Cross Country Healthcare Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits
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| Item 1.01. | Entry Into a Material Definitive Agreement. |
Agreement and Plan of Merger
On December 3, 2024, Cross Country Healthcare, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, Aya Holdings II Inc., a Delaware corporation (“Parent”), Spark Merger Sub One Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and, solely for purposes of Section 11.14 thereto, Aya Healthcare, Inc. (“Aya”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as a wholly owned subsidiary of Parent (the “Surviving Corporation”). Capitalized terms used but not defined herein shall the meanings given to them in the Merger Agreement.
Merger Consideration
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of the Company, par value $0.0001 per share (a “Company Common Share”) (excluding (i) Company Common Shares held by the Company as treasury shares or owned by Parent, Merger Sub or any other Subsidiary of Parent immediately prior to the Effective Time and (ii) Dissenting Company Shares), issued and outstanding immediately prior to the Effective Time will automatically be converted into the right to receive $18.61 in cash, without interest (the “Merger Consideration”).
Pursuant to the Merger Agreement, at or immediately prior to the Effective Time:
| · | Each restricted stock award with respect to Company Common Shares that is subject solely to service-based vesting conditions (each, a “Company Restricted Stock Award”) that is outstanding immediately prior to the Effective Time (subject to limited exceptions for certain equity awards issued prior to the Closing) will, automatically and without any action on behalf of the holder thereof, be fully vested, canceled and converted into the right to receive an amount in cash equal to (i) the number of Company Common Shares subject to such Company Restricted Stock Award immediately prior to the Effective Time multiplied by (ii) the Merger Consideration, and will be paid at or as soon as practicable after the Effective Time, and will be subject to any applicable withholding; and |
| · | Each restricted stock award with respect to Company Common Shares that is subject to service- and performance-based vesting conditions (each, a “Company Performance Stock Award”) that is outstanding immediately prior to the Effective Time will, automatically and without any action on behalf of the holder thereof, be treated as follows: (i) each Company Performance Stock Award (x) granted in 2022 will be deemed vested with respect to seventy-five-and-a-half percent (75.5%) of the target number of Company Common Shares subject to such Company Performance Stock Award and (y) granted in 2023 and 2024 will be deemed vested with respect to fifty percent (50%) of the target number of Company Common Shares subject to such Company Performance Stock Award (the portion of each such vested Company Performance Stock Award, a “Vested Company Performance Stock Award”), and each such Vested Company Performance Stock Award will be canceled and converted |
into the right to receive an amount in cash equal to (A) the number of Company Common Shares subject to such Vested Company Performance Stock Award immediately prior to the Effective Time multiplied by (B) the Merger Consideration, and will be paid at or as soon as practicable after the Effective Time, and will be subject to any applicable withholding and (ii) each Company Performance Stock Award or portion thereof that is not a Vested Company Performance Stock Award will be cancelled and forfeited for no consideration.
If the Merger is consummated, the Company’s securities will be delisted from the Nasdaq Global Select Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as promptly as practicable after the Effective Time.
Closing Conditions
The consummation of the Merger (the “Closing”) is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding a majority of the voting power of the outstanding Company Common Shares entitled to vote on the adoption of the Merger Agreement, voting together as a single class (the “Company Stockholder Approval”), (ii) the absence of any order or law issued by any governmental authority prohibiting, rendering illegal or permanently enjoining the consummation of the Merger (a “Legal Restraint”) and (iii) the expiration or termination of any waiting period (or extensions thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any commitment to, or agreement with, any governmental authority to delay or not consummate the Merger or any of the transactions contemplated by the Merger Agreement.
The obligation of each party to consummate the Merger is also conditioned upon (i) performance and compliance by the other party in all material respects with its pre-Closing obligations and covenants under the Merger Agreement, (ii) the accuracy of the representations and warranties of the other party (subject to customary materiality qualifiers) as of the date of the Merger Agreement and/or as of the Closing (as applicable), and (iii) in Parent’s case, the absence of a continuing material adverse effect with respect to the Company and its subsidiaries, taken as a whole. The Merger is not subject to a financing condition.
Representations and Warranties and Covenants
The Company and Parent have each made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and Closing. In addition, subject to certain exceptions, the Company has agreed to covenants relating to (i) the submission of the Merger Agreement to the Company’s stockholders at a meeting thereof for approval (the “Company Stockholders Meeting”) and (ii) recommendation by the board of directors of the Company (the “Board”) in favor of the adoption by the Company’s stockholders of the Merger Agreement.
