March 26, 2019
Jay Nadler
Chief Executive Officer
Clarivate Analytics PLC
4th Floor, St. Paul's Gate, 22-24 New Street
St. Helier, Jersey JE1 4TR
Re: Clarivate Analytics PLC
Registration Statement on Form F-4
Filed February 27, 2019
File No. 333-229899
Dear Mr. Nadler:
We have reviewed your registration statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-4
The Business Combination Proposal
Background of the Transactions, page 80
1. We note your disclosure regarding negotiation of the terms of the Merger
Agreement and
Sponsor Agreement between December 24, 2018 and January 14, 2019. Please
expand
your disclosure to identify the material terms negotiated in these
agreements and to add
additional discussion regarding the negotiation of the Tax Receivable
Agreement.
Discuss briefly how the various identified issues were resolved,
including any material
concessions the parties made to move toward a final agreement.
Jay Nadler
FirstName LastNameJay Nadler
Clarivate Analytics PLC
Comapany2019
March 26, NameClarivate Analytics PLC
March 26, 2019 Page 2
Page 2
FirstName LastName
Churchill's Board of Directors' Reasons for Approval of the Transactions, page
83
2. In the listing of factors on page 85, please discuss whether
Churchill's Board considered
as negative factors: (i) the determination not to obtain a third-party
valuation or fairness
opinion; ii) stockholders' rights under the Amended and Restated
Shareholder Agreement,
including their right to designate up to nine directors of the
company's post-merger
board; and iii) the fact that your public stockholders will hold a
minority share position in
the post-merger company.
3. Please elaborate upon how your financial advisors assisted your Board
of Directors in
recommending the transaction to shareholders. Clarify the role the
advisors played in the
negotiations and determination of the merger consideration. Also,
clarify the steps and
analyses the Board performed to conclude that the terms and conditions
of the business
combination were advisable, fair to and in the best interests of
Churchill and its
shareholders. If any of your financial advisors provided a report to
the Board of Directors,
please revise to provide the information required by Items 4(b) of
Form F-4 and
1015(b)(6) of Regulation M-A.
Certain Forecasted Financial Information for the Company, page 85
4. You indicate that "Churchill management also presented a preliminary
2019 forecast that
was adjusted for certain additional cost savings initiatives that
Churchill expected to be
implemented in 2019." Please revise your discussion of the 2019
forecast provided to
Churchill management to include a discussion of the cost savings
initiatives and other
quantifiable information.
Comparable Company Analysis, page 87
5. We note that your description of the comparable companies analysis
uses Enterprise
Value to Standalone Adjusted EBITDA as the method for determining the
appropriate
multiple to value the Company. Please present the results from this
analysis for each
company presented and tell us why your Standalone Adjusted EBITDA
metric is useful in
evaluating the companies listed. Also revise your disclosure to
provide details with respect
to the comparable companies the Board considered in determining the
Company's fair
market value.
Interests of Churchill's Directors and Officers in the Business Combination,
page 89
6. We note that an affiliated entity, The Klein Group, LLC, acted as a
financial advisor and
aided in determining the fair value of the Company. Please discuss the
risks associated
with this potential conflict of interest.
Jay Nadler
FirstName LastNameJay Nadler
Clarivate Analytics PLC
Comapany2019
March 26, NameClarivate Analytics PLC
March 26, 2019 Page 3
Page 3
FirstName LastName
Business of Clarivate, page 134
7. Please revise your disclosure in this section and throughout to
provide objective support
for claims about your market position. As non-exclusive examples, we
note your
statements that "We are the leading global information services and
analytics company"
on page 134, and "We believe that we hold a #1 or #2 global market
position by revenues
across our key offerings" on page 137. We note that all of the
comparable companies
cited on page 88 appear to have greater revenue than the Company.
Unaudited Pro Forma Condensed Combined Financial Statements, page 144
8. We note adjustment (N) for the Tax Receivable Agreement Liability.
Please explain your
accounting under the Tax Receivable Agreement and refer to the
authoritative guidance
you relied upon.
Company's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Key Performance Indicators
Annualized Contract Values, page 161
9. You disclose that you calculate and monitor annualized contract value
("ACV") for each
of your groups; however, you only disclose total ACV. Tell us what
consideration was
given to disclosing ACV for each group for each period presented.
