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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Matterport, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

LOGO

Dear Fellow Stockholders of Matterport, Inc.:

On April 21, 2024, CoStar Group, Inc. (“CoStar Group”), Matrix Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of CoStar Group (“Merger Sub I”), Matrix Merger Sub II LLC, a Delaware limited liability company and wholly owned subsidiary of CoStar Group (“Merger Sub II”), and Matterport, Inc. (“Matterport”) entered into a merger agreement (the “Merger Agreement”) under which, upon the terms and subject to the conditions set forth therein, Merger Sub I will merge with and into Matterport, with Matterport surviving as a direct, wholly owned subsidiary of CoStar Group (the “First Merger”). Immediately thereafter, subject to the terms of the Merger Agreement and, in certain circumstances, at the discretion of CoStar Group, in a single integrated transaction with the First Merger, Matterport will merge with and into Merger Sub II, with Merger Sub II surviving as a direct, wholly owned subsidiary of CoStar Group (the “Second Merger” and together with the First Merger, the “Mergers”). In connection with the Second Merger, Merger Sub II’s name will be changed to “Matterport, LLC”. A copy of the Merger Agreement is included as Annex A to the accompanying proxy statement/prospectus.

If the First Merger is completed, you will be entitled to receive for each share of Matterport Class A common stock (“Matterport Common Stock”) you own an amount equal to $2.75 in cash plus a number of shares of CoStar Group common stock (“CoStar Group Common Stock”) equal to the exchange ratio set forth in the Merger Agreement. The exchange ratio depends on the average of the daily volume weighted averages of the trading prices of CoStar Group Common Stock on the Nasdaq Global Select Market on each of the 20 consecutive trading days ending on and including the trading day that is three trading days prior to the effective time of the First Merger (the “Average Share Price”). If the Average Share Price is greater than or equal to $94.62, then the exchange ratio shall be set at 0.02906. If the Average Share Price is less than or equal to $77.42, then the exchange ratio shall be set at 0.03552. If the Average Share Price is greater than $77.42 and less than $94.62, then the exchange ratio shall be equal to the quotient of $2.75 divided by the Average Share Price.

The transaction price represents a premium of approximately 216.1% over the Matterport Common Stock closing price on April 19, 2024, the last trading day before the public announcement of the execution of the Merger Agreement with CoStar Group, and a premium of 181.4% over the 20-day volume weighted average on the same date. The value of the merger consideration to be received in exchange for each share of Matterport Common Stock will fluctuate with the market value of CoStar Group Common Stock until the transaction is complete. Matterport Common Stock is listed on the Nasdaq Global Market under the symbol “MTTR”. CoStar Group Common Stock is listed on the Nasdaq Global Select Market under the symbol “CSGP”. Upon completion of the Mergers, former Matterport stockholders are expected to own approximately 2.8% - 3.4% of the then outstanding CoStar Group Common Stock, based on CoStar Group’s outstanding equity as of April 19, 2024.

Matterport will hold a special meeting of its stockholders on July 26, 2024, at 10:00 a.m. Pacific Time (the “Special Meeting”). In the interest of providing our stockholders with a more convenient, cost-effective method of attending, the Special Meeting will be conducted virtually via live webcast. You will be able to attend the Special Meeting online by visiting https://web.lumiconnect.com/216187135 (password: matterport2024).

Information about the Special Meeting, the Mergers, the Merger Agreement, and the other business to be considered by stockholders at the Special Meeting is contained in the accompanying proxy statement/prospectus. The Matterport board of directors has fixed the close of business on June 6, 2024 as the record date for the determination of Matterport stockholders entitled to notice of, and to vote at, the Special Meeting. For further information on how to participate in the meeting, please see “The Special Meeting” in the accompanying proxy statement/prospectus.

At the Special Meeting, the Matterport stockholders will be asked to (i) consider and vote on a proposal to adopt the Merger Agreement (the “Merger Proposal”), (ii) consider and vote on a non-binding advisory proposal to approve the compensation that may be paid or become payable to the named executive officers of Matterport that is based on or otherwise relates to the Mergers and (iii) consider and vote on a proposal to approve the adjournment of the Special Meeting, if necessary or appropriate, including adjournment to permit further solicitation of proxies in favor of the Merger Proposal.


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The Matterport board of directors has unanimously (i) determined and declared that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to and in the best interests of Matterport and its stockholders, (ii) declared that the Merger Agreement, the Mergers and the other transactions contemplated thereby are advisable and (iii) approved the execution, delivery and performance by Matterport of the Merger Agreement and the transactions contemplated thereby, including the Mergers.

The Matterport board of directors accordingly recommends that the Matterport stockholders vote “FOR” the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Mergers, “FOR” the non-binding, advisory proposal to approve the compensation that may be paid or become payable to Matterport’s named executive officers in connection with the Mergers and “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, including to solicit additional votes for approval of the Merger Proposal.

In considering the recommendation of the Matterport board of directors, you should be aware that the directors and executive officers of Matterport have certain interests in the transaction that may be different from, or in addition to, the interests of Matterport stockholders generally. See the section titled “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers” beginning on page 62 of the accompanying proxy statement/prospectus for a more detailed description of these interests.

In particular, we urge you to read carefully the section titled “Risk Factors” beginning on page 26 of the accompanying proxy statement/prospectus. If you have any questions regarding the accompanying proxy statement/prospectus, you may contact D.F. King & Co., Inc., Matterport’s proxy solicitor, by calling 866-356-7813.

Your vote is very important. Matterport and CoStar Group cannot complete the Mergers unless the Matterport stockholders adopt the Merger Proposal. Whether or not you plan to attend the Special Meeting, please submit a proxy to vote your shares as promptly as possible to ensure that your shares of Matterport Common Stock are represented at the Special Meeting. The attached proxy statement/prospectus describes the Special Meeting, the Mergers, the documents related to the Mergers, and other related matters. Please review the entire proxy statement/prospectus. You can also obtain information about Matterport and CoStar Group from documents that each has filed with the Securities and Exchange Commission.

On behalf of the Matterport board of directors, we would like to express our appreciation for your continued support of, and interest in, Matterport.

Sincerely,

R.J. Pittman

Chairman of the Board and Chief Executive Officer

Sunnyvale, California

June 10, 2024

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Mergers or the securities to be issued pursuant to the Mergers under this proxy statement/prospectus or has passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated June 10, 2024, and is first being mailed to or otherwise Matterport stockholders on or about June 10, 2024.


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LOGO

Matterport, Inc.

352 East Java Drive

Sunnyvale, California 94089

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

Time    Place    Date
10:00 a.m. Pacific Time   

Online only via live webcast at https://web.lumiconnect.com/216187135

(password: matterport2024)

   July 26, 2024

Dear Fellow Stockholders of Matterport, Inc.:

NOTICE IS HEREBY GIVEN that Matterport, Inc. (“Matterport”) will hold a special meeting of stockholders of Matterport (the “Special Meeting”), which will be held virtually on July 26, 2024, at 10:00 a.m. Pacific Time. You will be able to attend the Special Meeting online by visiting https://web.lumiconnect.com/216187135 (password: matterport2024) and entering your virtual control number included on your proxy card, or on the instructions that accompanied your proxy materials provided by your bank or broker. You will be able to listen to the Special Meeting live, submit questions and vote online during the Special Meeting. You will not be able to attend in person. At the Special Meeting, stockholders will consider and vote on the following matters:

MATTERS

 

 

  1

To adopt the Agreement and Plan of Merger and Reorganization, dated as of April 21, 2024, as it may be amended from time to time (the “Merger Agreement”), by and among CoStar Group, Inc., a Delaware corporation (“CoStar Group”), Matrix Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of CoStar Group (“Merger Sub I”), Matrix Merger Sub II LLC, a Delaware limited liability company and a wholly owned subsidiary of CoStar Group (“Merger Sub II”), and Matterport, a copy of which is attached as Annex A to the proxy statement/prospectus of which this notice is a part, and which is further described in the sections titled “The Mergers” and “The Merger Agreement,” beginning on pages 40 and 71, respectively (the “Merger Proposal”).

 

  2

To approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Matterport’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Merger Agreement (the “Transaction Related Compensation Proposal”).

 

  3

To approve one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

 

 

Each of the proposals is more fully described in the accompanying proxy statement/prospectus of Matterport and CoStar Group, which provides you with information about Matterport, CoStar Group, the Special Meeting, the Mergers, the Merger Agreement and other related matters. Matterport encourages you to carefully read the accompanying proxy statement/prospectus in its entirety, including the annexes and the documents incorporated by reference.

Matterport will transact no other business at the Special Meeting except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof. The accompanying proxy statement/prospectus, including the Merger Agreement attached thereto as Annex A contains further information with respect to these matters.

The Matterport board of directors has approved and declared advisable the Merger Agreement and the transactions contemplated by the Merger Agreement, on the terms and subject to the conditions set forth in the


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Merger Agreement. The Matterport board of directors accordingly recommends that Matterport stockholders vote “FOR” the Merger Proposal, “FOR” for the Transaction Related Compensation Proposal and “FOR” for the Adjournment Proposal.

Approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Matterport Class A common stock entitled to vote at the Special Meeting on the Merger Proposal. Approval of each of the Transaction Related Compensation Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting on each proposal.

The record date for determining stockholders entitled to receive notice of and to vote at the Special Meeting or adjournment or postponement thereof is the close of business on June 6, 2024. Only stockholders of record at the close of business on the record date are entitled to receive notice of, participate in, and vote at the Special Meeting and any postponements or adjournments thereof. A complete list of such stockholders will be open to the examination of any stockholder for a period of 10 calendar days prior to and through the date of the Matterport special meeting for a purpose germane to the meeting by sending an email to Matthew Zinn, Chief Legal Officer, at legal@matterport.com, stating the purpose of the request and providing proof of ownership of Matterport stock.

Your vote is very important regardless of the number of Matterport shares you own. Matterport and CoStar Group cannot complete the Mergers unless the Matterport stockholders adopt the Merger Proposal. Regardless of whether you plan to attend the Special Meeting, please vote as soon as possible by following the voting procedures described on the proxy card. If you do not vote on the Merger Proposal, it will have the same effect as a vote by you against the Merger Proposal. Submitting a proxy will not prevent you from voting virtually at the Special Meeting, but it will help to secure a quorum and avoid added solicitation costs if you decide not to or become unable to attend the Special Meeting. Any eligible holder of Matterport shares may vote virtually at the Special Meeting, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in the proxy statement/prospectus of which this notice is a part.

To ensure that a quorum is present at the Special Meeting, please vote your shares over the Internet or by telephone, or you may sign, date and mail the proxy card in the enclosed envelope, whether or not you expect to attend the Special Meeting. Note that, in light of possible disruptions in mail service, we encourage stockholders to submit their proxy via the Internet or telephone.

If you hold your shares in a brokerage account, you should be aware that, if you do not instruct your broker how to vote, your broker will not be permitted to vote your shares for the Merger Proposal, the Transaction Related Compensation Proposal or the Adjournment Proposal. Therefore, you must affirmatively take action to vote your shares at the Special Meeting. If you do not, your shares will not be voted on these items.

By Order of the Board of Directors of Matterport, Inc.,

R.J. Pittman

Chairman of the Board and Chief Executive Officer

Sunnyvale, California

June 10, 2024

 

You are cordially invited to attend the Special Meeting virtually. Whether or not you expect to attend the Special Meeting, please complete, date, sign and return the proxy mailed to you or vote over the telephone or the Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the Special Meeting. Even if you have voted by proxy, you may still vote online if you attend the Special Meeting virtually. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Special Meeting, you must obtain a proxy issued in your name from that record holder.


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates by reference important business and financial information about CoStar Group and Matterport from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference into this proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

CoStar Group, Inc.

1331 L Street, NW
Washington, DC 20005
(202) 346-6500

Attn.: Investor Relations

  

Matterport, Inc.

352 East Java Drive

Sunnyvale, California 94089

(650) 641-2241

Attn.: Investor Relations

   or
  

D.F. King & Co., Inc.

48 Wall St, 22nd Floor

New York, NY 10005

Brokers and Banks Call Collect: (212) 269-5550

All Others Call Toll-Free: (866) 356-7813

Investors may also consult the websites of CoStar Group or Matterport for more information concerning the Mergers and the other transactions described in this proxy statement/prospectus. The website of CoStar Group is www.costargroup.com and the website of Matterport is www.matterport.com. Information included on these websites is not incorporated by reference into this proxy statement/prospectus.

If you would like to request any documents, please do so by July 18, 2024, in order to receive them before the Special Meeting.

For more information, see “Where You Can Find More Information.”


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ABOUT THIS DOCUMENT

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission by CoStar Group, Inc. (File No. 333-279571), constitutes a prospectus of CoStar Group under Section 5 of the Securities Act with respect to the CoStar Group Common Stock to be issued in connection with the Mergers. This document also constitutes a proxy statement of Matterport under Section 14(a) of the Exchange Act. It also constitutes a notice of meeting with respect to the Special Meeting of stockholders, at which holders of Matterport Common Stock will be asked to vote upon certain proposals to approve the Mergers and/or other related matters.

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated June 10, 2024. You should not assume that the information contained in, or incorporated by reference into, this proxy statement/prospectus is accurate as of any date other than the date on the front cover of those documents. Neither the mailing of this proxy statement/prospectus to Matterport stockholders nor the issuance of CoStar Group Common Stock in connection with the Mergers will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this proxy statement/prospectus regarding CoStar Group has been provided by CoStar Group and information contained in this proxy statement/prospectus regarding Matterport has been provided by Matterport.


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CERTAIN DEFINED TERMS

The following terms are used throughout this proxy statement/prospectus. Unless stated otherwise, the terms set forth below, whenever used in this proxy statement/prospectus, have the following meanings:

 

   

“Average CoStar Group Share Price” means the average of the volume-weighted average prices of CoStar Group Common Stock on the Nasdaq Global Select Market for the 20 consecutive trading days ending on and including the trading day that is three trading days prior to the First Effective Time.

 

   

“Closing” means the closing of the Mergers.

 

   

“Closing Date” means the date on which the Closing actually occurs.

 

   

“Code” means the Internal Revenue Code of 1986, as amended.

 

   

“CoStar Group” means CoStar Group, Inc., a Delaware corporation.

 

   

“CoStar Group Board” means the board of directors of CoStar Group.

 

   

“CoStar Group By-laws” means the Fourth Amended and Restated Bylaws of CoStar Group.

 

   

“CoStar Group Certificate of Incorporation” means the Fourth Amended and Restated Certificate of Incorporation of CoStar Group.

 

   

“CoStar Group Common Stock” means the common stock of CoStar Group, par value $0.01 per share.

 

   

“DGCL” means the General Corporation Law of the State of Delaware.

 

   

“Equity Award Conversion Factor” means the sum of (1) the Exchange Ratio and (2) the quotient obtained by dividing $2.75 by the volume weighted average price of a share of CoStar Group Common Stock for the five consecutive trading days ending with the trading date immediately preceding (but not including) the Closing Date.

 

   

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

   

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

   

“First Effective Time” means the date and time at which the First Merger becomes effective.

 

   

“First Merger” means the merger of Merger Sub I with and into Matterport, with Matterport surviving the merger as a wholly owned subsidiary of CoStar Group and the Surviving Corporation.

 

   

“GAAP” means generally accepted accounting principles as applied in the United States.