No Solicitation
The Company is subject to customary “no-shop” restrictions on the Company’s ability to solicit alternative acquisition proposals, to furnish information to, and participate in discussions or negotiations with, third parties regarding any alternative acquisition proposals, subject to a customary “fiduciary out” provision that allows the Company, under certain specified circumstances, to furnish information to, and participate in discussions or negotiations with, third parties with respect to an alternative acquisition proposal if in response to a bona fide acquisition proposal, the Board determines in good faith, after consultation with its financial advisors and outside legal counsel, that such alternative acquisition proposal constitutes, or could reasonably be expected to lead to, a superior proposal.
Termination and Fees
The Merger Agreement contains certain customary termination rights for the Company and Parent. Parent and the Company may agree to terminate the Merger Agreement by mutual written consent. Either the Company or Parent may terminate the Merger Agreement if (i) the Merger has not been consummated on or before September 3, 2025 (the “End Date”) or, if the Closing has not occurred by the End Date solely due to a failure to obtain required antitrust approvals, December 3, 2025 (the “Extended End Date”), (ii) any Legal Restraint rendering illegal or permanently enjoining the consummation of the Merger is in place and such Order shall have become final and non-
appealable, (iii) the Company Stockholder Approval is not obtained at the Company Stockholders Meeting at which a vote on the adoption of the Merger Agreement is held, or (iv) the other party breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances, terminate the Merger Agreement in order for the Company to enter concurrently into a definitive written agreement with respect to an unsolicited superior acquisition proposal, subject to the Company having first complied with its obligations under the “no-shop” provisions, including Parent’s matching rights and payment of the Company Termination Fee (as defined below) to Parent, as set forth in the Merger Agreement. In addition, Parent may, under certain circumstances, terminate the Merger Agreement if, prior to receipt of the Company Shareholder Approval, (i) the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (ii) the Company materially breaches its obligations related to the Company Stockholders Meeting or the “no-shop” provisions.
The Company is required to pay to Parent a one-time fee equal to $20 million (the “Company Termination Fee”) if the Merger Agreement is terminated (i) by the Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal, (ii) by Parent because the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement, or (iii) (a) prior to the receipt of the Company Stockholder Approval, by either party due to failure to close by the End Date (or Extended End Date, as applicable), (b) by either party due to failure to obtain the Company Stockholder Approval or (c) by Parent in connection with the Company (1) breaching its obligations under the “no-shop” provisions or related to the Company Stockholders Meeting prior to the receipt of the Company Shareholder Approval, or (2) breaching its representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied (subject to a cure period in certain circumstances), but only if, in the case of this clause (iii), an alternative acquisition proposal was publicly announced after the date of the Merger Agreement or, in the case of a termination for failure to obtain the Company Shareholder Approval, after the Company Stockholders Meeting, and not withdrawn, and, within 12 months after termination of the Merger Agreement, a definitive agreement for the alternative acquisition proposal is entered into and is subsequently consummated.
Parent is required to pay to the Company a one-time fee equal to $20 million (the “Parent Termination Fee”) if the Merger Agreement is terminated by the Company or Parent due to (i) failure to close by the End Date (or Extended End Date, as applicable) if, at the time of such termination, any Legal Restraint related to antitrust laws is in place or the required antitrust approvals have not been received, (ii) failure to close due to a Legal Restraint related to antitrust laws being in place if, at the time of such termination, all other closing conditions of Parent are satisfied, or (iii) a material breach by Parent of its obligations to obtain antitrust approval.
Parent’s obligations under the Merger Agreement are guaranteed by Aya. The Merger Agreement also provides that either party may specifically enforce the other party’s obligations under the Merger Agreement under certain circumstances.
The Merger Agreement and the above description have been included to provide investors with information regarding its terms. They are not intended to provide any other factual information about the Company, Parent or any of their respective subsidiaries or affiliates or to modify or supplement any factual disclosures about the Company included in its public reports filed with the Securities and Exchange Commission (the “SEC”) or otherwise. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement, and, as of specific dates, were solely for the benefit of the parties thereto, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent or any of their respective subsidiaries or affiliates.
