Akamai Technologies Inc. filed SEC Form 8-K: Other Events, Entry into a Material Definitive Agreement
UNITED STATES
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| Item 1.01 | Entry into a Material Definitive Agreement |
Convertible Note Offering
On May 19, 2025, Akamai Technologies, Inc. (“Akamai”) completed its previously announced offering of 0.25% Convertible Senior Notes due May 15, 2033 (the “Notes”). The Notes were sold in a private placement under a purchase agreement, dated as of May 14, 2025, entered into by and between Akamai and each of Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC as representatives of the several initial purchasers named therein (collectively, the “Initial Purchasers”), for resale to persons reasonably believed to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The aggregate principal amount of the Notes sold in the offering was $1.725 billion, which includes $225.0 million in aggregate principal amount of Notes issued pursuant to the Initial Purchasers’ option to purchase Notes on the same terms and conditions, which the Initial Purchasers exercised in full on May 16, 2025.
Akamai used approximately $275.0 million of the net proceeds from the offering of the Notes to pay the cost of the privately-negotiated convertible note hedge transactions described below (after such cost was partially offset by the proceeds to Akamai from the sale of warrants pursuant to the warrant transactions described below) and used approximately $300.0 million of the net proceeds from the offering of the Notes to repurchase 3,870,468 shares of Akamai’s common stock, as described below in Item 8.01.
Akamai intends to use the remaining net proceeds from the offering of the Notes to repay approximately $250.0 million in borrowings outstanding under its five-year senior unsecured revolving credit facility, as amended, and repay at maturity a portion of Akamai’s $1.15 billion outstanding aggregate principal amount of 0.375% Convertible Senior Notes due 2027 (the “2027 Convertible Notes”), which mature on September 1, 2027, unless the 2027 Convertible Notes are converted prior to maturity.
Indenture and the Notes
On May 19, 2025, Akamai entered into an indenture (the “Indenture”) with respect to the Notes with U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Under the Indenture, the Notes will be senior unsecured obligations of Akamai, and bear interest from May 19, 2025 at a rate of 0.25% per year, payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2025. The Notes will mature on May 15, 2033, unless earlier converted or repurchased in accordance with their terms.
The Notes are convertible into shares of Akamai’s common stock at an initial conversion rate of 10.7513 shares per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $93.01 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price represents a premium of approximately 20% to the $77.51 per share closing price of Akamai’s common stock on May 14, 2025.
Upon conversion of the Notes, Akamai will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of Akamai’s common stock, or a combination of cash and shares of Akamai’s common stock, at Akamai’s election, in respect of the remainder, if any, of Akamai’s conversion obligation in excess of the aggregate principal amount of the Notes being converted.
Prior to the close of business on the business day immediately preceding January 15, 2033, the Notes will be convertible only upon the occurrence of certain events and will be convertible thereafter at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes.
If certain corporate events described in the Indenture occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its Notes in connection with such corporate event in certain circumstances.
The Notes are not redeemable prior to maturity, and no sinking fund is provided for the Notes. Holders may require Akamai to repurchase for cash all or any portion of their Notes on May 15, 2031 (the “optional repurchase date”), if the last reported sale price of Akamai’s common stock on the trading day immediately preceding the business day
immediately preceding the optional repurchase date is less than the conversion price. The optional repurchase price will be equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the optional repurchase date. In addition, if Akamai undergoes a “Fundamental Change,” as defined in the Indenture, subject to certain conditions and limited exceptions, holders may require Akamai to repurchase for cash all or any portion of their Notes. The fundamental change repurchase price will be equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Indenture contains customary terms and covenants, including that upon certain events of default that are occurring and continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Notes to be due and payable.
The above description of the Indenture and the Notes is a summary only and is qualified in its entirety by reference to the Indenture (and the Form of Note included therein), which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
Convertible Note Hedge Transactions and Warrant Transactions
On May 14, 2025, in connection with the pricing of the Notes, Akamai entered into convertible note hedge transactions with one or more of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”). Akamai also entered into warrant transactions with the Option Counterparties pursuant to which it sold warrants for the purchase of Akamai’s common stock. On May 16, 2025, in connection with the Initial Purchasers’ exercise of their option to purchase additional Notes, Akamai entered into additional convertible note hedge transactions and additional warrant transactions with the Option Counterparties.
The convertible note hedge transactions are expected generally to reduce the potential dilution with respect to shares of Akamai’s common stock upon any conversion of the Notes and/or offset any cash payments Akamai is required to make in excess of the principal amount of any converted Notes, as the case may be. The warrant transactions could separately have a dilutive effect to the extent that the market price per share of Akamai’s common stock exceeds the relevant strike price of the warrants, unless Akamai elects, subject to certain conditions, to settle the warrants in cash.
The above description of the convertible note hedge transactions and the warrant transactions is a summary only and is qualified in its entirety by reference to the forms of the Call Option Transaction Confirmation and the Warrant Confirmation executed by Akamai and each Option Counterparty as of the dates specified above, forms of which are attached hereto as Exhibit 10.1 and 10.2, respectively, and are incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The Notes were sold to the Initial Purchasers in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act for resale to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A of the Securities Act. Akamai does not intend to file a shelf registration statement for the resale of the Notes or any common stock issuable upon conversion of the Notes. The warrants were sold to the Option Counterparties in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act. Additional information pertaining to the Notes, the shares of Akamai’s common stock issuable upon conversion of the Notes and the warrants is contained in Item 1.01 of this report and is incorporated herein by reference.
| Item 8.01 | Other Events. |
In connection with the sale of the Notes, Akamai used approximately $300.0 of the net proceeds of such sale to repurchase 3,870,468 shares of its common stock from purchasers of Notes in privately negotiated transactions effected through one or more of the Initial Purchasers or their affiliates, as Akamai’s agent. The purchase price of the common stock repurchased in such transactions was equal to the closing price per share of Akamai’s common stock on the date of the pricing of the offering, which was $77.51 per share.
| Item 9.01. | Financial Statements and Exhibits. |
| 4.1 | Indenture (including form of Notes) with respect to Akamai’s 0.25% Convertible Senior Notes due May 15, 2033, dated as of May 19, 2025, between Akamai and U.S. Bank Trust Company, National Association, as trustee. | |
| 10.1 | Form of Call Option Transaction Confirmation between Akamai and each Option Counterparty. | |
| 10.2 | Form of Warrant Confirmation between Akamai and each Option Counterparty. | |
| 104 | Cover page interactive data file (the cover page XBRL tags are embedded within the inline XBRL document) | |
SIGNATURES
Pursuant to the 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.
| AKAMAI TECHNOLOGIES, INC. | ||||||
| By: | /s/ Aaron S. Ahola | |||||
| Name: | Aaron S. Ahola | |||||
| Date: May 19, 2025 | Title: | Executive Vice President, General Counsel and Corporate Secretary | ||||