53
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54
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42
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36
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32
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Stock-based Compensation
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24
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20
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27
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30
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33
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35
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Adjusted EBITDA
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$
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55
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$
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69
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$
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89
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$
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115
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$
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132
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$
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148
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GAAP Financials:
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Net Revenue:
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Technology Revenue
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406
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439
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484
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538
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N/A
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N/A
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Marketing Services Revenue
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51
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53
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58
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64
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N/A
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N/A
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Total Net Revenue
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$
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457
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$
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492
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$
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542
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$
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602
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$
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657
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$
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703
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Cost of Net Revenue:
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Cost of Technology Revenue
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201
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210
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227
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233
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N/A
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N/A
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Cost of Marketing Services Revenue
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5
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4
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4
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5
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N/A
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N/A
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Cost of Net Revenue
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206
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214
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231
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238
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N/A
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N/A
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Gross Profit
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$
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251
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$
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278
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$
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311
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$
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364
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N/A
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N/A
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Sales & Marketing
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106
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114
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121
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127
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N/A
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N/A
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Research & Development Gross
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103
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97
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101
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104
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N/A
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N/A
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Less: Capitalized Software
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(21
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)
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(15
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)
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(9
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(5
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N/A
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N/A
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Research & Development Net
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82
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83
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92
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99
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N/A
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N/A
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General & Administrative
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77
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75
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83
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90
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N/A
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N/A
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Amortization of Intangibles
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16
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10
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6
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5
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N/A
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N/A
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Total Operating Expenses
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$
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281
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$
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282
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$
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302
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$
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321
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N/A
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N/A
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Income (Loss) From Operations
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($
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30
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)
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($
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4
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)
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$
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8
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$
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43
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$
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63
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$
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81
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By amending and restating the seventh paragraph under the subsection entitled Certain Financial Projections on
page 30 of the Schedule 14D-9 in its entirety as follows:
The Financial Information reflects numerous estimates and assumptions
made by the Companys management with respect to general business, economic, competitive, market and financial conditions and other future events, as well as matters specific to the Companys business, all of which were difficult to
predict and many of which were beyond the Companys control. The Financial
Information of the Company as a standalone company was not prepared in accordance with GAAP and assumed growth rates for individual years which resulted in a 9% compounded annual growth in
revenue in the years 2013 through 2018. The Company assumed that revenue growth would continue in line with historical results. In 2014, revenue was estimated to grow by approximately 8%. This assumption was developed by analyzing current quarter
revenue growth, changes in core metrics including registrations and revenue per registration as well as the impact of additional investments in sales and marketing. The revenue assumptions for 2015 and beyond reflect a slight acceleration in revenue
growth driven by the continued investment in sales and marketing as well as substantial product improvement and consolidation. Projected future Adjusted EBITDA margin expanded to 21% in 2018, from an Adjusted EBITDA margin of 9% achieved by the
Company in 2012, as a result of forecasted revenue growth, gross margin expansion and operating leverage. The Financial Information also assumes that operating expenses grow at a slower pace than revenue as the Company achieves efficiencies, largely
in Research & Development but also in Cost of Goods Sold (COGS), Sales & Marketing, and General & Administrative expenses.
By
inserting the following sentence as the first sentence of the eighth paragraph under the subsection entitled Certain Financial Projections on page 30 of the Schedule 14D-9:
The gross margin improvement in COGS is expected to be driven by the continued transition of registrations from offline to on-line,
product consolidation allowing for streamlined support and continued management of credit card fees. The Company anticipates a continued investment in Sales & Marketing which will fuel the revenue growth in outer years. A substantial reduction
in Research & Development was assumed as we are consolidating our customers on a streamlined product portfolio and ending development for legacy products. This will drive substantial cost savings. The Company assumed that General &
Administrative expenses would scale with revenue growth.
By inserting the following new paragraph and table immediately following the fourth
paragraph included under the subsection entitled Certain Financial Projections Target Financial Model on page 32 of the Schedule 14D-9:
The following table is a reconciliation of GAAP Income (Loss) From Operations to Adjusted EBITDA.
