UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K
 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 2, 2018
 

GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
1-36874
 
47-2390983
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
     
7950 Jones Branch Drive, McLean,
Virginia
 
22107-0910
(Address of principal executive offices)
 
(Zip Code)
(703) 854-6000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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 13(a) of the Exchange Act.   ☐

 
Item 2.01  
Completion of Acquisition or Disposition of Assets.
On July 2, 2018, Gannett Co., Inc. (“Gannett”), completed its previously announced acquisition of WordStream, Inc. (“WordStream”). Pursuant to the Agreement and Plan of Merger, dated as of May 9, 2018, by and among Gannett, Orca Merger Sub, Inc., a wholly owned subsidiary of Gannett (“Merger Sub”), Wordstream  and Shareholder Representative Services LLC (the “Equityholder Representative”), as amended by that certain Letter Agreement, dated as of June 20, 2018, by and among Gannett, Merger Sub, WordStream and the Equityholder Representative (collectively, the “Merger Agreement”), Merger Sub merged with and into WordStream (the “Merger”), with WordStream surviving the Merger as a wholly owned subsidiary of Gannett.
The total merger consideration payable by Gannett to WordStream’s equityholders upon the closing of the Merger was approximately $145 million in cash, which Gannett funded through a combination of cash on hand and borrowings under its revolving credit facility.  The total closing consideration included a base purchase price of $130 million, which was adjusted for WordStream’s estimated net working capital, cash on hand, debt and unpaid transaction expenses as of the closing, as well as escrow holdbacks totaling $6.3 million and a holdback of $100,000 for the Equityholder Representative’s expenses. The total closing consideration remains subject to confirmation and adjustment pursuant to certain customary post-closing true-up procedures set forth in the Merger Agreement.
In addition to the consideration payable upon the closing of the Merger, the Merger Agreement provides for certain additional consideration that may become payable to WordStream’s equityholders at a later date, including up to an additional $20 million in potential cash earn-out payments based on WordStream meeting certain revenue targets and up to $6.4 million in cash payable upon the release of the escrow and expense holdbacks (if such funds remain available for release).
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement. Copies of the original Merger Agreement and the amendment thereto are filed herewith as Exhibit 2.1 and Exhibit 2.2, respectively, and are incorporated herein by reference.
 
Item 8.01  
Other Events.
On July 2, 2018, Gannett issued a press release announcing the completion of the Merger. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Item 9.01  
Exhibits.
 
(d)
Exhibits

Exhibit No.
 
Description
  


Exhibit No.
 
Description
     
 
________________________________________________________________________
* The schedules and exhibits to the Agreement and Plan of Merger have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Gannett will furnish copies of such schedules to the Securities and Exchange Commission upon request.
 
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
         
   
 
Gannett Co., Inc.
 
         
Date: July 2, 2018
By:
 
 /s/ Barbara W. Wall
 
   
 
Barbara W. Wall
 
   
 
Senior Vice President and Chief Legal Officer
 
 



Exhibit 2.2
 
 


June 20, 2018

PRIVATE AND CONFIDENTIAL

WordStream, Inc.
101 Huntington Avenue
Suite 7000
Boston, MA 02199
Attention: Howard Kogan, President and CEO

Shareholder Representative Services LLC
950 17th Street, Suite 1400
Denver, CO 80202
Attention: Managing Director

Re:  Merger Agreement Amendment – “Closing Cash” Definition

Ladies and Gentlemen:

Reference is made to that certain Agreement and Plan of Merger, dated as of May 9, 2018 (the “ Merger Agreement ”), by and among Gannett Co., Inc., a Delaware corporation (“ Gannett ”), WordStream, Inc., a Delaware corporation (the “ Company ”), Orca Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Gannett (“ Merger Sub ”), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the Company Equityholders. Each capitalized term used but not defined herein has the meaning given to it in the Merger Agreement.

The Merger Agreement is hereby amended and modified by amending the definition of “Closing Cash” in Section 1.1 to read as follows:

““ Closing Cash ” means all cash and cash equivalents held in the bank accounts of the Company, net of (i) outstanding (uncleared) outbound checks, drafts, wire transfers or deposits in transit, and other debits of the Company in-process, (ii) restricted balances (other than the amounts held in the Company’s money market accounts with Pacific Western Bank that constitute the “Collateral” under those certain Pledge and Security Agreements, dated as of June 12, 2018, by the Company in favor of Pacific Western Bank, which accounts had a collective balance of $495,371.00 as of June 12, 2018), and (iii) amounts held in escrow (other than funds held in escrow as a result of this Agreement), in each case, calculated as of immediately prior to the Effective Time.”

This letter agreement may be executed in counterparts (including via facsimile or electronic transmission), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

[Signature Page Follows]

 
Sincerely,
 
     
     
     
 
GANNETT CO., INC.
 
       
       
 
By:
/s/ Elizabeth A. Allen
 
 
Name:  
Elizabeth A. Allen
 
 
Title:
Vice President, Associate General Counsel and Secretary
 
       
       
       
 
ORCA MERGER SUB, INC.
 
