ARC Document enters merger agreement with TechPrint Holdings

ARC Document Solutions has signed a definitive agreement with TechPrint Holdings, LLC, an affiliate of Kumarakulasingam Suriyakumar, the Company’s Chairman and CEO Dilantha Wijesuriya, the Company’s President and COO, Jorge Avalos, the Company’s CFO, Rahul Roy, the Company’s CTO, Sujeewa Sean Pathiratne, a private investor, and certain entities affiliated with such persons, pursuant to which the Company will merge with and into TechPrint Merger Sub, Inc., a wholly-owned subsidiary of TechPrint Holdings, LLC, and each outstanding share of common stock of the Company will be converted into the right to receive cash consideration of $3.40 per share. The Acquisition Group currently collectively owns approximately 15.8% of the voting power of the Company’s outstanding capital stock, and currently collectively beneficially owns approximately 19.6% of the shares of the Company’s stock. The merger consideration represents an approximately 28.8% premium to the Company’s closing stock price on the last trading day prior to the public announcement of Mr. Suriyakumar’s proposal to acquire the Company. The Merger Agreement and the Transaction have been approved by the Company’s Board of Directors based on the recommendation of a Special Committee of the Board consisting solely of independent directors. The Special Committee was established to, among other things, evaluate the advisability and fairness of strategic alternatives to the Company and its stockholders in light of Mr. Suriyakumar’s preliminary non-binding proposal, dated April 8, 2024, to acquire all of the outstanding shares of common stock of the Company not already beneficially owned by Mr. Suriyakumar. The Company’s stockholders will be asked to vote upon the adoption of the Merger Agreement and approval of the Transaction at a stockholders meeting called for such purpose on a date to be announced. The Transaction is expected to close before the end of 2024. Consummation of the Transaction is conditioned on, among other things, the approval at a special meeting of the Company’s stockholders by the affirmative vote of the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon, and is subject to other customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. As previously announced, the Company declared a quarterly cash dividend of $0.05 per share payable on November 29, 2024 to the holders of record of issued and outstanding shares of the Company’s common stock as of the close of business on October 31, 2024. If the Transaction closes before the Record Date, the July Dividend will be paid to the holders of the Company’s common stock as of the closing date. If the Transaction closes after the Record Date and before November 29, 2024, the Company will pay the July Dividend promptly after the Closing Date to holders of common stock on the Record Date. The Company is subject to restrictions under the Merger Agreement from making additional dividends. Upon completion of the Transaction, the Company’s common stock will no longer be listed on the New York Stock Exchange. U.S. Bank, National Association, BMO Bank N.A., Zions Bancorporation N.A. dba California Bank & Trust and City National Bank are providing debt financing in connection with the Transaction. Affiliates of the Acquisition Group have entered into a commitment letter with the Lenders, pursuant to which the Lenders have committed to provide a facility of $185.0 million to assist with funding of a portion of the Transaction. Additionally, Mr. Suriyakumar and Mr. Pathiratne are providing $11 million of equity financing pursuant to a commitment letter in connection with the Transaction. The Transaction is not subject to any financing conditions.