Reconciliation of Adjusted EBITDA to Income (Loss) From Operations:
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(In Millions)
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Target Financial Model
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2013
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2014
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2015
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2016
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Income (Loss) From Operations
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($
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30
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)
|
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$
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9
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$
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37
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|
|
$
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96
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Depreciation and Amortization
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61
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53
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54
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42
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Stock-based Compensation
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24
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20
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27
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30
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Adjusted EBITDA
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$
|
55
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$
|
82
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$
|
118
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$
|
168
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GAAP Financials:
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|
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Net Revenue:
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Technology Revenue
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|
|
406
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|
|
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453
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|
|
|
520
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|
|
|
600
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Marketing Services Revenue
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51
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|
|
|
57
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|
|
|
66
|
|
|
|
77
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Total Net Revenue
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$
|
457
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$
|
510
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$
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586
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$
|
677
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Cost of Net Revenue:
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|
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|
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|
|
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Cost of Technology Revenue
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|
201
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|
|
|
214
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|
|
233
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|
|
|
243
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Cost of Marketing Services Revenue
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|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
6
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Cost of Net Revenue
|
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|
206
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|
|
219
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|
|
238
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|
|
|
249
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Gross Profit
|
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$
|
251
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$
|
291
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$
|
348
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|
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$
|
428
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Sales & Marketing
|
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|
106
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|
|
|
115
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|
|
|
130
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|
|
|
142
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Research & Development Gross
|
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|
103
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|
|
|
97
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|
|
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99
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|
|
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99
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Less: Capitalized Software
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(21
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)
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(15
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)
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(9
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)
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(5
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)
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Research & Development Net
|
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|
82
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83
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|
|
90
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|
94
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General & Administrative
|
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|
77
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|
|
|
74
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|
|
|
84
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|
|
|
91
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Amortization of Intangibles
|
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|
16
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|
|
|
10
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|
|
|
6
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|
|
|
5
|
|
Total Operating Expenses
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$
|
281
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|
|
$
|
282
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|
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$
|
310
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|
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$
|
332
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|
Income (Loss) From Operations
|
|
($
|
30
|
)
|
|
$
|
9
|
|
|
$
|
37
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|
|
$
|
96
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By amending and restating the fifth paragraph under the subsection entitled Certain Financial Projections
Target Financial Model on page 32 of the Schedule 14D-9 in its entirety as follows:
The Target Financial Model assumed
growth rates for individual years which resulted in a 14% compounded annual growth in revenue in the years 2013 through 2016. The Company assumed that revenue growth would accelerate in 2014 to approximately 12%. This assumption was developed by
analyzing current quarter revenue growth and then assuming significant improvement in core metrics including registrations and revenue per registration as well as the impact of additional investments in sales and marketing. The Company invested an
incremental 10% and 9% in Sales & Marketing in 2013 and 2014 and we expect significant improvement in productivity from our sales force in 2014 and beyond. The revenue assumptions for 2015 and beyond assumed continued acceleration in revenue
growth driven by the continued investment in sales and marketing as well as substantial product improvement and consolidation. Optimal performance from sales and marketing is required to drive this level of revenue growth. Projected future Adjusted
EBITDA margin expanded to 25% in 2016, from an Adjusted EBITDA margin of 9% achieved by the Company in 2012, as a result of forecasted revenue growth, gross margin expansion and operating leverage. The Target Financial Model also assumes that
operating expenses grow at a significantly slower pace than revenue as the Company achieves efficiencies, largely in Research & Development but also in COGS, Sales & Marketing, and General & Administrative expenses. The
gross margin improvement in COGS is expected to be driven by accelerated transition of registrations from offline to on-line, rapid product consolidation allowing for streamlined support, and continued management of credit card fees. The Company
anticipates a continued investment in Sales and Marketing which will fuel the revenue growth in outer years. We assumed it would be slightly slower than revenue growth. The Company assumed a substantial reduction in Research & Development as a
result of transitioning our customers onto a consolidated product portfolio thereby ending development for legacy products. This will drive substantial cost savings. The Company assumed that General & Administrative expenses would scale with
revenue growth. Achievement of the projected increase in revenue and projected improvements in Adjusted EBITDA margin are subject to significant risks, as described above in the summary of the Financial Information.