 

   

“Matterport” means Matterport, Inc., a Delaware corporation.

 

   

“Matterport Benefit Plan” means (a) each “employee benefit plan” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), and (b) each other employment agreement, bonus, stock option, stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings, retirement, disability, insurance, vacation, incentive, deferred compensation, severance, separation, termination, retention, change of control and other similar fringe, welfare or other plan, program, agreement, contracts policy or arrangement (whether or not in writing) providing for benefits or compensation, in each case, (i) which is maintained, sponsored or contributed to (or required to be contributed to) for the benefit of or relating to any current or former director, officer, consultant, employee or other individual service provider of Matterport or its Subsidiaries or (ii) with respect to which Matterport or any of its Subsidiaries has or may have any liability or obligation.

 

   

“Matterport Board” means the board of directors of Matterport.

 

   

“Matterport Bylaws” means the amended and restated bylaws of Matterport.

 

   

“Matterport Charter” means the certificate of incorporation of Matterport, as amended, restated, supplemented or corrected from time to time.

 

   

“Matterport Common Stock” means Class A common stock of Matterport, par value $0.0001 per share.


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“Matterport Continuing Employee” means each employee of Matterport and its subsidiaries who remains an employee of CoStar Group or its subsidiaries immediately following the First Effective Time.

 

   

“Matterport Equity Awards” means, collectively, (i) Matterport Options and (ii) Matterport RSUs.

 

   

“Matterport Equity Plan” means, collectively, Matterport’s 2021 Incentive Award Plan and the Matterport’s 2011 Stock Incentive Plan, in each case, as amended and/or restated from time to time.

 

   

“Matterport ESPP” means the Matterport’s 2021 Employee Stock Purchase Plan.

 

   

“Matterport Option” means each outstanding option to purchase shares of Matterport Common Stock issued under any Matterport Equity Plan or otherwise.

 

   

“Matterport RSU” means each restricted stock unit granted pursuant to a Matterport Equity Plan or otherwise pursuant to which the holder has a right to receive shares of Matterport Common Stock or cash following the vesting or lapse of restrictions applicable to such restricted stock unit.

 

   

“Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated as of April 21, 2024, by and among CoStar Group, Merger Sub I, Merger Sub II and Matterport, as it may be amended from time to time, a copy of which is attached as Annex A to this proxy statement/prospectus and is incorporated herein by reference.

 

   

“Merger Sub I” means Matrix Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of CoStar Group.

 

   

“Merger Sub II” means Matrix Merger Sub II LLC, a Delaware limited liability company and a direct wholly owned subsidiary of CoStar Group.

 

   

“Merger Subs” means Merger Sub I and Merger Sub II.

 

   

“Mergers” means the First Merger together with the Second Merger.

 

   

“Per Share Stock Consideration Value” means the value of shares of CoStar Group Common Stock equal to the product of (x) the Exchange Ratio and (y) the Average CoStar Group Share Price.

 

   

“Qatalyst Partners” means Qatalyst Partners LP, financial advisor to Matterport.

 

   

“Record Date” means the record date for the Special Meeting, which is the close of business on June 6, 2024.

 

   

“Requisite Stockholder Approval” means the affirmative vote of a majority in voting power of the outstanding shares of Matterport Common Stock entitled to vote thereon at the Special Meeting in favor of the adoption of the Merger Agreement.

 

   

“SEC” means the U.S. Securities and Exchange Commission.

 

   

“Second Effective Time” means the date and time at which the Second Merger becomes effective.

 

   

“Second Merger” means following the First Merger, the merger of the Matterport with and into Merger Sub II, with Merger Sub II surviving the merger as a wholly owned subsidiary of CoStar Group and the Surviving Company.

 

   

“Securities Act” means the Securities Act of 1933, as amended.

 

   

“Special Meeting” means the special meeting of Matterport stockholders for the purpose of obtaining the Requisite Stockholder Approval and, if applicable, the Matterport stockholder advisory vote.

 

   

“Surviving Company” means Merger Sub II following the Second Effective Time.

 

   

“Surviving Corporation” means Matterport following the First Effective Time.

 

   

“Threshold Percentage” means the quotient, expressed as a percentage, obtained by dividing (x) the Per Share Stock Consideration Value by (y) the sum of (1) the Per Share Stock Consideration Value plus (2) $2.75 (for this purpose, including any other amounts treated as consideration other than CoStar Group Common Stock, as determined pursuant to Treasury Regulations Section 1.368-1(e)).


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     11  

RISK FACTORS

     26  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     36  

INFORMATION ABOUT THE COMPANIES

     38  

THE MERGERS

     40  

THE MERGER AGREEMENT

     71  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     93  

THE SPECIAL MEETING

     97  

MATTERPORT PROPOSALS

     102  

COMPARATIVE STOCK PRICES AND DIVIDENDS

     105  

DESCRIPTION OF CAPITAL STOCK

     106  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF MATTERPORT

     109  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF COSTAR GROUP

     111  

COMPARISON OF RIGHTS OF COSTAR STOCKHOLDERS AND MATTERPORT STOCKHOLDERS

     113  

APPRAISAL RIGHTS

     122  

LEGAL MATTERS

     127  

EXPERTS

     128  

FUTURE STOCKHOLDER PROPOSALS

     129  

OTHER MATTERS

     130  

WHERE YOU CAN FIND MORE INFORMATION

     131  

ANNEX A—AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

  

ANNEX B—OPINION OF QATALYST PARTNERS

  

ANNEX C—VOTING AGREEMENT

  

ANNEX D—DELAWARE GENERAL CORPORATION LAW, SECTION 262

  


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QUESTIONS AND ANSWERS

The following are answers to some questions that you, as a stockholder of Matterport, may have regarding the proposed transactions between CoStar Group, Merger Sub I, Merger Sub II and Matterport, and the other matters being considered at the Special Meeting. You are encouraged to carefully read this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Mergers and the other matters being considered at the Special Meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement/prospectus.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

You are receiving this proxy statement/prospectus because CoStar Group, Matterport, Merger Sub I and Merger Sub II have entered into the Merger Agreement. The Merger Agreement provides for two mergers: (a) the First Merger whereby Merger Sub I will be merged with and into Matterport, with Matterport continuing as the Surviving Corporation, followed in a single integrated transaction with the First Merger subject to the terms of the Merger Agreement and, in certain circumstances, at the discretion of CoStar Group, and (b) the Second Merger, whereby Matterport, as the Surviving Corporation in the First Merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the Surviving Company. For more information, see “The Merger Agreement—Form of the Mergers” beginning on page 71 of this proxy statement/prospectus. The Merger Agreement, which governs the terms of the Mergers, is attached to this proxy statement/prospectus as Annex A.

The Merger Agreement must be adopted by the Matterport stockholders in accordance with DGCL in order for the Mergers to be consummated. Matterport is holding the Special Meeting of its stockholders to obtain that approval, and your vote is required. Matterport stockholders will also be asked to vote on a non-binding, advisory proposal to approve certain compensation that may be paid or become payable to Matterport’s named executive officers that is based on or otherwise relates to the Mergers and to approve the adjournment of the Special Meeting, from time to time, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Special Meeting to approve the Merger Proposal.

This proxy statement/prospectus contains important information about the Mergers and the other proposals being considered and voted on at the Special Meeting, and you should read it carefully. It is a proxy statement because the Matterport Board is soliciting proxies from its stockholders. It is a prospectus because CoStar Group will issue shares of CoStar Group Common Stock. The enclosed voting materials allow Matterport stockholders to vote their shares without attending the Special Meeting.

CoStar Group is not required to obtain stockholder approval in connection with the issuance of CoStar Group Common Stock pursuant to the terms of the Merger Agreement and applicable law.

Your vote is very important. Matterport encourages you to submit a proxy to have your shares of Matterport Common Stock voted as soon as possible.

 

Q:

When and where will the Special Meeting be held?

 

A:

The Special Meeting will be held virtually at https://web.lumiconnect.com/216187135 (password: matterport2024) on July 26, 2024 at 10:00 a.m. Pacific Time. Participants will be able to log in 15 minutes prior to the start of the Special Meeting. Matterport encourages you to access the Special Meeting in advance of the designated start time to ensure that you do not experience any technical difficulties. Matterport stockholders will be able to attend the Special Meeting online and vote their shares electronically during the Special Meeting.

 

1


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Q:

Can I attend the Special Meeting in person?

 

A:

No. The Special Meeting will be held virtually and, because there will not be a physical meeting location, you will not be able to attend the Special Meeting in person.

 

Q:

What if I have technical difficulties or trouble accessing the virtual meeting website?

 

A:

If you have technical difficulties accessing the Special Meeting live audio webcast, Matterport will have technicians ready to assist you. If you encounter any difficulties accessing the Special Meeting live audio webcast during the check-in or meeting time or any difficulties emerge during the meeting, please call the technical support number that will be posted on the Special Meeting log-in page.

If Matterport experiences technical difficulties during the Special Meeting (e.g., a temporary or prolonged power outage), it will determine whether the Special Meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the Special Meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any such situation, Matterport will promptly notify stockholders of the decision via the virtual meeting website.

 

Q:

What matters will be considered at the Special Meeting?

 

A:

The Matterport stockholders are being asked to consider and vote on the following proposals:

 

   

to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Mergers (the “Merger Proposal”);

 

   

to approve, by a non-binding, advisory vote, certain compensation that may be paid or become payable to Matterport’s named executive officers that is based on or otherwise relates to the Mergers contemplated by the Merger Agreement (the “Transaction Related Compensation Proposal”); and

 

   

to approve one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

 

Q:

Is my vote important?

 

A:

Yes. Your vote is very important. The Mergers cannot be completed unless the Merger Proposal is approved by the affirmative vote of a majority of the outstanding shares of Matterport Common Stock entitled to vote on the Merger Proposal. Only Matterport stockholders as of the close of business on the Record Date are entitled to vote at the Special Meeting.

 

Q:

How does the Matterport Board recommend that I vote?

 

A:

The Matterport Board unanimously recommends that such Matterport stockholders vote “FOR” the approval of the Merger Proposal, “FOR” the approval of the Transaction Related Compensation Proposal and “FOR” the Adjournment Proposal.

 

Q:

Will my Matterport shares be entitled to vote at the Special Meeting?

 

A:

Holders of record of Matterport Common Stock on the Record Date will be entitled to notice of, and such stockholders and holders of a valid proxy will be entitled to vote at, the Special Meeting or any postponement, continuation or adjournment of the Special Meeting. Each share of Matterport Common Stock entitles the holder thereof to one vote with respect to all matters submitted to stockholders at the Special Meeting. As of the Record Date, there were 318,762,400 shares of Matterport Common Stock outstanding, approximately 10.61% of which were beneficially owned by Matterport directors and executive officers and their affiliates. Matterport has no other securities entitled to vote at the Special Meeting.

 

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A list of registered stockholders entitled to vote at the Special Meeting will be made available for examination by any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the Special Meeting between the hours of 9:00 a.m. and 5:00 p.m., Pacific Time, at our principal executive offices by contacting our Chief Legal Officer, Matthew Zinn by telephone at (408) 805-3347 or by email at legal@matterport.com.

 

Q:

What constitutes a quorum for the Special Meeting?

 

A:

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority the voting power of all outstanding shares of Matterport Common Stock entitled to vote are present virtually at the Special Meeting or represented by proxy. At the close of business on June 6, 2024, which is the Record Date of the Special Meeting, there were 318,762,400 shares of Matterport Common Stock outstanding and entitled to vote. This means that at least 159,381,201 shares must be represented by the stockholders present virtually at the Special Meeting or represented by proxy to have a quorum.

Your shares will be counted towards the quorum if you submit a valid proxy or attend the Special Meeting. Abstentions will count as votes present and entitled to vote for the purposes of determining the presence of a quorum for the transaction of business at the Special Meeting. Brokers, banks or other nominees that hold shares for beneficial owners do not have discretionary authority to vote the shares as to any matter at the meeting without receiving voting instructions from the beneficial owners. Such shares will be considered to be broker-non votes and will not be counted as present at the Special Meeting for the purpose of determining the presence of a quorum.

YOUR VOTE AS A MATTERPORT STOCKHOLDER IS VERY IMPORTANT EVEN IF YOU OWN ONLY A SMALL NUMBER OF SHARES OF MATTERPORT COMMON STOCK. Your immediate response will help avoid potential delays and may save Matterport significant additional expense associated with soliciting stockholder votes.

 

Q:

What vote is required for approval of the Merger Proposal, the Transaction Related Compensation Proposal and the Adjournment Proposal?

 

A:

The Merger Proposal. Assuming a quorum is present at the Special Meeting, approval of the Merger Proposal requires the affirmative vote of a majority of the outstanding shares of Matterport Common Stock entitled to vote on the Merger Proposal. Accordingly, a Matterport stockholder’s abstention from voting, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote (including the failure of a Matterport stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have the same effect as votes cast “AGAINST” the Merger Proposal.

The Transaction Related Compensation Proposal. Assuming a quorum is present at the Special Meeting, approval, on a non-binding advisory basis, of the Transaction Related Compensation Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Transaction Related Compensation Proposal. Accordingly, a Matterport stockholder’s abstention from voting, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote (including the failure of a Matterport stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the Transaction Related Compensation Proposal.

The Adjournment Proposal. The Special Meeting may be adjourned to solicit additional proxies if there are not sufficient votes at the time of the Special Meeting to approve the Merger Proposal or to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to Matterport stockholders. Whether or not a quorum is present, approval of the Adjournment Proposal requires the affirmative vote of a

 

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majority of the votes cast at the Special Meeting on the Adjournment Proposal, and the chairman of the Special Meeting also has the power to adjourn such Special Meeting from time to time. Accordingly, a Matterport stockholder’s abstention from voting, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote (including the failure of a Matterport stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the Adjournment Proposal.

 

Q:

What will Matterport stockholders receive if the Mergers are completed?

 

A:

As a result of the First Merger, each share of Matterport Common Stock issued and outstanding immediately prior to the First Effective Time (other than any excluded shares and Dissenting Matterport Shares (as defined herein), and any Matterport Equity Awards other than Matterport RSUs that become vested at the time of the First Merger) will be converted into the right to receive the merger consideration comprised of: (a) $2.75 in cash, without interest and (b) a number of shares of CoStar Group Common Stock equal to the Exchange Ratio (as defined in the section entitled “The Merger Agreement—Merger Consideration” beginning on page 72). No fractional shares of CoStar Group Common Stock will be issued in connection with the First Merger. Each holder of Matterport Common Stock that otherwise would have been entitled to receive a fractional share of CoStar Group Common Stock immediately prior to the First Effective Time will have the right to receive an amount in cash (without interest and rounded to the nearest cent) in lieu of such fractional share.

 

Q:

How is the Exchange Ratio determined?

 

A:

The Exchange Ratio is used to determine the number of shares of CoStar Group Common Stock that Matterport stockholders will be entitled to receive for each share of Matterport Common Stock they hold. The Exchange Ratio is established in accordance with the Merger Agreement and depends on the average of the volume weighted averages of the trading price of CoStar Group Common Stock on each of the 20 consecutive trading days ending on and including the day that is three trading days prior to the First Effective Time, which is referred to as the “Average Share Price”.

 

   

If the Average Share Price is greater than or equal to $94.62, the Exchange Ratio will be 0.02906.

