the approval of its board of directors for substantially all potential acquisitions by it or its consolidated subsidiaries, including acquisitions by Playtika. In addition, Giant has informed Playtika that the approval by Giant’s stockholders would also be required for any acquisition by it or its consolidated subsidiaries, including acquisitions by Playtika, if the cumulative total purchase price (including any debt assumed and transaction expenses) of all acquisitions or the cumulative total assets of such proposed acquisitions during the previous twelve months is greater than 30% of the total assets of Giant, on a consolidated basis, based on Giant’s most recent full year audited financial statements. Under those requirements, based on the most recent full year audited financial statements provided by Giant, assuming the Reorganization is completed, Giant has informed Playtika that Giant would be required to obtain approval from its stockholders prior to acquisitions, including those by Playtika, with total assets or total combined proposed purchase price of over approximately $507 million during any twelve month period. All acquisitions that are approved by Giant’s stockholders would not be included in the above calculation for determining whether the threshold for the prior twelve months has been met. Giant expects the total asset threshold to substantially increase upon completion of its 2021 consolidated audited financial statements.
In addition to the cumulative test described above, assuming the Reorganization is completed, Giant has informed Playtika that approval of Giant’s stockholders would also be required for any individual proposed acquisition, including an acquisition by Playtika, if (i) (a) the net assets of the acquired company as of the end of their most recent fiscal year or (b) the purchase price (including any debt assumed and transaction expenses), in each case, would be greater than 50% of Giant’s net assets on a consolidated basis (currently estimated to be approximately $740 million), (ii) the revenue of the acquired company for their most recent fiscal year would be greater than 50% of Giant’s consolidated revenue (currently estimated to be approximately $170 million), or (iii) the net income of the acquired company for their most recent fiscal year would be greater than 50% of Giant’s net income on a consolidated basis (currently estimated to be approximately $80 million), each based on the last day of or the full year financial statements, as applicable, of Giant’s most recent full year audited financial statements.
Giant has also informed us that, assuming the Reorganization is completed, substantially all derivatives transactions (such as hedging or swap related transactions) and other extraordinary transactions undertaken by Playtika will need to be approved by Giant’s board of directors.
While Playtika is not subject to the approval requirements discussed above, as we have previously disclosed, Mr. Shi currently controls shares of common stock representing over a majority of Playtika’s voting power and, pursuant to the terms of Playtika’s organizational documents and subject to applicable law, the ability to appoint all of the members of our board of directors, which in turn controls all matters affecting us, including, among other things, any determinations with respect to Playtika’s acquisitions. Giant has informed Playtika that Mr. Shi currently controls approximately 37.5% of the voting power of the outstanding capital stock of Giant, and employees of Giant currently control approximately 11.9% of the voting power of the outstanding capital stock of Giant. Giant has also informed Playtika that Giant’s stockholders must approve such acquisitions by a majority of the votes cast by its stockholders, other than an approval required under the total assets threshold, which requires approval by a two-thirds vote of the votes cast of Giant’s stockholders. Giant has informed us that stockholder meetings may be called upon 15 days prior notice. For the foregoing reasons, if the Reorganization is completed, the Reorganization may adversely impact Playtika’s ability to consummate acquisitions or other financial transactions that would require Giant to obtain the approval of Giant’s board of directors and, if necessary, its stockholders in a timely matter, or at all. For more information regarding the risks related to our controlling stockholders, refer to the section entitled “Risk Factors” in Playtika’s Annual Report on Form 10-K.
The foregoing information in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any of Playtika’s filings, whether made before or after the date hereof, regardless of any general incorporation language in any such filing.
