| Item 1.01 | Entry into a Material Definitive Agreement. |
On July 11, 2019, Invitae Corporation, a Delaware corporation (“Invitae”), Jumanji, LLC, a Delaware limited liability company and wholly-owned subsidiary of Invitae (“Merger Sub”), Jungla Inc., a privately held Delaware corporation (“Jungla”), the holders of all of the outstanding capital stock of Jungla (the “Sellers”), and Fortis Advisors LLC (solely in its capacity as representative of the Sellers) entered into a Stock Purchase and Merger Agreement (the “Agreement”), pursuant to which, among other things and subject to the satisfaction or waiver of the conditions set forth in the Agreement, Invitae will purchase 100% of the capital stock of Jungla from the Sellers and following which, as part of the same overall transaction, Jungla will merge with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger and remaining a wholly-owned subsidiary of Invitae (the “Transaction”). The Transaction is intended to qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The aggregate consideration in the Transaction will consist of up to approximately $65 million, of which approximately $50 million will be payable at the closing and approximately $15 million will be payable in connection with the achievement of certain milestones within 24 months after the closing of the Transaction; provided, however, that such aggregate amount is subject to adjustment based upon various factors, including the cash, debt and working capital of Jungla at the time of the Transaction. Of the consideration payable at the closing, approximately $35 million will be payable in shares of Invitae’s common stock and approximately $15 million will be payable in cash. Of the consideration payable pursuant to the achievement of the milestones, most will be payable in shares of Invitae’s common stock and the remainder will be payable in cash. A portion of the consideration will be subject to a hold back to satisfy indemnification obligations that may arise in connection with the Agreement.
The shares of Invitae’s common stock issued in the Transaction will be issued in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act.
Closing Conditions; Closing Date
The obligations of the parties to consummate the Transaction are subject to the satisfaction or waiver of various conditions set forth in the Agreement, including, but not limited to (i) the accuracy of the representations and warranties of each party contained in the Agreement (subject to certain materiality qualifications), (ii) each party’s compliance with or performance of the covenants and agreements in the Agreement in all material respects, (iii) entry by Invitae into employment and non-competition agreements with certain employees of Jungla, (iv) receipt of certain third parties consents to the Transaction, (v) amendment of a license agreement to which Jungla is a party, in a form reasonably satisfactory to Invitae, (vi) receipt of option cancellation and joinder agreements from certain holders of Jungla stock options, and (vii) entry into the Registration Rights Agreement described below. The Transaction is expected to close in July 2019, subject to customary closing conditions.
Representations and Warranties; Covenants
The Agreement contains customary representations and warranties by Invitae, Jungla and the Sellers. The Agreement also contains customary covenants and agreements, including with respect to the operations of the business of Jungla between signing and closing, restrictions on alternative transactions by Jungla, commercially reasonable efforts to take actions that may be necessary in order to obtain approval of the Transaction with certain governmental authorities, and other matters.
The Agreement generally prohibits certain stockholders of Jungla from soliciting proposals relating to alternative transactions and restricts their ability to furnish non-public information to, or participate in any discussions or negotiations with, any third party with respect to any alternative transaction, subject to certain limited exceptions.
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