 

   

If the Average Share Price is less than or equal to $77.42, the Exchange Ratio shall be 0.03552.

 

   

If the Average Share Price is greater than $77.42 and less than $94.62, the Exchange Ratio shall be the quotient of (a) $2.75 divided by (b) the Average Share Price.

 

Q:

What equity stake will Matterport stockholders hold in CoStar Group immediately following the Mergers?

 

A:

Upon completion of the Mergers, former Matterport stockholders are expected to own approximately 2.8% - 3.4% of the then outstanding CoStar Group Common Stock, based on CoStar Group’s outstanding equity as of April 19, 2024.

For more details on the merger consideration, see “The Merger Agreement—Merger Consideration” beginning on page 72.

 

Q:

What will happen to my Matterport Equity Awards?

 

A:

Matterport Options. At the First Effective Time, each Matterport Option that is outstanding (other than those held by individuals who are former employees or service providers of Matterport (the “Former Employee Options”)), whether vested or unvested, will be converted into an option to purchase a number of shares of CoStar Group Common Stock based on the Equity Award Conversion Factor at an adjusted

 

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  exercise price (as determined in accordance with the formula in the Merger Agreement). The adjusted option will otherwise be subject to the same terms and conditions as were applicable to the corresponding Matterport Option prior to the First Effective Time.

Former Employee Options. At the First Effective Time, Former Employee Options that are outstanding, whether vested or unvested will be cancelled. Holders of Former Employee Options will receive the merger consideration applicable to the shares of Matterport Common Stock covered by such options after deducting the exercise price (as determined in accordance with the formula in the Merger Agreement), less applicable withholdings.

Matterport RSUs. At the First Effective Time, each Matterport RSU that is outstanding (other than each Matterport RSU that becomes fully vested automatically as a result of Closing (the “Accelerated Matterport RSUs”)) will be converted into a corresponding award in respect of CoStar Group Common Stock based on the Equity Award Conversion Factor (as determined in accordance with the formula in the Merger Agreement). The adjusted restricted stock units will otherwise be subject to the same terms and conditions as were applicable to the corresponding Matterport RSUs prior to the First Effective Time.

Accelerated Matterport RSUs. At the First Effective Time, all Accelerated Matterport RSUs will be cancelled and converted into the right to receive the merger consideration applicable to the shares of Matterport Common Stock covered by such Accelerated Matterport RSUs (including any Matterport Common Stock in respect of dividend equivalent units credited thereon).

For more information, see the section titled “The Merger Agreement—Treatment of Outstanding Matterport Equity Awards in the Mergers” beginning on page 72 of this proxy statement/prospectus.

 

Q:

What will happen to the Matterport ESPP?

 

A:

There will be no new offering periods under the Matterport ESPP after the date of the Merger Agreement. As a result, any Matterport employee who is not a participant in any offering period in effect as of the date of the Merger Agreement (the “Current Offering Period”), may not become a participant in the Current Offering Period, and no current participant may increase the percentage of his or her payroll deduction election from that in effect on the date of the Merger Agreement for such Current Offering Period. The last day of the Current Offering Period will be accelerated to a date that is at least ten (10) business days prior to the First Effective Time. Subject to the consummation of the Mergers, the Matterport ESPP will terminate effective immediately prior to the First Effective Time.

For more information, see the section titled “The Merger Agreement—Treatment of Outstanding Matterport Equity Awards in the Mergers” beginning on page 72 of this proxy statement/prospectus.

 

Q:

How will I receive the Merger consideration to which I am entitled at the Effective Time?

 

A:

CoStar Group will appoint an exchange agent to handle the exchange of certificates formerly representing Matterport Common Stock (the “Matterport Certificates”) and book entry securities formerly representing Matterport Common Stock for the merger consideration.

After the First Merger is completed, if you hold Matterport Certificates immediately prior to the First Effective Time, the exchange agent will send you a letter of transmittal and instructions for exchanging your Matterport Certificates for the merger consideration. Upon surrender of the Matterport Certificates, the executed letter of transmittal and other required documents, you will receive the merger consideration to which you are entitled.

 

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If you hold shares of Matterport Common Stock in book entry form immediately prior to the First Effective Time, you will not need to take any action to receive the merger consideration.

For more information, see the section titled “The Mergers—Exchange of Shares in the Mergers” beginning on page 69 of this proxy statement/prospectus.

 

Q:

What will happen to Matterport as a result of the Mergers?

 

A:

If the First Merger is completed, Matterport will be merged with and into Merger Sub I, with Matterport as the initial surviving entity and a wholly owned subsidiary of CoStar Group. Matterport will no longer be a publicly held company, and Matterport Common Stock will be delisted from the Nasdaq Global Market and deregistered under the Exchange Act. As a private company, Matterport will no longer be required to file periodic reports with SEC in respect of Matterport Common Stock.

If the Second Merger is completed, Matterport will be merged with and into Merger Sub II, with Matterport continuing as the final surviving entity and a wholly owned subsidiary of CoStar Group.

 

Q:

When do Matterport and CoStar Group expect to complete the Mergers?

 

A:

Matterport and CoStar Group are working to complete the Mergers as soon as practicable and continue to anticipate obtaining all requisite stockholder and regulatory approvals during 2024. Neither Matterport nor CoStar Group can predict the actual date on which the transactions will be completed because they are subject to conditions beyond each company’s control. See “The Merger Agreement—Conditions to Completion of the Mergers” beginning on page 83.

 

Q:

Are there any conditions to Closing of the Mergers that must be satisfied for the Merger to be completed?

 

A:

The obligations of CoStar Group and Matterport to complete the Mergers are subject to certain conditions being satisfied or, where legally permissible, waived. For a more detailed discussion of the conditions to Closing, see “The Merger Agreement—Conditions to Completion of the Mergers” beginning on page 83.

 

Q:

What happens if the Mergers are not completed?

 

A:

If the Merger Proposal is not approved by Matterport stockholders or if the Mergers are not completed for any other reasons, Matterport stockholders will not receive any merger consideration, including CoStar Group Common Stock in connection with the Mergers, and their shares of Matterport Common Stock will remain outstanding. Matterport will continue to be an independent public company, and Matterport Common Stock will continue to be listed and traded on the Nasdaq Global Market. If the Merger Agreement is terminated under specified circumstances, Matterport may be required to pay CoStar Group a termination fee. For a more detailed discussion on the termination of the Merger Agreement and related fees, see “The Merger Agreement—Termination of the Merger Agreement” beginning on page 89 of this proxy statement/prospectus.

 

Q:

What are the material U.S. federal income tax consequences of the Mergers to Matterport’s U.S. stockholders?

 

A:

It is intended that, for U.S. federal income tax purposes, the First Merger, together with the Second Merger, will constitute a “reorganization” within the meaning of Section 368(a) of the Code, which is referred to as the Intended Tax Treatment. As described below, if Mergers qualify for the Intended Tax Treatment, a holder of Matterport Common Stock will generally only recognize any taxable gain with respect to such stock up to the amount of cash received pursuant to the Mergers but will not recognize any taxable gain in excess of the amount of cash received.

 

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The completion of the Mergers is not conditioned on the Mergers qualifying for the Intended Tax Treatment or upon the receipt of an opinion from counsel to that effect. Whether or not the Mergers will qualify for the Intended Tax Treatment depends on facts that will not be known until the Mergers are completed. In particular, the Intended Tax Treatment requires that the value of the shares of CoStar Group Common Stock issued to holders of Matterport Common Stock in the Mergers, determined as of completion of the Mergers, represents at least a minimum percentage of the total consideration paid to holders of Matterport Common Stock in the Mergers. While there is no specific guidance as to precisely what minimum percentage is necessary to satisfy this requirement, it would be satisfied if the value of the CoStar Group Common Stock (valued as of completion of the Mergers) represents at least 40% of the total consideration paid by CoStar Group. Because this test is based on the value of CoStar Group Common Stock as of completion of the Mergers, a substantial decline in the value of the CoStar Group Common Stock could cause this requirement to not be met. Accordingly, no assurance can be given that the Mergers will qualify for the Intended Tax Treatment.

Moreover, neither Matterport nor CoStar Group intends to request a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the Mergers. Accordingly, even if Matterport and CoStar Group conclude that the Mergers qualify for the Intended Tax Treatment, no assurance can be given that the Internal Revenue Service will not challenge that conclusion or that a court would not sustain such a challenge.

Assuming the Mergers qualify for the Intended Tax Treatment, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Consequences” of this proxy statement/prospectus, a holder of Matterport Common Stock whose shares of Matterport Common Stock are exchanged in the Mergers for shares of CoStar Group Common Stock and cash will generally only recognize a capital gain (but not loss) in connection with the exchange in an amount not exceeding the amount of cash received by the holder (except with respect to any cash received in lieu of a fractional share of CoStar Group Common Stock, as discussed below under the section entitled “Material U.S. Federal Income Tax Consequences—Cash Received Instead of a Fractional Share of CoStar Group Common Stock” beginning on page 96 of this proxy statement/prospectus).

In addition, in the event the transaction will be reasonably likely to fail to qualify for the Intended Tax Treatment, CoStar Group may elect not to consummate the Second Merger. The First Merger would still be completed if the Second Merger is not consummated. In that event, holders of Matterport Common Stock would still receive the merger consideration and Matterport would still become a wholly owned subsidiary of CoStar Group.

If the Mergers fail to qualify for the Intended Tax Treatment, a holder of Matterport Common Stock generally would recognize gain or loss in an amount equal to the difference between (i) the fair market value of the shares of CoStar Group Common Stock and the amount of cash received in the Mergers by the holder (including cash received in lieu of a fractional share of CoStar Group Common Stock) and (ii) the holder’s tax basis in the Matterport Common Stock common stock surrendered.

It will not be known at the time of the Special Meeting whether the requirements for the Mergers to qualify for the Intended Tax Treatment will be met. CoStar Group will make a public announcement no later than 45 days after the First Effective Time as to whether or not the Mergers will be reported as a reorganization within the meaning of Section 368(a) of the Code.

For a more detailed discussion of the material U.S. federal income tax consequences of the Mergers, please see the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 93 of this proxy statement/prospectus.

 

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The tax consequences of the Mergers to any particular stockholder will depend on that stockholder’s individual facts and circumstances. Accordingly, you are urged to consult your own tax advisor to determine your tax consequences from the Mergers.

 

Q:

Why am I being asked to consider the Transaction Related Compensation Proposal?

 

A:

Under SEC rules, Matterport is required to seek a non-binding, advisory vote with respect to the Mergers-related executive compensation. Your vote on the Transaction Related Compensation Proposal is non-binding and advisory, and the approval of the Transaction Related Compensation Proposal is not a condition to completion of the Mergers. Even if the Transaction Related Compensation Proposal is not approved by Matterport stockholders, the Mergers-related executive compensation may be paid to Matterport’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements.

 

Q:

What do I do now and how do I vote?

 

A:

After carefully reading and considering the information contained in this proxy statement/prospectus, please vote promptly by proxy to ensure that your shares are represented at the Special Meeting. Even if you have submitted a proxy before the Special Meeting, you may still attend the Special Meeting and vote at the Special Meeting. In such case, your previously submitted proxy will be disregarded.

If you hold your shares of Matterport Common Stock in your own name as the stockholder of record, you may submit a proxy to have your shares of Matterport Common Stock voted at the Special Meeting in one of the following ways:

 

   

You may vote your shares by proxy over the Internet, by telephone or by returning your proxy card by mail in the envelope provided. To vote using the proxy card, please complete, sign and date the enclosed proxy card and return it promptly to Equiniti Trust Company, Attn: Proxy Department, 55 Challenger Rd Suite 200B 2nd Floor, Ridgefield Park, NJ 07660. If you vote by proxy via telephone, over the Internet or by returning your signed proxy card to Matthew Zinn, your shares of Matterport Common Stock will be voted as you direct.

 

   

To vote online during the Special Meeting, you must go to the meeting website at https://web.lumiconnect.com/216187135 (password: matterport2024). Once admitted, during the Special Meeting, you may vote by following the instructions on the meeting website.

In order to be counted, proxies submitted by telephone or Internet must be received by 11:59 p.m. Pacific Time on July 25, 2024. Proxies submitted by U.S. mail must be received before the start of the Special Meeting.

If you sign and return your proxy card but do not mark your card to instruct the proxies how to vote your shares of Matterport Common Stock on each proposal, your shares of Matterport Common Stock will be voted as recommend by the Matterport Board: “FOR” the approval of the Merger Proposal, “FOR” the approval of the Transaction Related Compensation Proposal and “FOR” the Adjournment Proposal.

If your shares are held in “street name” by a broker, bank or other nominee, you may vote your shares by directing the broker, bank or other similar organization that holds your shares as your nominee on how to vote the shares in your account, or you may vote online at the Special Meeting. Please refer to the voting instructions provided by your broker, bank or other nominee.

 

Q:

If my shares of Matterport Common Stock are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote those shares for me?

 

A:

If your shares are held through a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” The “record holder” of such shares is your

 

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  broker, bank or other nominee, and not you. If this is the case, this proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. You must provide the record holder of your shares with instructions on how to vote your shares. Otherwise, your broker, bank or other nominee may not vote your shares on any of the proposals to be considered at the Special Meeting. A so called “broker non-vote” will result if your broker, bank or other nominee returns a proxy but does not provide instruction as to how shares should be voted on a particular matter.

Under the current rules of the Nasdaq Global Market, brokers, banks or other nominees do not have discretionary authority to vote on any of the proposals at the Special Meeting. Because the only proposals for consideration at the Special Meeting are nondiscretionary proposals, it is not expected that there will be any broker non-votes at the Special Meeting. However, if there are any broker non-votes, they will have (a) the same effect as a vote “AGAINST” the Merger Proposal and (b) no effect on the Transaction Related Compensation Proposal and the Adjournment Proposal.

 

Q:

Can I change my vote after I submitted my proxy?

 

A:

Yes. If you are stockholder of record, you can change your vote or revoke your proxy by:

 

   

notifying Matterport’s Chief Legal Officer, in writing, at Matterport, Inc., 352 East Java Drive, Sunnyvale, California 94089. Such notice must be received at the above location before 11:59 p. m. Pacific Time on July 25, 2024;

 

   

voting again using telephone or Internet before 11:59 p. m. Pacific Time on July 25, 2024 (your latest telephone or Internet proxy is the one that will be counted); or

 

   

attending and voting during the Special Meeting. Simply logging into the Special Meeting will not, by itself, revoke your proxy.

If your shares of Matterport Common Stock are held in “street name” by your broker, bank or other nominee, you may revoke any prior voting instructions by contacting your broker, bank or other nominee or by attending the Special Meeting and voting by Internet during the meeting.

 

Q:

What happens if I sell my shares of Matterport Common Stock before the First Effective Time?

 

A:

If you sell or otherwise transfer your shares of Matterport Common Stock before the First Effective Time, you will have transferred your right to receive the merger consideration, and you will have lost your appraisal rights. In order to receive the merger consideration or exercise your appraisal rights, you must hold (or beneficially own, as the case may be) your shares through the First Effective Time.

 

Q:

If I do not favor the Mergers as a Matterport stockholder, what are my rights?