Item 7. Purposes of the Transaction and Plans or Proposals.
Item 7 of the Schedule 14D-9 is hereby amended and supplemented by amending and restating the third paragraph under Item 7 of the
Schedule 14D-9 in its entirety as follows:
As noted above, the Merger Agreement provides for limited exceptions to these
restrictions for certain excluded parties until 11:59 P.M. on October 21, 2013. During this period, the Company was permitted to continue discussions and negotiations with Excluded Parties, who were those persons or groups of
persons who made a bona fide written offer, indication of interest or proposal for an acquisition transaction prior to September 28, 2013 or with whom the Company had been actively engaged in discussions or negotiations with respect to an
acquisition proposal prior to September 28, 2013 which could reasonably be expected to result in a Superior Proposal (which is generally defined to refer to a bona fide written acquisition proposal that the Company Board determines
in good faith (after consultation with its financial advisor) is reasonably likely to be consummated if accepted and, if consummated, would result in a transaction more favorable to the Companys stockholders from a financial point of view than
the Offer and the Merger in each case, taking into account at the time of determination all relevant circumstances). The Company sought to inform the Excluded Parties of the limited exception to the no-shop covenant and the reduced termination fee
and also disclosed such terms in its Form 8-K filed with the SEC on September 30, 2013. None of the Excluded Parties made an acquisition proposal during this period. As required by the terms of the Merger Agreement, the Company discontinued all
negotiations and discussions with the Excluded Parties upon the expiration of the limited exception to the no-shop covenant.
Item 8.
Additional Information.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented as follows:
By amending and restating the first sentence of the second paragraph under the section entitled Notice of
Appraisal Rights on page 42 of the Schedule 14D-9 in its entirety as follows:
The following discussion summarizes
appraisal rights of stockholders under the DGCL in connection with the Merger assuming that the Merger is consummated pursuant to Section 251(h) of the DGCL. The full text of Section 262 of the DGCL is attached to this Schedule 14D-9 as
Annex III. All references in Section 262 of the DGCL and in this summary to a stockholder are to the record holder of Shares immediately prior to the Effective Time as to which appraisal rights are asserted. A person having a
beneficial interest in Shares held of record in the name of another person, such as a broker or nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.
Stockholders should carefully review the full text of Section 262 of the DGCL as well as the information discussed below.
By
amending and restating the last paragraph under the section entitled Notice of Appraisal Rights on page 46 of the Schedule 14D-9 in its entirety as follows:
The foregoing summary of the rights of the Companys stockholders to seek appraisal rights under Delaware law does not purport
to be a complete statement of the procedures to be followed by the stockholders of the Company desiring to exercise any appraisal rights available thereunder. The proper exercise of appraisal rights requires strict adherence to the applicable
provisions of the DGCL. Stockholders should carefully review the full text of Section 262 of the DGCL. A copy of Section 262 of the DGCL is included as Annex III to this Schedule 14D-9.
By inserting the following new paragraph immediately following the second paragraph under the heading Antitrust Compliance on page 48 of the
Schedule 14D-9:
At 11:59 p.m. Eastern time on October 21, 2013, the required waiting period under the HSR Act in connection
with the purchase of Shares in the Offer and the Merger expired. Accordingly, the condition to the Offer and the Merger that any waiting period under the HSR Act shall have expired or been terminated has been satisfied.
Annex I to Schedule 14D-9.
Annex I of
the Schedule 14D-9 is hereby amended and supplement by deleting the last sentence of the carryover paragraph starting on page I-1 and replacing it in its entirety as follows:
The information contained in this Information Statement, including information incorporated herein by reference, concerning Parent and
Purchasers designees has been furnished to us by Parent.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and
correct.
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THE ACTIVE NETWORK, INC.
|
|
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By:
|
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/s/ Jon Belmonte
|
Name:
|
|
Jon Belmonte
|
Title:
|
|
Interim Chief Executive Officer
|
Dated: October 23, 2013
The Active Network, Inc. (NYSE:ACTV)
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The Active Network, Inc. (NYSE:ACTV)
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Von Jul 2023 bis Jul 2024