Refer to Section
III.B.1 of SEC Release 33-8350.
Certain Non-GAAP Measures, page 168
10. We note your disclosure here and on page 161 indicating that the
non-GAAP measures
allow management to focus on the "most accurate indicators of [y]our
continuous
operational performance" and "more accurately reflect the underlying
trends of [y]our
operations." These disclosures make your non-GAAP measures more
prominent than the
corresponding GAAP measures. Please remove these disclosures such that
the non-GAAP
measures are no longer more prominent.
Standalone Adjusted EBITDA, page 169
11. We note your disclosure of Standalone Adjusted EBITDA as a performance
measure.
Please revise to remove the adjustments "excess standalone costs" and
"costs savings". In
this regard, we note that these adjustments appear to be estimates
and/or forecasts which
are inconsistent with Question 100.04 of the Non-GAAP Financial
Measures Compliance
and Disclosure Interpretations.
Jay Nadler
FirstName LastNameJay Nadler
Clarivate Analytics PLC
Comapany2019
March 26, NameClarivate Analytics PLC
March 26, 2019 Page 4
Page 4
FirstName LastName
Liquidity and Capital Resources, page 171
12. You disclose on page 174 that Consolidated EBITDA, which is used to
calculate your
consolidated coverage ratio, is "substantially similar" to Standalone
Adjusted EBITDA as
disclosed elsewhere in the filing. Please tell us what you mean by
"substantially similar."
As part of your response, please quantify any differences between the
measures.
Critical Accounting Policies, Estimates and Assumptions
Goodwill, page 178
13. We note your disclosures regarding the quantitative impairment test
and the specific
results of the Derwent test. Please tell us the percentage by which
the fair value of the
other reporting units exceeded their carrying value. Please expand
your disclosure to state
if true, that the estimated fair value substantially exceeded the
carrying value for each of
the other reporting units. To the extent any reporting unit's fair
value was not substantially
in excess of its carrying value, disclose the percentage of excess
fair value over carrying
value for any such reporting unit.
Index to Financial Statements
Camelot Holdings (Jersey) Limited
Consolidated Statements of Operations, page F-4
14. On page 163 you describe Transactional revenue as content sales
usually delivered
instantly or in a short period of time, with the most significant
components including
"clearance searching" and "backfiles" products. Tell us what
consideration was given
to separately presenting product revenues in accordance with Rule 5-03
of Regulation S-
X.
Notes to the Consolidated Financial Statements
Note 18. Product and Geographic Sales Information, page F-44
15. We note that your product portfolio is split between the Science Group
and the Intellectual
Property Group and that there are several product lines under each for
which you provide
quantitative information. Please tell us the factors used to identify
your reportable
segments. In this regard, tell us how you evaluated ASC 280-10-50 in
determining that
you have one reportable segment.
Note 21. Subsequent Events, page F-48
16. Please disclose the specific date through which subsequent events were
evaluated. Refer
to ASC 855-10-50-1. Similar concerns apply to Churchill Capital Corp's
disclosure on
page F-69.
Jay Nadler
FirstName LastNameJay Nadler
Clarivate Analytics PLC
Comapany2019
March 26, NameClarivate Analytics PLC
Page 5
March 26, 2019 Page 5
FirstName LastName
Churchill Capital Corp
Notes to Financial Statements
Note 3. Summary of Significant Accounting Policies, page F-60
17. Revise your disclosure to clarify that upon consummation of the
merger, Churchill will
begin adopting new and revised accounting standards as they become
effective to align
with Clarivate and Camelot.
General
18. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you or anyone authorized to do
so on your behalf,
presented to potential investors in reliance on Section 5(d) of the
Securities Act, whether
or not you retain copies of the communications.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Frank Knapp, Staff Accountant at (202) 551-3805 or
Christine Dietz,
Senior Staff Accountant, at (202) 551-3408 if you have questions regarding
comments on the
financial statements and related matters. Please contact Matthew Derby, Staff
Attorney, at (202)
551-3334 or Matthew Crispino, Staff Attorney, at (202) 551-3456 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Information Technologies
and Services