 

A:

Pursuant to Section 262 of the DGCL, holders of Matterport Common Stock who hold their shares through the First Effective Time, do not vote their shares in favor of adoption of the Merger Agreement and who comply fully with and properly demand appraisal for their shares under the applicable requirements of Section 262 of the DGCL and do not otherwise withdraw or lose the right to appraisal under the DGCL, have the right to seek appraisal of the fair value of their shares of Matterport Common Stock, as determined by the Delaware Court of Chancery, if the First Merger is completed. The “fair value” of shares of Matterport Common Stock as determined by the Delaware Court of Chancery may be more than, less than, or equal to the value of the merger consideration that Matterport stockholders would otherwise be entitled to receive under the terms of the Merger Agreement. Matterport stockholders also should be aware that an investment banking opinion as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the First Merger, is not an opinion as to, and does not otherwise address, “fair value” under Section 262 of the DGCL. Holders of Matterport Common Stock who wish to preserve any

 

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  appraisal rights they may have, must so advise Matterport by submitting a written demand for appraisal prior to the vote to adopt the Merger Agreement and approve the transactions contemplated thereby, and must otherwise follow fully the procedures prescribed by Section 262 of the DGCL.

 

Q:

Are there any risks that I should be aware of and consider as a Matterport stockholder in deciding how to vote?

 

A:

You should carefully review the risk factors set forth in the section entitled “Risk Factors” beginning on page 26. You should also read and carefully consider the risk factors of Matterport and CoStar Group contained in the documents that are incorporated by reference in this proxy statement/prospectus.

 

Q:

Who will solicit and pay the cost of soliciting proxies?

 

A:

Matterport has retained D.F. King & Co., Inc. to assist in the solicitation process. Matterport will pay D.F. King & Co., Inc. a fee of approximately $13,500 and reimbursement for reasonable and customary documented expenses.

 

Q:

Who can answer my questions about the Special Meeting or the Mergers?

 

A:

If you have questions about the Special Meeting or the information contained in this proxy statement/prospectus, or desire additional copies of this proxy statement/prospectus or additional proxies, please contact Matterport’s proxy solicitor: D.F. King & Co., Inc. toll-free at (866) 356-7813 or via email at mttr@dfking.com.

 

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement/prospectus and may not contain all of the information that is important to you. CoStar Group and Matterport urge you to read carefully this proxy statement/prospectus, including the attached annexes, and the other documents to which CoStar Group and Matterport have referred you because this section does not provide all of the information that might be important to you with respect to the Mergers and the related matters being considered at the Special Meeting. See also “Where You Can Find More Information.” We have included page references to direct you to a more complete description of the topics presented in this summary.

Information about the Companies

CoStar Group, Inc. (See page 38)

CoStar Group, Inc. is a leading provider of information, analytics and online marketplaces to the real estate industry in the United States (“U.S.”) and United Kingdom (“U.K.”) based on the fact that it offers the most comprehensive real estate database available; has the largest research department in the industry; owns and operates one of the leading online marketplaces for real estate and apartment listings in the U.S. (based on the numbers of unique visitors and site visits per month); and provides more information, analytics and marketing services than any of its competitors. It has created and compiled a standardized platform of information, analytics and online marketplace services where industry professionals and consumers of commercial real estate, including apartments, and the related business communities can continuously interact and facilitate transactions by efficiently accessing and exchanging accurate and standardized real estate-related information. Its service offerings span all commercial property types, including office, retail, industrial, multifamily, commercial land, mixed-use and hospitality. CoStar Group manages its business geographically in two operating segments, with its primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America.

CoStar Group’s principal executive office is located at 1331 L Street, NW, Washington, D.C. 20005, and its telephone number is (202) 346-6500.

CoStar Group Common Stock is listed on the Nasdaq Global Select Market, trading under the symbol “CSGP.”

Additional information about CoStar Group and its subsidiaries is included in documents incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”

Matrix Merger Sub, Inc. (See page 38)

Matrix Merger Sub, Inc, a Delaware corporation, is a direct, wholly owned subsidiary of CoStar Group. Merger Sub I was formed by CoStar Group solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub I has not conducted any business activities, has no assets, liabilities or obligations and has conducted its operations solely as contemplated by the Merger Agreement. By operation of the First Merger, Merger Sub I will merge with and into Matterport, with Matterport surviving the First Merger as a wholly owned subsidiary of CoStar Group.

Its principal executive offices are located at c/o CoStar Group, Inc., 1331 L Street, NW Washington, DC 20005, and its telephone number is (202) 346-6500.

 

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Matrix Merger Sub II LLC (See page 38)

Merger Sub II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of CoStar Group, was formed solely for the purpose of facilitating the Second Merger. Merger Sub II has not conducted any business activities, has no assets, liabilities or obligations and has conducted its operations solely as contemplated by the Merger Agreement. By operation of the Second Merger, the Surviving Corporation will be merged with and into Merger Sub II, with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of CoStar Group.

Its principal executive offices are located at c/o CoStar Group, Inc., 1331 L Street, NW Washington, DC 20005, and its telephone number is (202) 346-6500.

Matterport, Inc. (See page 38)

Matterport, Inc. is a Delaware corporation headquartered in Sunnyvale, California. Matterport’s website address is www.matterport.com. Information contained on Matterport’s website does not constitute part of this proxy statement/prospectus.

Matterport’s technology platform uses spatial data collected from a wide variety of digital capture devices to transform physical buildings and spaces into dimensionally accurate, photorealistic digital twins that provide its subscribers access to valuable building information and insights. For more than a decade, Matterport’s platform has set the standard for digitizing, accessing and managing buildings, spaces and places online.

Matterport’s principal executive office is located at 352 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (650) 641-2241.

Matterport Common Stock is traded on the Nasdaq Global Market under the symbol “MTTR.”

Additional information about Matterport is included in documents incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”

Risk Factors (See page 26)

Before voting at the Special Meeting, you should carefully consider all of the information contained in or incorporated by reference into this proxy statement/prospectus, as well as the specific factors under the heading “Risk Factors” beginning on page 26, including the following risks:

Risk Factors Relating To The Mergers

 

   

The merger consideration to be paid in exchange for each share of Matterport Common Stock is a combination of cash and shares of CoStar Group Common Stock based on an exchange ratio. Fluctuations in the value of CoStar Group Common Stock can adversely affect the value of the CoStar Group Common Stock portion to be issued in exchange for each share of Matterport Common Stock, and Matterport stockholders may receive merger consideration with value that, at the time received, is less than anticipated.

 

   

The failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Mergers.

 

   

Completion of the Mergers is subject to a number of conditions, some of which are outside of the parties’ control. If any of these conditions are not satisfied or waived, the Mergers will not be completed.

 

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In order to complete the Mergers, CoStar Group and Matterport must make certain governmental filings and obtain certain governmental authorizations. If such filings and authorizations are not made or granted or are granted with conditions to the parties, Closing may be jeopardized, or the anticipated benefits of the Mergers may be reduced.

 

   

CoStar Group’s and Matterport’s business relationships with third parties may be disrupted due to uncertainty associated with the Mergers, which could have an adverse effect on the results of operations, cash flows and financial position.

 

   

Certain executive officers and directors of Matterport may have interests in the Mergers that might differ from your interests as a stockholder of Matterport.

 

   

Failure to complete the Mergers could negatively impact each of CoStar Group and Matterport’s stock price, future business and financial results.

 

   

The Merger Agreement subjects CoStar Group and Matterport to restrictions on their respective business activities during the period while the Mergers are pending.

 

   

The Merger Agreement contains provisions that could discourage a potential competing acquirer of Matterport from making a favorable proposal and, in specified circumstances, could require Matterport to make a termination payment to CoStar Group.

 

   

The shares of CoStar Group Common Stock that Matterport stockholders will receive upon completion of the Mergers will have different rights from shares of Matterport Common Stock.

 

   

After the Mergers, Matterport stockholders will have lower percentage ownership and voting percentage interests in CoStar Group than they currently have in Matterport and will exercise less influence over management.

 

   

Litigation challenging the Mergers may increase costs and prevent the Mergers from being completed within the expected timeframe, or from being completed at all.

 

   

CoStar Group and Matterport will incur significant transaction costs in connection with the Mergers, which may be in excess of those anticipated.

 

   

The opinions of Matterport’s financial advisor will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Mergers.

 

   

Each of CoStar Group and Matterport are required, under certain circumstances, to pay a termination fee that if paid, may materially and adversely affect such party’s financial results.

 

   

If the Mergers, taken together, do not qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes, there may be adverse tax consequences to U.S. Holders (as defined under “Material U.S. Federal Income Tax Consequences”).

Risk Factors Relating To CoStar Group Following The Mergers

 

   

The integration of Matterport into CoStar Group may not be as successful as anticipated.

 

   

The combined company may not be able to retain customers, suppliers or distributors, or customers, suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with CoStar Group or Matterport.

 

   

The market price of CoStar Group Common Stock after completion of the Mergers will continue to fluctuate and may be affected by factors different from those affecting shares of Matterport Common Stock currently.

 

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The future results of the combined company may be adversely impacted if CoStar Group does not effectively manage its expanded operations following completion of the Mergers.

The Mergers

The Merger Agreement (See page 71)

CoStar Group and Matterport have entered into the Merger Agreement attached as Annex A to this proxy statement/prospectus. The CoStar Group Board and the Matterport Board have both approved the Merger Agreement and the transactions contemplated thereby, including the Mergers. CoStar Group and Matterport encourage you to read the entire Merger Agreement carefully because it is the principal legal document governing the Mergers.

Form of the Mergers (See page 71)

Pursuant to the Merger Agreement, (i) Merger Sub I will merge with and into Matterport, with Matterport surviving the First Merger as a wholly owned subsidiary of CoStar Group and the Surviving Corporation, and (ii) in the event that the Threshold Percentage is at least 40%, immediately following the First Merger and as part of a single integrated transaction, the Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of CoStar Group and the Surviving Company.

Upon the consummation of the Mergers, we expect that the legacy stockholders of CoStar Group and the legacy common stockholders of Matterport will own approximately 96.6% - 97.2% and 2.8% - 3.4%, respectively, of the outstanding shares of CoStar Group Common Stock.

Merger Consideration (See page 72)

The Merger Agreement provides that, at the First Effective Time, each share of Matterport Common Stock issued and outstanding immediately prior to the First Effective Time (other than (x) shares of Matterport Common Stock held by Matterport (including in treasury), CoStar Group or their respective subsidiaries and (y) shares of Matterport Common Stock that are held by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to the DGCL will automatically be cancelled and converted into the right to receive (i) $2.75 in cash, without interest, and (ii) a number of shares of CoStar Group Common Stock determined by application of an Exchange Ratio (as defined below), together with cash in lieu of any fractional shares of CoStar Group Common Stock.

“Exchange Ratio” means:

 

   

if the Average CoStar Group Share Price is greater than or equal to $94.62, then the Exchange Ratio will be 0.02906;

 

   

if the Average CoStar Group Share Price is less than or equal to $77.42, then the Exchange Ratio will be 0.03552; or

 

   

if the Average CoStar Group Share Price is greater than $77.42 and less than $94.62 per share, then the Exchange Ratio shall be the quotient of (a) $2.75 divided by (b) the Average CoStar Group Share Price.

In the event that the Threshold Percentage is at least 40%, for U.S. federal income tax purposes, the Mergers are intended to qualify as a reorganization under Section 368(a) of the Code. Whether the Mergers so qualify

 

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depends upon certain factors including the Average CoStar Group Share Price. If the Mergers so qualify, a holder of Matterport Common Stock will generally only recognize any taxable gain with respect to such stock up to the amount of cash received pursuant to the Mergers but will not recognize any taxable gain in excess of the amount of cash received.

Treatment of Outstanding Matterport Equity Awards in the Mergers (See page 72)

At the First Effective Time, certain Matterport Equity Awards will be cancelled, and others will be assumed by CoStar Group. Any payments due or shares of CoStar Group Common Stock issuable pursuant to the cancellation of Matterport Equity Awards will be completed by CoStar Group promptly following the First Effective Time, and in any event within 10 business days. Matterport Equity Awards that are assumed by CoStar Group will continue to have, and will be subject to, the same terms and conditions of the Matterport Equity Awards.

Matterport Options. At the First Effective Time, each Matterport Option that is outstanding and unexercised (other than the Former Employee Options), whether vested or unvested, will be assumed by CoStar Group and converted into an option to purchase a number of CoStar Group Common Stock equal to the product obtained by multiplying (x) the number of shares of Matterport Common Stock subject to such Matterport Option by (y) the Equity Award Conversion Factor at an adjusted exercise price (as determined in accordance with the formula in the Merger Agreement), rounded down to the nearest whole number of shares of CoStar Group Common Stock.

Former Employee Options. At the First Effective Time, Former Employee Options that are outstanding and unexercised, whether vested or unvested will be cancelled and converted into the right to receive a combination of shares of CoStar Group Common Stock and a cash payment, less withholding taxes (as determined in accordance with the Merger Agreement), if the value of the Matterport shares subject to such Former Employee Options exceeds the exercise price for those shares. If the merger consideration value is less than or equal to the per share exercise price of a Former Employee Option, the Former Employee Option will be cancelled for no consideration.

Matterport RSUs. At the First Effective Time, each Matterport RSU that is outstanding (other than the Accelerated Matterport RSUs) will be assumed by CoStar Group and converted into a corresponding award in respect of CoStar Group Common Stock determined by multiplying (x) the number of shares of Matterport Common Stock subject to the Matterport RSU by (y) the Equity Award Conversion Factor, rounded down to the nearest whole number of shares of CoStar Group Common Stock.

Accelerated Matterport RSUs. At the First Effective Time, all Accelerated Matterport RSUs that are outstanding will vest (if unvested) and will be cancelled and converted into the right to receive the merger consideration applicable to the shares of Matterport Common Stock covered by such Accelerated Matterport RSUs.

Matterport ESPP. There will be no new offering periods under the Matterport ESPP after the date of the Merger Agreement. No participant in the Current Offering Period may increase the percentage of his or her payroll contribution rate from that in effect on the date of the Merger Agreement for such Current Offering Period or make separate non-payroll contributions to the Matterport ESPP on or following the date of the Merger Agreement. The last day of the Current Offering Period will be accelerated to a date that is at least 10 business days prior to the First Effective Time. Subject to the consummation of the First Merger, the Matterport ESPP will terminate immediately prior to and effective as of the First Effective Time.

For more information, see “The Merger Agreement—Treatment of Outstanding Matterport Equity Awards in the Mergers.

 

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Treatment of Outstanding Matterport Warrants in the Mergers (See page 74)

Following the date of the Merger Agreement, Matterport shall use commercially reasonable efforts to cause the holders of each Private Warrant to execute a Conditional Exchange Agreement. Pursuant to the Conditional Exchange Agreement, holders of each Private Warrant (as defined below) agree to exchange their Private Warrants for merger consideration upon Closing. For more information, see “The MergerAgreement – Treatment of Outstanding Matterport Warrants in the Mergers.”