       
       
 
By:
/s/ Elizabeth A. Allen
 
 
Name:
Elizabeth A. Allen
 
 
Title:
Secretary
 






[Signature Page to “Closing Cash” Side Letter Agreement]



ACKNOWLEDGED AND AGREED :


WORDSTREAM, INC.



By:
/s/ Howard Kogan
 
Name:  
Howard Kogan
 
Title:
President and CEO
 
     
Date:
June 20, 2018
 






[Signature Page to “Closing Cash” Side Letter Agreement]



ACKNOWLEDGED AND AGREED :


SHAREHOLDER REPRESENTATIVE SERVICES LLC,
solely in its capacity as the Equityholder Representative



By:
/s/ Sam Riffe
 
Name:  
Sam Riffe
 
Title:
Executive Director
 
     
Date:
June 20, 2018
 






[Signature Page to “Closing Cash” Side Letter Agreement]



Exhibit 99.1
 
   
FOR IMMEDIATE RELEASE
Monday, July 2, 2018

Gannett Completes Acquisition of WordStream

McLean, VA - Gannett Co., Inc. (NYSE: GCI) ("Gannett" or "company" or "we" or "our") today announced that it closed the acquisition of WordStream, Inc. (“WordStream”), a provider of cloud-based software-as-a-service (SaaS) solutions for local and regional businesses and agencies to optimize their digital marketing services campaigns . The closing of the transaction follows the receipt of all necessary regulatory clearances and approval of the transaction by WordStream shareholders .

“Today’s announcement is an important milestone as we further accelerate our digital transformation with the addition of WordStream,” said Robert Dickey, president and chief executive officer of Gannett. “The acquisition of WordStream immediately expands our addressable market with Do-it-Yourself (DIY) SaaS solutions. Gannett is now able to offer a full spectrum of digital marketing services to any local or regional business or agency, which, combined with our large, local sales presence, will allow us to grow our share of local digital advertising.”

As previously disclosed, the purchase price was $130 million in cash, net of cash acquired, plus up to an aggregate $20 million earnout payable in 2019 and 2020 based on achieving certain revenue targets. The acquisition was funded from a combination of cash on hand and borrowings under the Company’s revolver. In the first year, WordStream is forecasted to contribute approximately $55 million in digital marketing services revenue and approximately $16 million of Adjusted EBITDA. Gannett anticipates the transaction will be accretive in the first full year of operations . Gannett intends to update its full year guidance on its second quarter earnings call in early August to reflect the addition of WordStream.


About Gannett

Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally focused media and marketing solutions company committed to strengthening communities across our network. With an unmatched local-to-national reach, Gannett touches the lives of more than 125 million people monthly with our Pulitzer-Prize winning content, consumer experiences and benefits, and advertiser products and services. Gannett brands include USA TODAY NETWORK with the iconic USA TODAY and more than 100 local media brands, digital marketing services companies ReachLocal and SweetIQ, and U.K. media company Newsquest. To connect with us, visit www.gannett.com .

About WordStream, Inc.

WordStream, Inc. provides software and services that help marketers maximize results from their online marketing efforts. WordStream’s easy-to-use software allows for more effective paid search and social campaigns with the 20-Minute Work Week, a customized workflow that guides marketers through steps that can greatly improve their AdWords, Bing, and Facebook campaigns, plus tools for call tracking, keyword optimization, and more. WordStream also offers an award-winning PPC tool, the AdWords Performance Grader, which evaluates users' Google AdWords accounts and provides valuable tips for improvement. WordStream holds premier partner status with Google and Bing ad networks. More information can be found at www.wordstream.com .

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. Such statements include, but are not limited to, Gannett’s ability to integrate WordStream’s operations and employees with Gannett’s existing business, and economic and other uncertainties affecting the digital advertising industry generally. The words "believe," "expect," "estimate," "could," "should," "intend," "may," "plan," "seek," "anticipate," "project" and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. The matters discussed in these forward-looking statements are subject to many risks, trends, uncertainties, and other factors that could cause actual results to differ materially from those projected, anticipated, or implied in the forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management, is expressed in good faith and is believed to have a reasonable basis. However, there can be no assurance the expectation or belief will result, be achieved or be accomplished. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. Except as may be required by law, we undertake no obligation to modify or revise any forward-looking statements to reflect new information, events, or circumstances occurring after the date of this press release. Factors, risks, trends, and uncertainties that could cause actual results or events to differ materially from those projected, anticipated, or implied include the matters described under the heading "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2017 and in our other SEC filings.


For investor inquiries, contact:
 
For media inquiries, contact:
Stacy Cunningham
 
Amber Allman
VP, Financial Planning & Investor Relations
 
Vice President, Corporate Events & Communications
703-854-3168
 
703-854-5358
investors@gannett.com
 
aallman@gannett.com
or
   
Brinlea Johnson
   
The Blueshirt Group
   
investors@gannett.com
   

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