01—Abstract
Summary
Summary of the 8-K filed July 11, 2016. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) filed an 8-K on July 11, 2016, to report the completion of its acquisition of Demandware, Inc. The company successfully tendered approximately 64.4%a of Demandware's shares in an offer that expired on July 8, 2016, and subsequently completed a merger on July 11, 2016.
The aggregate consideration paid for Demandware was approximately $2.8 billionb, funded by a combination of Salesforce's existing cash and a new $500 million term loan facility. This marks a significant strategic move for Salesforce to expand its e-commerce capabilities. In conjunction with the acquisition, Salesforce also entered into an Amended and Restated Credit Agreement, establishing a $1 billion revolving credit facility with Wells Fargo.
This facility, which matures in July 2021, provides significant liquidity for general corporate purposes, including future acquisitions and refinancing. The company has borrowed the full $500 millionc under its new term loan facility, which matures in July 2019, with proceeds specifically earmarked for the Demandware acquisition. Both credit facilities include covenants regarding leverage and interest coverage ratios, reflecting a disciplined approach to debt management.
02—Key points
Key Highlights
- Completion of Demandware Acquisition: Salesforce has successfully acquired Demandware for approximately $2.8 billion, funded by cash and a new $500 million term loan.
- Demandware Tender Offer Success: The tender offer for Demandware shares secured approximately 64.4% of outstanding shares, meeting the minimum condition for the acquisition.
- New $500 Million Term Loan: Salesforce drew the full $500 million under a new term loan facility to finance a portion of the Demandware acquisition cost.
- Maturity of Term Loan: The new $500 million term loan facility matures on July 11, 2019.
- Amended Revolving Credit Facility: Salesforce established a $1 billion revolving credit facility with Wells Fargo, maturing on July 7, 2021.
- No Immediate Borrowing on Revolving Facility: No amounts were borrowed under the new revolving credit facility at closing, indicating ample existing liquidity.
- Strategic E-commerce Expansion: The acquisition of Demandware is expected to bolster Salesforce's position in the e-commerce market.
03—Questions
Frequently Asked Questions
What was the primary purpose of this 8-K filing?
The primary purpose of this 8-K filing was to announce the completion of Salesforce's acquisition of Demandware, Inc. It also detailed the financing arrangements put in place for this acquisition, specifically a new term loan and an amended revolving credit facility.
How did Salesforce finance the Demandware acquisition?
Salesforce financed the Demandware acquisition through a combination of its available cash on hand and the proceeds from a new $500 million term loan facility that was drawn in full on July 11, 2016.
What are the terms of the new $500 million term loan?
The $500 million term loan facility matures on July 11, 2019. Interest rates are based on either a base rate or adjusted LIBOR rate plus a spread determined by Salesforce's consolidated leverage ratio. The proceeds were used to pay a portion of the Offer Price for Demandware shares. The agreement also includes an uncommitted incremental facility of up to $250 million.
What is the significance of the Amended and Restated Revolving Credit Agreement?
The Amended and Restated Revolving Credit Agreement establishes a $1 billion revolving credit facility maturing on July 7, 2021. While no amounts were drawn at closing, this facility provides significant financial flexibility for general corporate purposes, including working capital, capital expenditures, and future permitted acquisitions.
04—Continue