Dissenting Matterport Shares (See page 74)

The Merger Agreement provides that the shares of Matterport Common Stock held by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to the DGCL (the “Dissenting Matterport Shares”) will not be converted into the right to receive the merger consideration, but rather, the holders of Dissenting Matterport Shares will be entitled to only those rights as are granted pursuant to Section 262 of the DGCL, if perfected. At the First Effective Time, such Dissenting Matterport Shares will no longer be outstanding, will automatically be cancelled and will cease to exist and such holder will cease to have any rights with respect thereto other than, assuming strict compliance with the provisions of Section 262 of the DGCL, the right to receive the “fair value” of such Dissenting Matterport Shares as determined in accordance with Section 262 of the DGCL. If any holder of Dissenting Matterport Shares fails to perfect, or otherwise waives, withdraws or loses the right to appraisal under Section 262 of the DGCL, then the right of such holder to be paid the fair value of such holder’s Dissenting Matterport Shares will cease and such Dissenting Matterport Shares will be deemed to have been converted as of the First Effective Time into, and will become exchangeable solely for the right to receive, without interest (and less any amounts entitled to be deducted or withheld), the merger consideration. For more information, see “The Merger Agreement—Dissenting Matterport Shares.”

Recommendation of the Matterport Board (See page 97)

The Matterport Board has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are in the best interests of Matterport and its stockholders, (ii) declared that the Merger Agreement, the Mergers and the other transactions contemplated thereby are advisable and (iii) approved the execution, delivery and performance by Matterport of the Merger Agreement and the transactions contemplated thereby, including the Mergers.

The Matterport Board unanimously recommends that Matterport stockholder vote “FOR” the Merger Proposal, “FOR” the Transaction Related Compensation Proposal and “FOR” the Adjournment Proposal.

For the factors considered by the Matterport Board in reaching its decision to approve the Merger Agreement, see “The Mergers—Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board.

Opinion of Matterport’s Financial Advisor (See page 52)

Opinion of Qatalyst Partners

Matterport retained Qatalyst Partners to act as its financial advisor in connection with the Mergers and to evaluate whether the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group) was fair, from a financial point of view, to such holders. Matterport selected Qatalyst Partners to act as Matterport’s financial advisor based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of the business and affairs of Matterport and the industry in which it operates. Qatalyst Partners

 

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has provided its written consent to the reproduction of its opinion in this proxy statement/prospectus. At the meeting of the Matterport Board on April 20, 2024, Qatalyst Partners rendered to the Matterport Board its oral opinion, which was confirmed by delivery of a written opinion dated April 21, 2024, to the effect that, as of such date and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group) was fair, from a financial point of view, to such holders.

The full text of Qatalyst Partners’ written opinion, dated April 21, 2024, is attached hereto as Annex B. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. Holders of shares of Matterport Common Stock should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the Matterport Board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group), to such holders, and it does not address any other aspect of the Mergers. It does not constitute a recommendation as to how any holder of shares of Matterport Common Stock should vote with respect to the Merger Proposal or any other matter and does not in any manner address the price at which Matterport Common Stock will trade or otherwise be transferable at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion.

Interests of Matterport Directors and Executive Officers in the Mergers (See page 62)

In considering the recommendations of the Matterport Board with respect to the Mergers, Matterport stockholders should be aware that the directors and executive officers of Matterport have certain interests in the Mergers, including financial interests, that may be different from or in addition to those of Matterport stockholders generally. These interests include the treatment in the transaction of Matterport Equity Awards, severance protections for executive officers under the Matterport, Inc. Executive Severance Plan (the “Executive Severance Plan”), certain other rights held by Matterport’s directors and executive officers, and the indemnification of former Matterport directors and executive officers by CoStar Group. The Matterport Board was aware of and considered these interests, among other matters, in reaching its decision to (i) approve the Mergers, (ii) approve and declare advisable the Merger Agreement, and (iii) resolve to recommend the adoption of the Merger Agreement by Matterport stockholders. For further information, see “The Mergers—Background of the Mergers” beginning on page 40 and “The Mergers—Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board” beginning on page 49. These interests are described in more detail in the section entitled “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers.

Accounting Treatment (See page 67)

CoStar Group prepares its financial statements in accordance with GAAP. The Mergers will be accounted for by applying the acquisition method of accounting, with CoStar Group treated as the acquiror. For more information, see “The Mergers—Accounting Treatment.”

Regulatory Approvals (See page 67)

In connection with the issuance of CoStar Group Common Stock in the Mergers, pursuant to the Merger Agreement, as a condition to Closing, CoStar Group must file a registration statement with the SEC under the Securities Act, of which this proxy statement/prospectus forms a part, and such registration statement must be declared effective by the SEC.

 

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Completion of the Mergers is also conditioned upon the receipt of certain governmental clearances or approvals, including, but not limited to, the expiration or termination of all applicable waiting periods, and any extensions thereof, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and certain other governmental consents and approvals, including approval under the foreign investment laws of the U.K.

CoStar Group and Matterport have agreed to use their reasonable best efforts, subject to certain limitations, to consummate and make effective the transactions contemplated by the Merger Agreement, including compliance with all necessary actions or non-actions, obtaining consents and approvals from governmental authorities, making all necessary registrations and filings (including filings with governmental authorities), and taking all reasonable steps as may be necessary to obtain an approval from, or to avoid any action by, any governmental authority necessary in connection with the consummation of the transactions contemplated by the Merger Agreement. The process for obtaining the requisite regulatory clearances and approvals for the Mergers is ongoing.

The regulatory approvals required for completion of the Mergers are further described under “The Mergers—Regulatory Approvals.

Closing; Effective Times of the Mergers (See page 71)

CoStar Group and Matterport expect to complete the Mergers during 2024. However, completion of the Mergers is subject to various conditions, and it is possible that factors outside the control of CoStar Group and Matterport could result in the Mergers being completed at a later time, or not at all. There may be a substantial amount of time between the Special Meeting and the completion of the Mergers. CoStar Group and Matterport expect to complete the Mergers as soon as reasonably practicable following the satisfaction of all applicable conditions.

Conditions to Completion of the Mergers (See page 83)

As more fully described in this proxy statement/prospectus and in the Merger Agreement, the completion of the Mergers depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

   

receipt of the Requisite Stockholder Approval;

 

   

(i) the expiration or termination of any applicable waiting period (or any extension thereof) under the HSR Act and the expiration or termination of any commitment to, or agreement with, any governmental authority to delay the consummation of, or not to consummate before a certain date or event, the Mergers and (ii) the obtainment, termination or expiration of applicable waiting periods (or extensions thereof) or clearance, as applicable, under certain other specified antitrust and foreign investment laws;

 

   

the absence of (i) a law or order issued, entered, promulgated or enacted that restrains, enjoins, or otherwise prohibits or makes illegal the consummation of the Mergers and remains in force and (ii) an injunction, order or award by any governmental authority having jurisdiction over any party restraining or enjoining, or otherwise prohibiting, the consummation of the Mergers;

 

   

the approval for listing on the Nasdaq Global Select Market of shares of CoStar Group Common Stock to be issued or reserved for issuance in connection with the First Merger;

 

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the SEC having declared effective the registration statement of which this proxy statement/prospectus forms a part and no stop order having been issued by the SEC, and no proceedings for that purpose initiated or threatened (and not withdrawn) by the SEC;

 

   

the correctness of all representations and warranties made by the parties in the Merger Agreement and performance by the parties of their obligations under the Merger Agreement (subject in most cases to materiality or material adverse effect qualifications), and receipt of an officer’s certificate from each of CoStar Group and Matterport (as applicable) attesting thereto;

 

   

compliance by all parties with their respective obligations under the Merger Agreement (subject to customary materiality qualifiers), and receipt of an officer’s certificate from each of CoStar Group and Matterport (as applicable) attesting thereto; and

 

   

the absence of a material adverse effect with respect to CoStar Group and Matterport (as applicable), and receipt of an officer’s certificate from each of CoStar Group and Matterport (as applicable) attesting thereto.

We cannot be certain when, or if, the conditions to the Mergers will be satisfied or waived, or that the Mergers will be completed.

No Solicitation (See page 85)

Matterport is subject to a customary “no-shop” provision that requires it to, subject to certain exceptions, refrain from, and cease discussions or solicitations with respect to, Competing Proposals (as defined in the section entitled “The Mergers” beginning on page 40) and subjects it to certain restrictions in considering and negotiating Competing Proposals. If Matterport receives a Competing Proposal and the Matterport Board concludes in good faith, after consultation with outside legal counsel and financial advisors, that (i) such Competing Proposal constitutes or is reasonably likely to result in a Superior Proposal (as defined in the section entitled “The Mergers” beginning on page 40) and (ii) the failure to take action with respect to such Competing Proposal would reasonably be expected to be inconsistent with the Matterport Board’s fiduciary duties to the Matterport stockholders, Matterport may provide nonpublic information to the proposing party and engage in discussions or negotiations with the party making such a proposal. Matterport will promptly (and in any case within 24 hours) notify CoStar Group of receipt of any Competing Proposal, and substantially concurrently (and in any case within 24 hours) make available to CoStar Group all material non-public information provided by Matterport in connection with such proposal.

Permitted Change in Recommendation (See page 86)

The Matterport Board may change its recommendation with respect to Matterport’s stockholder vote (i) in response to an Intervening Event (as defined in “The Mergers” beginning on page 40) and (ii) prior to the Matterport stockholder vote, in response to a Superior Proposal. Matterport may also terminate the Merger Agreement in order to accept such a Superior Proposal (subject to payment of a specified termination fee). Prior to effecting a change in recommendation, the Matterport Board must provide CoStar Group with notice, reasons for such action and four business days of good faith negotiations with the goal of obviating the need for the Matterport Board to effect a change in recommendation.

Termination of the Merger Agreement (See page 89)

The Merger Agreement may be terminated at any time prior to the First Effective Time, whether before or after the Requisite Stockholder Approval is obtained (except as otherwise noted), under the following circumstances:

 

   

by mutual written consent of each of CoStar Group and Matterport;

 

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by either CoStar Group or Matterport if:

 

   

the Mergers will not have been consummated on or before January 21, 2025 (the “Termination Date”), which will be automatically extended for up to three periods of 90 days each if, at the time of each such extension, all closing conditions other than with respect to receipt of clearance and approvals under certain specified antitrust or foreign investment laws have been satisfied or waived, except that this termination right is not available to any party whose breach of its obligations under the Merger Agreement may not have been a principal cause of or have resulted in the failure of the First Effective Time to occur on or before the Termination Date;

 

   

prior to the First Effective Time, any governmental entity of competent jurisdiction issues a final and nonappealable law or order or takes any other action that permanently restrains, enjoins, renders illegal or otherwise prohibits the Mergers, and any appeal of such law or order or other action has become final and non-appealable; except that this termination right is not available to any party whose breach of its obligations under the Merger Agreement has been a principal cause of or resulted in the issuance of such law or order or taking of such action; or

 

   

the Requisite Stockholder Approval is not obtained at the Special Meeting (or any adjournment or postponement thereof); except that this termination right is not available to Matterport if Matterport’s failure to perform any of its obligations under the Merger Agreement has been the principal cause of the failure to obtain the Requisite Stockholder Approval.

 

   

by Matterport if:

 

   

CoStar Group or Merger Subs have breached or failed to perform their representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions, subject to a cure period, provided that Matterport is not, at the time of such termination, in breach of any of its representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions; or

 

   

prior to obtaining the Requisite Stockholder Approval, the Matterport Board (or a committee thereof) determines to terminate the Merger Agreement in order to concurrently with such termination enter into a definitive agreement with respect to a Superior Proposal, provided that the Merger Agreement may not be so terminated (a) if Matterport breaches the provisions of the Merger Agreement regarding nonsolicitation of Competing Proposals and such breach was the principal cause of or resulted in such Superior Proposal and (b) unless concurrently with or prior to such termination, Matterport pays CoStar Group the termination fee discussed below.

 

   

by CoStar Group if:

 

   

Matterport has breached or failed to perform its representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions, subject to a cure period, provided that CoStar Group and Merger Subs are not, at the time of such termination, in breach of any of their representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions; or

 

   

the Matterport Board makes a change in recommendation of the Mergers (whether or not permitted under the terms of the Merger Agreement).

Termination Fee and Expense Reimbursement (See page 90)

Generally, all fees and expenses incurred in connection with the Mergers and the transactions contemplated by the Merger Agreement will be paid by the party incurring those expenses. For more information, see “The

 

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Merger Agreement—Fees and Expenses.” The Merger Agreement further provides that, upon termination of the Merger Agreement, under certain circumstances:

Matterport may be obligated to pay CoStar Group a termination fee of $50 million in the following circumstances:

 

   

if Matterport or CoStar Group terminates the Merger Agreement because the Requisite Stockholder Approval was not received at a time when the Merger Agreement is terminable or terminated because the Matterport Board has made a change in recommendation;

 

   

if Matterport terminates the Merger Agreement to enter into a Superior Proposal; or

 

   

if the Merger Agreement is terminated because (i) the Requisite Stockholder Approval was not obtained, (ii) Matterport breached any of its representations, warranties, covenants or agreements in the Merger Agreement, or (iii) the Mergers have not been consummated prior to or on the Termination Date; provided that (A) prior to such termination and after the date of the Merger Agreement, a Competing Proposal has been publicly announced or otherwise communicated to the Matterport Board (and not withdrawn) prior to the date of the Special Meeting, in the case of clause (i), or the date of termination, in the case of clauses (ii) or (iii) and (B) if within 12 months after the date of such termination, a transaction in respect of such Competing Proposal is consummated or Matterport enters into a definitive agreement in respect of such Competing Proposal (except for purposes of this clause (B), the references to “20%” in the definition of Competing Proposal are deemed to refer instead to “50%”).

CoStar Group may be obligated to pay Matterport a reverse termination fee of $85 million if (i) the Merger Agreement is terminated because the Mergers have not have been consummated prior to or on the Termination Date or due to an applicable law or order arising under the HSR Act or any other antitrust law or foreign investment law that prohibits or makes illegal the consummation of the Mergers; and (ii) all of the conditions to Closing set forth in the Merger Agreement have been satisfied or validly waived (except for those conditions that by their terms must be satisfied at the Closing; provided that such conditions would have been so satisfied if the Closing would have occurred on or before the date of termination), other than the conditions to Closing relating to the expiration of any waiting period or clearance, as applicable, under the HSR Act or any other antitrust law or foreign investment law or the existence of any legal restraints arising under the HSR Act or any other antitrust law or foreign investment law.

Material U.S. Federal Income Tax Consequences of the Mergers (See page 94)

It is intended that, for U.S. federal income tax purposes, the First Merger, together with the Second Merger, will constitute a “reorganization” within the meaning of Section 368(a) of the Code, which is referred to as the “Intended Tax Treatment.” As described below, if the Mergers qualify for the Intended Tax Treatment, a holder of Matterport Common Stock will generally only recognize any taxable gain with respect to such stock up to the amount of cash received pursuant to the Mergers but will not recognize any taxable gain in excess of the amount of cash received.

The completion of the Mergers is not conditioned on the Mergers qualifying for the Intended Tax Treatment or upon the receipt of an opinion from counsel to that effect. Whether or not the Mergers will qualify for the Intended Tax Treatment depends on facts that will not be known until the Mergers are completed. In particular, the Intended Tax Treatment requires that the value of the shares of CoStar Group Common Stock issued to holders of Matterport Common Stock in the Mergers, determined as of completion of the Mergers, represents at least a minimum percentage of the total consideration paid to holders of Matterport Common Stock in the Mergers. While there is no specific guidance as to precisely what minimum percentage is necessary to satisfy this

 

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requirement, it would be satisfied if the value of the CoStar Group Common Stock received in the Mergers (valued as of completion of the Mergers) represents at least 40% of the total consideration paid by CoStar Group. Because this test is based on the value of CoStar Group Common Stock as of completion of the Mergers, a substantial decline in the value of the CoStar Group Common Stock as of the date hereof could cause this requirement to not be met. Accordingly, no assurance can be given that the Mergers will qualify for the Intended Tax Treatment.