The foregoing description of the Merger Agreement and the transactions contemplated thereby, including the Merger, do not purport to be complete and are qualified in their entirety by reference to the actual Merger Agreement. A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K (“Report”) and incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On December 4, 2024, the Company and Aya issued a joint press release announcing the execution of the Merger Agreement, a copy of which is filed as Exhibit 99.1 to this Report and is incorporated herein by reference.
The information in this Item 7.01 (including Exhibit 99.1) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Important Information and Where to Find It
This communication relates to a proposed transaction between the Company, Parent and the other parties to the Merger Agreement. In connection with this proposed transaction, the Company will file a proxy statement on Schedule 14A or other documents with the SEC. This communication is not a substitute for any proxy statement or other document the Company may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT, AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The definitive proxy statement, when available, will be mailed to stockholders of the Company, as applicable. Investors and security holders will be able to obtain free copies of these documents, when available, and other documents filed with the SEC by the Company through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s internet website at https://ir.crosscountryhealthcare.com/ or by contacting the Company’s primary investor relations contact by email at [email protected] or by phone at 561-237-8310.
Participants in the Solicitation
The Company, Parent, Merger Sub, Aya, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of the Company, their ownership of Company Common Shares, and the Company’s transactions with related persons is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 23, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1141103/000162828024006454/ccrn-20231231.htm), in its proxy statement on Schedule 14A for its 2024 Annual Meeting of Stockholders in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Related Party Transactions”, which was filed with the SEC on April 1, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1141103/000114036124016761/ny20018339x1_def14a.htm), certain of its Quarterly Reports on Form 10-Q and certain of its Current Reports on Form 8-K.
These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Forward Looking Statements
This communication contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. Any statements contained in this communication that are not statements of historical fact, including statements regarding the proposed Merger, including the expected timing and closing of the proposed Merger; the Company’s ability to consummate the proposed Merger; the expected benefits of the proposed Merger and other considerations taken into account by the Board in approving the proposed Merger; the amounts to be received by stockholders and expectations for the Company prior to and following the closing of the proposed Merger, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future of the Company based on current expectations and assumptions relating to the Company’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future performance, plans, actions or events. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others: (i) the timing to consummate the proposed Merger, (ii) the risk that a condition of closing of the proposed Merger may not be satisfied or that the closing of the proposed Merger might otherwise not occur, (iii) the risk that a regulatory approval that may be required for the proposed Merger is not obtained or is obtained subject to conditions that are not anticipated, (iv) the diversion of management time on transaction-related issues, (v) risks related to disruption of management time from ongoing business operations due to the proposed Merger, (vi) the risk that any announcements relating to the proposed Merger could have adverse effects on the market price of the common stock of the Company, (vii) the risk that the proposed Merger and its announcement could have an adverse effect on the ability of the Company to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers, (viii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring the Company to pay a termination fee, (ix) the risk that competing offers will be made; (x) unexpected costs, charges or expenses resulting from the Merger, (xi) potential litigation relating to the Merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto, (xii) worldwide economic or political changes that affect the markets that the Company’s businesses serve which could have an effect on demand for the Company’s services and impact the Company’s profitability, (xiii) effects from global pandemics, epidemics or other public health crises, (xiv) changes in marketplace conditions, such as alternative modes of healthcare delivery, reimbursement and customer needs, and (xv) disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, costs of providing services, retention of key employees, and outcomes of legal proceedings, claims and investigations. Accordingly, actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in the Company’s filings with the SEC, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and in the Company’s other filings with the SEC. The list of factors is not intended to be exhaustive.
These forward-looking statements speak only as of the date of this communication, and the Company does not assume any obligation to update or revise any forward-looking statement made in this communication or that may from time to time be made by or on behalf of the Company.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit No. |
Description | |
| 2.1 | Agreement and Plan of Merger, dated as of December 3, 2024, among Cross Country Healthcare, Inc., Aya Holdings II Inc., Spark Merger Sub One Inc. and, solely for the purposes set forth therein, Aya Healthcare, Inc.* | |
| 99.1 | Joint Press Release with respect to the Merger, issued by Cross Country, Healthcare, Inc. and Aya Healthcare, Inc., dated as of December 4, 2024. | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
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* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request.
SIGNATURE
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.
| Dated: December 4, 2024 | CROSS COUNTRY HEALTHCARE, INC. | ||
| By: | /s/ John A. Martins | ||
| Name: | John A. Martins | ||
| Title: | President & Chief Executive Officer (Principal Executive Officer) | ||