| Item 1.01. | Entry into a Material Definitive Agreement. |
Convertible Note Offering
On December 17, 2020, TechTarget, Inc. (“TechTarget”) completed its previously announced offering of $175 million aggregate principal amount of its 0.125% Convertible Senior Notes due 2025 (such notes, including the notes sold pursuant to the exercise by the Initial Purchasers (as defined below) of their option to purchase additional notes described below, the “Notes”). The Notes were sold in a private placement under a purchase agreement, dated as of December 14, 2020, entered into by and between TechTarget, and the several initial purchasers named therein (collectively, the “Initial Purchasers”), for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).
TechTarget also granted the Initial Purchasers an option to purchase an additional $26.25 million aggregate principal amount of Notes on the same terms and conditions, which the Initial Purchasers exercised in full on December 16, 2020 and which additional purchase was also completed on December 17, 2020.
TechTarget expects the net proceeds from the offering to be approximately $194.6 million after payment of Initial Purchasers’ discounts and estimated offering expenses payable by TechTarget.
TechTarget intends to use approximately $150 million of the net proceeds from the offering to fund the cash consideration payable for, and certain costs associated with, its previously announced proposed acquisition of BrightTalk Limited (the “BrightTalk Acquisition”). TechTarget also intends to use the net proceeds from the offering to fund the $20 million initial purchase price, subject to adjustment, of an additional acquisition of a company providing research and content for B2B information technology enterprise customers, with which TechTarget has entered into a non-binding letter of intent (the “Potential Acquisition”). Completion of the offering was not contingent upon completion of the BrightTalk Acquisition or the Potential Acquisition and there can be no assurance that the BrightTalk Acquisition or the Potential Acquisition will be consummated. TechTarget intends to use the remainder of the net proceeds from the offering (including, if either the BrightTalk Acquisition or the Potential Acquisition is not completed, the net proceeds from the offering that would have otherwise been used for the BrightTalk Acquisition or the Potential Acquisition, as applicable) for general corporate purposes, which may include, without limitation and in TechTarget’s sole discretion, working capital, capital expenditures, investments in or loans to TechTarget’s subsidiaries, repayment of outstanding indebtedness, common stock repurchases, funding potential future acquisitions and investments and satisfaction of other obligations.
Indenture and the Notes
On December 17, 2020, TechTarget entered into an indenture (the “Indenture”) with respect to the Notes with U.S. Bank National Association, as trustee (the “Trustee”). Under the Indenture, the Notes will be senior unsecured obligations of TechTarget, and bear interest from December 17, 2020, at an annual rate of 0.125% payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2021. The Notes will mature on December 15, 2025, unless earlier redeemed, repurchased or converted in accordance with their terms prior to such date.
The Notes are convertible into shares of TechTarget’s common stock at an initial conversion rate of 14.1977 shares per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $70.43 per share), subject to adjustment upon the occurrence of certain events. The initial conversion price represents a premium of approximately 40.0% to the $50.31 per share closing price of TechTarget’s common stock on December 14, 2020. Upon conversion of the Notes, holders will receive cash or shares of TechTarget’s common stock or a combination thereof, at TechTarget’s election.
Prior to September 15, 2025, the Notes will be convertible only upon the occurrence of certain events, and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes.
The conversion rate is subject to customary anti-dilution adjustments. If certain corporate events described in the Indenture occur prior to the maturity date, or TechTarget delivers a notice of redemption (as described below), the conversion rate will be increased for a holder who elects to convert its Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances.
Prior to December 20, 2023, TechTarget may not redeem the Notes. On or after December 20, 2023 and prior to September 15, 2025, TechTarget may redeem for cash all or a portion of the Notes if the last reported sale price of TechTarget’s common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which TechTarget provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which TechTarget provides notice of redemption. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the Notes.