Moreover, neither CoStar Group nor Matterport intends to request a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the Mergers. Thus, even if CoStar Group and Matterport conclude that the Mergers qualify for the Intended Tax Treatment, no assurance can be given that the Internal Revenue Service will not challenge that conclusion or that a court would not sustain such a challenge.

Assuming the Mergers qualify for the Intended Tax Treatment, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 93 of this proxy statement/prospectus, a holder of Matterport Common Stock whose shares of Matterport Common Stock are exchanged in the Mergers for shares of CoStar Group Common Stock and cash will generally only recognize a capital gain (but not loss) in connection with the exchange in an amount not exceeding the amount of cash received by the holder (except with respect to any cash received in lieu of a fractional share of CoStar Group Common Stock, as discussed in the section entitled “Material U.S. Federal Income Tax ConsequencesCash Received Instead of a Fractional Share of CoStar Group Common Stock” beginning on page 96 of this proxy statement/prospectus).

If the Mergers fail to qualify for the Intended Tax Treatment, a holder of Matterport Common Stock would generally recognize gain or loss in an amount equal to the difference between (i) the fair market value of the shares of CoStar Group Common Stock and the amount of cash received in the Mergers by the holder (including cash received in lieu of a fractional share of CoStar Group Common Stock) and (ii) the holder’s tax basis in the Matterport Common Stock surrendered.

It will not be known at the time of the Special Meeting whether the requirements for the Mergers to qualify for the Intended Tax Treatment will be met. CoStar Group will make a public announcement no later than 45 days after the First Effective Time as to whether or not the Mergers will be reported as a reorganization within the meaning of Section 368(a) of the Code. HOWEVER, MATTERPORT WILL NOT RESOLICIT STOCKHOLDER VOTES IN THE EVENT THAT THE MERGERS FAIL TO QUALIFY FOR THE INTENDED TAX TREATMENT.

For a more detailed discussion of the material U.S. federal income tax consequences of the Mergers, please see the section entitled “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 94 of this proxy statement/prospectus.

The tax consequences of the Mergers to any particular stockholder will depend on that stockholder’s individual facts and circumstances. Accordingly, you are urged to consult your own tax advisor to determine your tax consequences from the Mergers.

The Special Meeting (See page 97)

Date, Time, Place and Purpose of the Special Meeting

The Special Meeting will be held on July 26, 2024, at 10:00 a.m. Pacific Time. In the interest of providing our stockholders a more convenient, cost-effective method of attending, the Special Meeting will be conducted

 

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virtually via live webcast. You will be able to attend the Special Meeting online by visiting https://web.lumiconnect.com/216187135 (password: matterport2024). Matterport stockholders will be asked to consider and vote on:

 

   

the Merger Proposal;

 

   

the Transaction Related Compensation Proposal; and

 

   

the Adjournment Proposal.

Record Date and Outstanding Shares of Matterport Common Stock

You are entitled to receive notice of, and to vote at, the Special Meeting if you are a stockholder of record of shares of Matterport Common Stock as of the close of business on the Record Date. As of the close of business on the Record Date, there were 318,762,400 shares of Matterport Common Stock issued and outstanding and entitled to vote at the Special Meeting. You will have one vote on all matters properly coming before the Special Meeting for each share of Matterport Common Stock that you owned on the Record Date.

Quorum; Abstentions and Broker Non-Votes

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of all outstanding shares of Matterport Common Stock entitled to vote as of the Record Date are present at the Special Meeting or represented by proxy.

If you submit a properly executed proxy card, even if you do not vote for the proposal or vote to “abstain” in respect of the proposal, your shares of Matterport Common Stock will be counted for purposes of determining whether a quorum is present for the transaction of business at the Special Meeting. Broker non-votes will not be considered present and entitled to vote at the Special Meeting for the purpose of determining the presence of a quorum.

Required Vote

Assuming the presence of a quorum, approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Matterport Common Stock entitled to vote at Special Meeting on the Merger Proposal. An abstention, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Merger Proposal.

Assuming the presence of a quorum, approval of the Transaction Related Compensation Proposal on an advisory, non-binding basis, requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Transaction Related Compensation Proposal. An abstention, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote will have no effect on the outcome of the Transaction Related Compensation Proposal.

Whether or not there is a quorum, approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Adjournment Proposal, and the chairman of the Special Meeting also has the power to adjourn the Special Meeting from time to time. An abstention, a broker non-vote or the failure of a Matterport stockholder not present at the meeting to vote will have no effect on the outcome of the Adjournment Proposal.

Voting by Matterport Directors and Officers

As of June 6, 2024, Matterport directors, executive officers and their affiliates, as a group, held and were entitled to vote 33,808,500 shares of Matterport Common Stock, collectively representing approximately 10.61% of the

 

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shares of Matterport Common Stock outstanding and entitled to vote on the Record Date. Matterport currently expects that all of its directors and executive officers will vote their shares “FOR” the Merger Proposal, the Transaction Related Compensation Proposal and Adjournment Proposal.

Additionally, each of the directors, executive officers and certain of their affiliates agreed on the terms and subject to the conditions in the Voting Agreement (as defined herein), to vote (or cause to be voted) all of the covered shares in favor of the adoption of the Merger Proposal. For further information, see “The Merger Agreement—Summary of Voting Agreement beginning on page 91 of this proxy statement/prospectus.

Adjournment

If a quorum is not present or if there are not sufficient votes for the approval of the Merger Proposal and the Adjournment Proposal is approved, the Special Meeting may be adjourned. At any subsequent reconvening of the Special Meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the Special Meeting, except for any proxies that have been validly or withdrawn prior to the subsequent meeting.

Comparative Stock Prices and Dividends

The following table presents trading information for CoStar Group Common Stock and Matterport Common Stock on April 19, 2024, the last trading day before public announcement of the Merger Agreement and June 6, 2024, the latest practicable trading day before the date of this proxy statement/prospectus. The table also shows the estimated equivalent per share value of the merger consideration for each share of Matterport Common Stock on the relevant date. For further information, see “Comparative Stock Prices and Dividends beginning on page 105 of this proxy statement/prospectus.

 

     Matterport
Closing Price
     CoStar Group
Closing Price
     Exchange
Ratio(1)
     Estimated
Equivalent
Per Share
Value(2)
 

April 19, 2024

   $ 1.74      $ 84.26        0.03264      $ 5.50  

June 6, 2024

   $ 4.26      $ 77.05        0.03552      $ 5.49  

 

(1)

The actual Exchange Ratio at Closing will be determined based on the Average CoStar Group Share Price, which will be the average of the daily volume weighted averages of the trading prices of CoStar Group Common Stock on the Nasdaq Global Select Market on each of the 20 consecutive trading days ending on and including the trading day that is three trading days prior to the date of the First Effective Time of the Mergers. If the Average CoStar Group Share Price is greater than or equal to $94.62 per share, then the Exchange Ratio will be 0.02906. If the Average CoStar Group Share Price is less than or equal to $77.42 per share, then the Exchange Ratio will be 0.03552. If the Average CoStar Group Share Price is greater than $77.42 and less than $94.62 per share, then the Exchange Ratio shall be the quotient of (a) $2.75 divided by (b) the Average CoStar Group Share Price.

(2)

The actual estimated equivalent per share value at the Closing of the Mergers will be determined based on the sum of the Per Share Cash Consideration and the Per Share Stock Consideration Value, which will be the value of shares of CoStar Group Common Stock equal to the product of (x) the Exchange Ratio and (y) the Average CoStar Group Share Price.

Rights of Matterport Stockholders Will Change as a Result of the Mergers (See page 113)

Matterport stockholders will have different rights once they become stockholders of CoStar Group, due to differences between the governing documents of CoStar Group and Matterport. These differences are described in detail under “Comparison of Rights of CoStar Group Stockholders and Matterport Stockholders.”

 

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Litigation Relating to the Mergers (See page 92)

On June 3, 2024, a purported Matterport stockholder filed a complaint in the U.S. District Court for the Northern District of California, captioned Andrew Rose v. Matterport, Inc., et al., Case No. 5:24-cv-3313 (the “Rose Action”), naming Matterport and each member of the Matterport Board as defendants. The complaint alleges that CoStar Group’s Form S-4 Registration Statement filed with the SEC on May 21, 2024 is materially misleading and omits certain purportedly material information relating to the sales process, financial projections of Matterport and CoStar Group, the valuation analyses performed by Qatalyst Partners, and negotiations over the terms of post-transaction employment of certain Matterport employees. The complaint asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the Company’s Board. The complaint seeks, among other things, an injunction enjoining consummation of the Mergers, an order directing the individual defendants to issue a new Registration Statement, and an award of plaintiff’s costs of the action, including plaintiff’s reasonable attorneys’ and experts’ fees. Additionally, certain purported Matterport shareholders have delivered demand letters (the “Demands”) and a draft complaint alleging similar deficiencies or omissions regarding the disclosures made in the Registration Statement, and requesting relevant books and records. Matterport notes that: (i) the Rose Action may be amended; (ii) additional, similar complaints may be filed; or (iii) additional demand letters may be delivered. These events could prevent or delay completion of the Mergers and result in additional costs to Matterport. Matterport believes that the Rose Action and letter demands are without merit and intends to vigorously defend against them.

 

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RISK FACTORS

In addition to the other information included and incorporated by reference into this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding how to vote. In addition, you should read and consider the risks associated with each of the businesses of CoStar Group and Matterport because these risks will also affect CoStar Group following completion of the Mergers. For further discussion of factors that could materially affect the outcome of these forward-looking statements, see “Risk Factors” in Item 1A of the respective Annual Reports on Form 10-K for the year ended December 31, 2023, as updated by CoStar Group’s and Matterport’s subsequent filings under the Exchange Act, each of which is filed with the SEC and incorporated by reference into this proxy statement/prospectus. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”

The risks described below are certain material risks, although not the only risks, relating to the transactions contemplated by the Merger Agreement and each of CoStar Group, Matterport, the Surviving Corporation and the Surviving Company in relation to the Mergers. The risks described below are not the only risks that CoStar Group or Matterport currently face or that CoStar Group, the Surviving Corporation or the Surviving Company will face after the completion of the Mergers. Additional risks and uncertainties not currently known or that are currently expected to be immaterial may also adversely affect the business, financial condition and results of operations of CoStar Group, the Surviving Corporation or the Surviving Company, or the market price of CoStar Group Common Stock following the completion of the Mergers.

If any of the following risks and uncertainties develop into actual events, these events could have an adverse effect on the business, financial condition and results of operations of CoStar Group, Matterport, the Surviving Corporation and/or the Surviving Company. In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

Risk Factors Relating to the Mergers

The merger consideration to be paid in exchange for each share of Matterport Common Stock is a combination of cash and shares of CoStar Group Common Stock based on an exchange ratio, subject to adjustment as described herein. Fluctuations in the value of CoStar Group Common Stock can adversely affect the value of the CoStar Group Common Stock portion to be issued in exchange for each share of Matterport Common Stock, and Matterport stockholders may receive merger consideration with a value that, at the time received, is less than anticipated.

Upon completion of the First Merger, each issued and outstanding share of Matterport Common Stock (other than shares of Matterport Common Stock owned or held (x) in treasury or otherwise owned by Matterport, CoStar Group, any subsidiary of Matterport or any wholly owned subsidiary of CoStar Group (including Merger Subs) (each of which such shares will be automatically cancelled and retired immediately prior to the First Effective Time) or (y) by any person who has not voted in favor of, or consented to, the Mergers and properly demands appraisal of such shares under the DGCL) will be converted into the right to receive (i) $2.75 in cash and (ii) a number of shares of CoStar Group Common Stock equal to the Exchange Ratio, subject to further adjustment as described herein. At the time of the initial announcement of the Mergers, the estimated value of the total merger consideration was $5.50 for each share of Matterport Common Stock exchanged in the Mergers, subject to the collar mechanism described herein.

The Exchange Ratio will be calculated based on two factors: the Average Share Price and a 10% symmetrical collar. The Exchange Ratio is subject to a 10% symmetrical collar based on a CoStar Group share price of $86.02 as a midpoint as follows: (a) if the Average Share Price of CoStar Group’s Common Stock is

 

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greater than or equal to $94.62, the Exchange Ratio will be 0.02906, (b) if the Average Share Price is less than or equal to $77.42 per share, the Exchange Ratio will be 0.03552 and (c) if the Average Share Price is greater than $77.42 and less than $94.62, then the Exchange Ratio will be equal to the quotient of (x) $2.75 divided by (y) the Average Share Price.

A significant and prolonged decrease in the price of CoStar Group Common Stock on the Nasdaq Global Select Market from the date of the Merger Agreement to the First Effective Time of the Mergers could affect both the number and value of CoStar Group Common Stock that Matterport stockholders receive as part of the merger consideration, as well as the amount of the cash portion of the merger consideration. Matterport stockholders will not know the actual exchange ratio or the final value of the merger consideration when they are asked to vote to approve the proposals at the Special Meeting. Because the Exchange Ratio is based on a 20-day average, the Average Share Price on which the final exchange ratio is based could differ substantially from the price per share of CoStar Group Common Stock on the day on which Matterport stockholders vote on the proposals being considered at the Special Meeting. In addition, the First Effective Time will be three trading days after the Exchange Ratio is fixed and will not take into account any additional fluctuations in the trading price of CoStar Group Common Stock on the Nasdaq Global Select Market during that three day period, even if the changes would result in a more favorable result for Matterport stockholders.

It is impossible to accurately predict the market price of CoStar Group Common Stock at the First Effective Time or during the period over which the Average Share Price is calculated or the effect of the adjustment provisions on the amount of cash to be paid or on the number of shares of CoStar Group Common Stock to be delivered as merger consideration. As a result, Matterport stockholders cannot be certain of the number of shares or value of CoStar Group Common Stock to be delivered upon consummation of the Mergers and Matterport stockholders may receive merger consideration with a value that, at the time received, is less than or more than $5.50 per share for each share of Matterport Common Stock exchanged in the Mergers.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Mergers.

CoStar Group’s success after the Mergers will depend in part on the ability of CoStar Group to retain Matterport’s key employees. Competition for qualified personnel can be intense. Current and prospective Matterport employees may experience uncertainty about the Mergers’ effects, which may impair CoStar Group’s and Matterport’s ability to attract, retain and motivate key management, sales, marketing, technical and other personnel prior to and following the Mergers. Employee retention may be particularly challenging during the pendency of the Mergers, as employees of Matterport may experience uncertainty about their future roles with the combined company.

If key employees of Matterport depart, the integration of the companies may be more difficult and/or the combined company’s business following the Mergers may be harmed. Furthermore, CoStar Group may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to Matterport’s business, and CoStar Group’s ability to realize anticipated benefits of the Mergers may be adversely affected. Accordingly, no assurance can be given that CoStar Group will be able to attract or retain Matterport’s key employees to the same extent that Matterport has been able to attract or retain employees in the past.

Completion of the Mergers is subject to a number of conditions, some of which are outside of the parties’ control. If any of these conditions are not satisfied or waived, the Mergers will not be completed.

The Merger Agreement contains a number of conditions that must be satisfied (or waived) before the parties are required to consummate the Mergers. Those conditions include, among other conditions:

 

   

the approval by Matterport’s stockholders of the adoption of the Merger Agreement;

 

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the approval for listing on the Nasdaq Global Select Market, subject to official notice of issuance, of the shares of CoStar Group Common Stock to be issued to Matterport stockholders in the First Merger;

 

   

the receipt of certain regulatory approvals and clearances, including the expiration or termination of all applicable waiting periods (and any extensions thereof) under the HSR Act and under the laws of certain non-U.S. jurisdictions;

 

   

the absence of any law or order that has the effect of restraining, enjoining or making illegal the consummation of the Mergers;

 

   

the effectiveness under the Securities Act of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part;

 

   

subject to certain materiality exceptions, the accuracy of the representations and warranties of the parties;

 

   

compliance by the parties in all material respects with their respective covenants under the Merger Agreement; and

 

   

the absence of a material adverse effect with respect to either party since the date of the Merger Agreement.

The required satisfaction or waiver of the foregoing conditions could delay the completion of the Mergers for a significant period of time or prevent them from occurring at all. Any delay in completing the Mergers could cause the parties not to realize some or all of the benefits that the parties expect to achieve following the completion of the Mergers. There can be no assurance that the conditions to Closing will be satisfied or waived or that the Mergers will be completed. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Mergers, see “The Merger Agreement—Conditions to Completion of the Mergers.”

In order to complete the Mergers, CoStar Group and Matterport must make certain governmental filings and obtain certain governmental authorizations. If such filings and authorizations are not made or granted or are granted with conditions to the parties, Closing may be jeopardized, or the anticipated benefits of the Mergers may be reduced.

Closing is conditioned upon the expiration or termination of all applicable waiting periods (and any extensions thereof) under the HSR Act and the receipt of other authorizations, consents, clearances or approvals required under certain other laws. The parties’ HSR notifications were filed with the Federal Trade Commission (the “FTC”) and the Department of Justice (the “DOJ”) on May 3, 2024. Following discussions with the FTC, CoStar Group voluntarily withdrew its initial HSR Act notification and refiled a new HSR Act notification. The withdrawal and refiling are standard procedural steps that provide the FTC with additional time to complete its review of the proposed Mergers. The waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern Time, on July 3, 2024. Although CoStar Group and Matterport have agreed in the Merger Agreement to use their reasonable best efforts, subject to certain limitations, to make certain other governmental filings or obtain the required governmental clearances and authorizations, as the case may be, there can be no assurance that the relevant waiting periods will expire or be terminated or that the parties will obtain the relevant clearances and authorizations. In addition, the governmental authorities with or from which these clearances or authorizations are required have broad discretion in administering the governing regulations. Whether and when required governmental clearances or authorizations are granted could be affected by (i) adverse developments in CoStar Group’s or Matterport’s regulatory standing or any other factors regulators consider in granting relevant clearances and authorizations; (ii) governmental, political or community group inquiries, investigations or opposition; or (iii) changes in legislation or the political environment generally. As a condition to clearances or authorization of the Mergers, governmental authorities may seek to impose requirements, limitations or costs or place restrictions on the conduct of CoStar Group’s business after completion of the Mergers. Any such conditions, terms, obligations or restrictions or requested conditions, terms, obligations or restrictions may delay or prevent the Closing or impose additional material costs on or materially limit the revenues of the combined

 

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company following the Mergers, or otherwise adversely affecting CoStar Group’s businesses and results of operations after completion of the Mergers. In addition, these terms, obligations or restrictions may result in the delay or abandonment of the Mergers.

CoStar Group’s and Matterport’s business relationships with third parties may be disrupted due to uncertainty associated with the Mergers, which could have an adverse effect on the results of operations, cash flows and financial position.

Parties with which either CoStar Group or Matterport do business may experience uncertainty associated with the Mergers, including relating to current or future business relationships with CoStar Group, Matterport or the combined company. CoStar Group’s and Matterport’s existing business relationships may be disrupted as parties with which CoStar Group or Matterport do business may attempt to negotiate changes in existing business relationships or instead consider entering into business relationships with parties other than CoStar Group, Matterport or the combined company. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of the combined company, including an adverse effect on CoStar Group’s ability to realize the anticipated benefits of the Mergers. The risk, and any adverse effect, of such disruptions could be exacerbated by a delay in completion of the Mergers or termination of the Merger Agreement.

Certain executive officers and directors of Matterport may have interests in the Mergers that differ from the Matterport stockholders’ interests.

In considering the Matterport Board’s recommendation to vote for the adoption of the Merger Agreement, Matterport stockholders should be aware that non-employee directors and executive officers may have certain interests in the Mergers that are different from or in addition to the interests of Matterport stockholders generally. These interests include, among others, the accelerated vesting of outstanding equity awards, potential severance benefits and other payments and rights to ongoing indemnification and insurance coverage. The Matterport Board was aware of and considered those interests, among other matters, when evaluating and negotiating the Merger Agreement and approving the Merger Agreement, and in making its recommendation that the stockholders approve the adoption of the Merger Agreement.

For more information, see “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers.

Failure to complete the Mergers could negatively impact each of CoStar Group and Matterport’s stock price, future business and financial results.

If the Mergers are not completed for any reason, CoStar Group and Matterport’s ongoing businesses may be adversely affected. Without realizing any benefits of having completed the Mergers, CoStar Group and Matterport may be subject to a number of risks, including the following:

 

   

CoStar Group and Matterport may experience negative reactions from the financial markets, including negative impacts on their respective stock prices;

 

   

CoStar Group and Matterport may experience negative reactions from their employees;

 

   

CoStar Group and Matterport may experience adverse impacts on their customer, vendor and industry contract relationships which could adversely affect their respective results of operations and financial condition;

 

   

CoStar Group and Matterport will be required to pay certain costs relating to the Mergers, whether or not the Mergers are completed;

 

   

CoStar Group and Matterport may have expended substantial commitments of time and resources on matters relating to the Mergers (including integration planning), which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to either CoStar Group or Matterport as an independent company; and

 

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in certain circumstances, CoStar Group or Matterport may be required to pay a termination fee of $85 million or $50 million, respectively, to the other party.

In addition to the above risks, if the Merger Agreement is terminated and either party’s board of directors instead seeks an alternative transaction, such party’s stockholders cannot be certain that such party will be able to find another party willing to engage in a transaction on more attractive terms than those contemplated by the Merger Agreement.

If the Mergers are not completed, these risks may materialize and may adversely affect CoStar Group’s and/or Matterport’s businesses, financial condition, results of operations and stock prices.

The Merger Agreement subjects CoStar Group and Matterport to restrictions on their respective business activities during the period while the Mergers are pending.

The Merger Agreement contains restrictions, subject to certain exceptions, on CoStar Group’s and Matterport’s ability to take certain actions and generally obligate Matterport to use reasonable best efforts to conduct its business and to cause its subsidiaries to use reasonable best efforts to conduct the businesses of its subsidiaries in all material respects in the ordinary course consistent with past practice during the period of time while the Mergers are pending absent the prior written consent of the other party. These restrictions could prevent CoStar Group and Matterport from pursuing certain business opportunities that arise prior to the consummation of the Mergers or termination of the Merger Agreement and are outside the ordinary course of business. If CoStar Group or Matterport is unable to take actions it believes are beneficial, such restrictions could have an adverse effect on CoStar Group’s or Matterport’s, as applicable, business, financial condition and results of operations. See “The Merger Agreement—Conduct of Business Pending the Mergers.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of Matterport from making a favorable proposal and, in specified circumstances, could require Matterport to make a termination payment to CoStar Group.

Pursuant to the Merger Agreement, Matterport has agreed, among other things, not to, directly or indirectly, (i) initiate, seek, facilitate, solicit or knowingly encourage (including by way of furnishing information or assistance of any kind) the making of any Competing Proposal or take any other action designed or intended to lead to, or that would reasonably be expected to lead to any inquiry with respect to, or the making, submission or announcement of, any Competing Proposal, (ii) enter into, continue or otherwise participate or engage in negotiations or discussions with or furnish (or cause to be furnished) any material nonpublic information to, any person relating to a Competing Proposal or any inquiry or request that would reasonably be expected to lead to a Competing Proposal, (iii) enter into any letter of intent, agreement in principle, memorandum of understanding, Merger Agreement or other agreement, arrangement or understanding relating to any Competing Proposal (with certain exceptions), (iv) submit to Matterport stockholders for their approval any Competing Proposal, or (v) resolve to do, or agree or announce an intention to do, any of the foregoing. Notwithstanding these “no-shop” restrictions, prior to obtaining the Requisite Stockholder Approval of, under certain specified circumstances the Matterport Board may change its recommendation to stockholders and Matterport may also terminate the Merger Agreement to accept a Superior Proposal upon payment of an $50 million termination fee to CoStar Group. See “The Merger Agreement—Permitted Change in Recommendation” and “The Merger Agreement—Termination of the Merger Agreement.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Matterport from considering or proposing such an acquisition or might result in a potential competing acquirer proposing to pay a lower value than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the Merger Agreement.

 

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The shares of CoStar Group Common Stock Matterport stockholders will receive upon completion of the Mergers will have different rights from shares of Matterport Common Stock.

Matterport stockholders, whose rights are currently governed by Matterport’s Charter, Matterport’s Bylaws and the DGCL, will upon completion of the Mergers become stockholders of CoStar Group and as such, their rights will be governed by the CoStar Group Certificate of Incorporation and the CoStar Group By-laws, although they will continue to be governed by the DGCL. As a result, Matterport stockholders will have different rights than they currently have as Matterport stockholders, which may be less favorable than their current rights. These differences are described in detail in the section titled “Comparison of Rights of CoStar Group Stockholders and Matterport Stockholders.

After the Mergers, Matterport stockholders will have lower percentage ownership and voting percentage interests in CoStar Group than they currently have in Matterport and will exercise less influence over management.

Currently, Matterport stockholders have the right to vote in the election of the Matterport Board and the power to approve or reject, upon an affirmative vote of at least the majority of voting power of all outstanding shares of Matterport Common Stock, any matters requiring stockholder approval under the DGCL and the Matterport Charter and Bylaws. The actual number of shares of CoStar Group Common Stock to be issued and reserved for issuance in connection with the Mergers will be determined at completion of the Mergers based on the terms of the Merger Agreement and the number of shares of Matterport Common Stock outstanding at that time. Matterport stockholders will hold, in the aggregate, between approximately 2.8% and 3.4% of the issued and outstanding shares of CoStar Group Common Stock immediately following the closing of the First Merger based on the number of issued and outstanding shares of CoStar Group Common Stock and Matterport Common Stock as of April 19, 2024 and April 17, 2024, respectively, and based on the minimum and maximum potential exchange ratios of 0.02906 and 0.03552, respectively. These estimated percentages do not take into account any additional CoStar Group shares to be issued in exchange for vested but unexercised Matterport Options or the Matterport ESPP. Consequently, even if all former Matterport stockholders voted together on all matters presented to CoStar Group stockholders from time to time, the former Matterport stockholders will exercise significantly less influence over CoStar Group after the completion of the Mergers relative to their influence over Matterport prior to the completion of the Mergers and will thus have less influence over the management and policies of CoStar Group after the Mergers than they currently have over the management and policies of Matterport.

Litigation challenging the Mergers may increase costs and prevent the Mergers from being completed within the expected timeframe, or from being completed at all.

CoStar Group, Matterport and members of their respective boards of directors may in the future be parties to various claims and litigation related to the Merger Agreement or the Mergers. One of the conditions to completion of the Mergers is the absence of any injunction, order or award restraining or enjoining, or otherwise prohibiting, the consummation of the Mergers. Accordingly, if any complaint that has been or is subsequently filed challenging the Mergers and a plaintiff is successful in obtaining an order enjoining completion of the Mergers, then such order may prevent the Mergers from being completed, or from being completed within the expected time frame.

For example, on June 3, 2024, a purported Matterport stockholder filed a complaint in the U.S. District Court for the Northern District of California, captioned Andrew Rose v. Matterport, Inc., et al., Case No. 5:24-cv-3313 (the “Rose Action”), naming Matterport and each member of the Matterport Board as defendants. The complaint alleges that CoStar Group’s Form S-4 Registration Statement filed with the SEC on May 21, 2024 is materially misleading and omits certain purportedly material information relating to the sales process, financial projections of Matterport and CoStar Group, the valuation analyses performed by Qatalyst Partners, and negotiations over the terms of post-transaction employment of certain Matterport employees. The complaint asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all

 

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defendants, and violations of Section 20(a) of the Exchange Act against the Company’s Board. The complaint seeks, among other things, an injunction enjoining consummation of the Mergers, an order directing the individual defendants to issue a new Registration Statement, and an award of plaintiff’s costs of the action, including plaintiff’s reasonable attorneys’ and experts’ fees. Additionally, certain purported Matterport shareholders have delivered demand letters (the “Demands”) and a draft complaint alleging similar deficiencies or omissions regarding the disclosures made in the Registration Statement, and requesting relevant books and records. Matterport notes that: (i) the Rose Action may be amended; (ii) additional, similar complaints may be filed; or (iii) additional demand letters may be delivered. These events could prevent or delay completion of the Mergers and result in additional costs to Matterport. Matterport believes that the Rose Action and demand letters are without merit and intends to vigorously defend against them. Litigation could be time consuming and expensive, could divert the attention of CoStar Group’s and Matterport’s management away from their regular businesses, and, if adversely resolved against either CoStar Group or Matterport or their respective directors, could have a material adverse effect on CoStar Group’s and Matterport’s respective financial condition.

CoStar Group and Matterport will incur significant transaction costs in connection with the Mergers.

CoStar Group and Matterport expect to incur a number of non-recurring costs associated with the Mergers and combining the operations of the two companies. The significant, non-recurring costs associated with the Mergers include, among others, fees and expenses of financial, legal and other advisors and representatives, filing fees due in governmental agency-required filings and filing fees and printing and mailing costs for this proxy statement/prospectus. Some of these costs have already been incurred or may be incurred regardless of whether the Mergers are completed, including a portion of the fees and expenses of financial advisors, legal advisors and other advisors and representatives and filing fees for this proxy statement/prospectus. CoStar Group also will incur significant transaction fees and costs in connection with its formulating and implementing integration plans. CoStar Group continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Mergers and the integration of the two companies’ businesses. Although CoStar Group expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow CoStar Group to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

The opinions of Matterport’s financial advisor will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Mergers.

Matterport received an oral opinion from Qatalyst Partners on April 20, 2024, which was confirmed by delivery of a written opinion dated April 21, 2024, but has not obtained an updated opinion as of the date of this proxy statement/prospectus. Changes in the operations and prospects of CoStar Group or Matterport, general market and economic conditions and other factors that may be beyond the control of CoStar Group or Matterport, and on which Matterport’s financial advisors’ opinions were based, may significantly alter the value of CoStar Group or Matterport or the prices of the shares of CoStar Group Common Stock or of the shares of Matterport Common Stock by the time the Mergers are completed.

Qatalyst Partners’ opinion does not speak as of the time the Mergers will be completed or as of any date other than the date of such opinion. Because Matterport does not currently anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the merger consideration or the Exchange Ratio, as applicable, from a financial point of view at the time the Mergers are completed. The Matterport Board’s recommendation that Matterport stockholders vote “FOR” approval of the Merger Proposal, the Adjournment Proposal and the non-binding Transaction Related Compensation Proposal, however, is made as of the date of this proxy statement/prospectus.

For a description of the opinion that Matterport received from its financial advisor, see the section entitled “The Mergers—Opinion of Qatalyst Partners.” A copy of Qatalyst Partners’ opinion is attached as Annex B to this proxy statement/prospectus.

 

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Each of CoStar Group and Matterport are required, under certain circumstances, to pay a termination fee that if paid, may negatively affect such party’s financial results.

CoStar Group may be required, under certain circumstances in connection with a termination of the Merger Agreement, to pay Matterport a termination fee of $85 million, which could negatively affect CoStar Group’s financial condition and results of operations. Alternatively, Matterport may be required, under certain circumstances in connection with a termination of the Merger Agreement, to pay CoStar Group a termination fee of $50 million, which may materially and adversely affect Matterport’s financial results.

If the Mergers, taken together, do not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, there may be adverse tax consequences to U.S. Holders of Matterport Common Stock.

For U.S. federal income tax purposes, the Mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. However, the completion of the Mergers is not conditioned on the Mergers qualifying for such tax treatment or upon the receipt of an opinion from counsel to that effect, and whether or not the Mergers will qualify for such tax treatment depends on facts that will not be known until the Mergers are completed. Neither CoStar Group nor Matterport has sought or will seek a ruling from the IRS regarding the U.S. federal income tax consequences of the Mergers. If, for any reason, the Mergers, taken together, were to fail to qualify as a “reorganization” within the meaning of Section 368(a), then a U.S. Holder of Matterport Common Stock generally would recognize gain or loss, as applicable, equal to the difference between the sum of the amount of cash and the fair market value of CoStar Group Common Stock received by the U.S. Holder in the Mergers and the U.S. Holder’s tax basis in its shares of Matterport Common Stock surrendered, and the U.S. Holder’s holding period of the shares of CoStar Group Common Stock received in the Mergers would begin on the day after the date of the Mergers.

Risk Factors Relating to CoStar Group Following the Mergers

The integration of Matterport into CoStar Group may not be as successful as anticipated.

CoStar Group and Matterport have operated and, until the completion of the Mergers will continue to operate independently. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key CoStar Group or Matterport employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating operations in order to realize the Mergers’ anticipated benefits so the combined company performs as expected:

 

   

combining the companies’ operations and corporate functions;

 

   

combining the businesses of CoStar Group and Matterport and meeting the combined company’s capital requirements, in a manner that permits the combined company to achieve any anticipated cost savings or other synergies, the failure of which would result in the Mergers’ anticipated benefits not being realized in the time frame currently anticipated or at all;

 

   

integrating and unifying the offerings and services available to customers;

 

   

identifying and eliminating redundant and underperforming functions and assets;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

maintaining existing agreements with customers, suppliers, distributors and vendors, avoiding delays in entering into new agreements with prospective customers, suppliers, distributors and vendors, and leveraging relationships with such third parties for the benefit of the combined company;

 

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addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

   

consolidating the companies’ administrative and information technology infrastructure;

 

   

coordinating distribution and marketing efforts; and

 

   

coordinating geographically dispersed organizations.

In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the Mergers and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.

The combined company may not be able to retain customers, suppliers or distributors, or customers, suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with CoStar Group or Matterport.

As a result of the Mergers, the combined company may experience impacts on relationships with customers, suppliers and distributors that may harm the combined company’s business and results of operations. Certain customers, suppliers or distributors may seek to terminate or modify contractual obligations following the Mergers whether or not contractual rights are triggered as a result of the Mergers. There can be no guarantee that customers, suppliers and distributors will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the Mergers. If any customers, suppliers or distributors seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed. Furthermore, the combined company may not have long-term arrangements with many of its significant suppliers. If the combined company’s suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

CoStar Group and Matterport also have contracts with vendors, landlords, licensors and other business partners which may require CoStar Group or Matterport, as applicable, to obtain consent from these other parties in connection with the Mergers, or which may otherwise contain limitations applicable to such contracts following the Mergers. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom CoStar Group or Matterport currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the Mergers. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the Mergers. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the Mergers or by a termination of the Merger Agreement.

The market price of CoStar Group Common Stock after completion of the Mergers will continue to fluctuate and may be affected by factors different from those affecting shares of Matterport Common Stock currently.

Upon completion of the First Merger, holders of Matterport Common Stock will become holders of shares of CoStar Group Common Stock. The market price of CoStar Group Common Stock may fluctuate significantly following consummation of the Mergers and holders of Matterport Common Stock could lose the value of their investment in CoStar Group Common Stock. The issuance of shares of CoStar Group Common Stock in the First Merger could on its own have the effect of depressing the market price for CoStar Group Common Stock. In addition, many Matterport stockholders may decide not to hold the shares of CoStar Group Common Stock they

 

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receive as a result of the First Merger. Other Matterport stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of CoStar Group Common Stock they receive as a result of the First Merger. Such sales of CoStar Group Common Stock may take place shortly following the completion of the Mergers and could have the effect of depressing the market price for CoStar Group Common Stock.

Moreover, general fluctuations in stock markets, any decline of CoStar Group Common Stock in connection with fluctuations or pullback in the market related to post-acquisition special purpose acquisition companies, as well as fluctuations in the stock price of Matterport and CoStar Group’s publicly traded competitors in the 3D commercial real estate industry could have a material adverse effect on the market for, or liquidity of, the CoStar Group Common Stock, regardless of CoStar Group’s actual operating performance.

The businesses of CoStar Group differ from those of Matterport in important respects, including, particularly, expansion into camera manufacturing following the completion of the Mergers, and, accordingly, the results of operations of CoStar Group after the Mergers, as well as the market price of CoStar Group Common Stock, may be affected by factors different from those currently affecting the results of operations of Matterport. Following Closing, Matterport will be part of a larger company with other lines of business, so decisions affecting Matterport may be made based on considerations relating to the larger combined business as a whole rather than the Matterport business individually. For further information on the businesses of CoStar Group and Matterport and certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” and the section titled “Information About the Companies.

The future results of the combined company may be adversely impacted if CoStar Group does not effectively manage its expanded operations following completion of the Mergers.

Following completion of the Mergers, the size of the combined company’s business will be larger than the current size of either CoStar Group’s or Matterport’s respective businesses. CoStar Group’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to implement an effective integration of the two companies and its ability to manage a combined business with a larger size and scope with the associated increased costs and complexity. CoStar Group’s management may not be successful, and CoStar Group may not realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Mergers.

Other Risks

CoStar Group and Matterport face other risks.

The risks listed above are not exhaustive, and you should be aware that, prior to and following the Mergers and the transactions contemplated by the Merger Agreement, CoStar Group and Matterport will face various other risks, including those discussed in reports filed by CoStar Group and Matterport with the SEC from time to time, such as those discussed under the heading “Risk Factors” in their respective, most recently publicly filed reports under the Exchange Act. In addition to those risks identified in Matterport’s periodic reports under the heading “Risk Factors,” and as described by Matterport in a Form 8-K filed with the SEC on May 29, 2024 and incorporated by reference herein, the Delaware Court of Chancery issued a decision in a post-trial opinion on January 10, 2022 in the matter of Brown v. Matterport, Inc. and Matterport Operating, LLC, finding that plaintiff William Brown had prevailed on the merits. On May 28, 2024, the Delaware Court of Chancery issued a ruling awarding Brown $79,092,133.12 plus pre- and post-judgment interests as damages. The judgment does not impact the merger consideration expected to be paid to Matterport stockholders in connection with the Mergers and Matterport anticipates appealing the ruling. Plaintiff William Brown may also choose to appeal the ruling. For more information, see “Where You Can Find More Information.”

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which CoStar Group, Matterport and their respective subsidiaries operate and beliefs of and assumptions made by CoStar Group’s management and Matterport’s management, involve uncertainties that could significantly affect the financial or operating results of CoStar Group, Matterport, or the combined company. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed Mergers involving CoStar Group and Matterport, including future financial and operating results, plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that CoStar Group expects or anticipate will occur in the future - including statements relating to creating value for stockholders, benefits of the proposed Mergers to clients, employees, stockholders and other constituents of the combined company, integrating CoStar Group and Matterport, cost savings and the expected timetable for completing the proposed Mergers - are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although CoStar Group believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, CoStar Group can give no assurance that its expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to, those set forth under the section entitled “Risk Factors” of this proxy statement/prospectus:

 

   

risks associated with the ability to consummate the Mergers and the timing of Closing;

 

   

risks associated with the floating exchange ratio;

 

   

risks associated with the dilution of CoStar Group and Matterport stockholders in the Mergers;

 

   

risks associated with provisions in the Merger Agreement that could discourage a potential competing acquiror of Matterport;

 

   

risks associated with the pendency of the Mergers adversely affecting the businesses of CoStar Group and Matterport;

 

   

risks associated with the different interests in the Mergers of certain directors and executive officers of Matterport;

 

   

risks associated with the ability of CoStar Group and Matterport to terminate the Mergers if the Mergers are not consummated by the outside date as set forth in the Merger Agreement;

 

   

risks associated with the failure of the Mergers to qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

 

   

risks relating to approval of the Mergers and related transactions by Matterport stockholders;

 

   

risks relating to the adverse outcome in any litigation or other legal proceedings relating to the Merger Agreement, or the transactions contemplated thereby;

 

   

risks relating to the incurrence of substantial costs, fees and expenses related to the Mergers and the transactions contemplated by the Merger Agreement;

 

   

risks relating to the failure to integrate the businesses, operations and employees of CoStar Group and Matterport following Closing;

 

   

risks relating to the inability of CoStar Group to attract and retain key personnel;

 

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risks relating to the ability to realize anticipated benefits and synergies of the Mergers as rapidly or to the extent anticipated by financial analysts or investors;

 

   

risks associated with the potential impact of the announcement of the Mergers or the consummation of the Mergers on business relationships, including with employees, customers, suppliers and competitors;

 

   

risks relating to the ability of CoStar Group to effectively manage its expanded operations following the Mergers;

 

   

risks relating to the trading prices of CoStar Group Common Stock and Matterport Common Stock following the Mergers;

 

   

risks relating to certain contractual rights of counterparties to agreements with CoStar Group or Matterport;

 

   

risks relating to a decline in the market price of CoStar Group Common Stock as a result of the Mergers and the transactions contemplated by the Merger Agreement;

 

   

risks relating to a difference in rights of stockholders of CoStar Group and Matterport;

 

   

risks relating to the volatility of CoStar Group Common Stock;

 

   

risks relating to general adverse economic conditions; and

 

   

those additional risks and factors discussed in reports filed with the SEC by CoStar Group and Matterport from time to time, including those discussed under the heading “Risk Factors” in their respective most recently filed reports on Form 10-K and Form 10-Q.

Neither CoStar Group nor Matterport undertakes any duty to update any forward-looking statements appearing in this document, except as may be required by applicable securities laws.

 

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INFORMATION ABOUT THE COMPANIES

CoStar Group, Inc.

CoStar Group, Inc. is a leading provider of information, analytics and online marketplaces to the commercial real estate industry in the U.S. and U.K. based on the fact that it offers the most comprehensive commercial real estate database available; has the largest research department in the industry; own and operate leading online marketplaces for commercial real estate and apartment listings in the U.S. based on the numbers of unique visitors and site visits per month; and provides more information, analytics and marketing services than any of our competitors. It has created and compiled a standardized platform of information, analytics and online marketplace services where industry professionals and consumers of commercial real estate, including apartments, and the related business communities can continuously interact and facilitate transactions by efficiently accessing and exchanging accurate and standardized real estate-related information. Its service offerings span all commercial property types, including office, retail, industrial, multifamily, commercial land, mixed-use and hospitality. CoStar Group manages it business geographically in two operating segments, with its primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America.

CoStar Group’s principal executive office is located at 1331 L Street, NW, Washington, D.C. 20005, and its telephone number is (202) 346-6500.

CoStar Group Common Stock is listed on the Nasdaq Global Select Market, trading under the symbol “CSGP.”

Additional information about CoStar Group and its subsidiaries is included in documents incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”

Matrix Merger Sub, Inc.

Matrix Merger Sub, Inc, a Delaware corporation, is a direct, wholly owned subsidiary of CoStar Group. Merger Sub I was formed by CoStar Group solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub I has not conducted any business activities, has no assets, liabilities or obligations and has conducted its operations solely as contemplated by the Merger Agreement. Its principal executive offices are located at c/o CoStar Group, Inc., 1331 L Street, NW Washington, DC 20005, and its telephone number is (202) 346-6500.

Matrix Merger Sub II LLC

Merger Sub II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of CoStar Group, was formed solely for the purpose of facilitating the Second Merger. Merger Sub II has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement. By operation of the Second Merger, the Surviving Corporation will be merged with and into Merger Sub II, with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of CoStar Group.

Matterport, Inc.

Matterport is leading the digitization and datafication of the built world. Matterport was incorporated in 2011 and is headquartered in Sunnyvale, California. Matterport’s website address is www.matterport.com. Matterport’s Internet website address is provided as an inactive textual reference only. The information contained on Matterport’s Internet website is not incorporated into, and does not form a part of, this proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

 

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Matterport’s technology platform uses spatial data collected from a wide variety of digital capture devices to transform physical buildings and spaces into dimensionally accurate, photorealistic digital twins that provide its subscribers access to valuable building information and insights. For more than a decade, Matterport’s platform has set the standard for digitizing, accessing and managing buildings, spaces and places online. This has resulted in the world’s largest and most accurate library of spatial data with more than 40.7 billion square feet digitized to date. Matterport delivers value to its customers by leveraging proprietary artificial intelligence insights to enhance customer experiences, improve operational efficiency, lower costs associated with promoting and operating buildings and accelerate business. Matterport believes the digitization and datafication of the built world will fundamentally change the way people interact with buildings and the physical spaces around them.

Matterport’s spatial data platform delivers value across a diverse set of industries and use cases by unlocking a rich set of insights about properties and spaces worldwide. Open access to Matterport’s structured spatial data is enabling new opportunities and business models for hospitality, facilities management, insurance, construction, real estate and retail, among others. Large retailers can manage thousands of store locations remotely, real estate agencies can provide virtual open houses for hundreds of properties and thousands of visitors at the same time, property developers can monitor the entirety of the construction process with greater detail and speed, and insurance companies can more precisely document and evaluate claims and underwriting assessments with efficiency and precision. Matterport delivers the critical digital experience, tools and information that matter to its subscribers about properties of virtually any size, shape, and location worldwide. As Matterport continues to transform buildings into data, Matterport is extending its spatial data platform to further transform property planning, development, management and intelligence for its subscribers across industries to become the de facto building and business intelligence engine for the built world. Matterport believes the demand for spatial data and resulting insights for enterprises, businesses and institutions across industries, including real estate, architecture, engineering and construction, retail, insurance and government, will continue to grow rapidly.

Matterport’s innovative 3D capture products, the Pro3 and Pro2 Cameras, have played an integral part in shaping the 3D building and property visualization ecosystem. The Pro3 and Pro2 Cameras have driven adoption of Matterport’s solutions and have generated the unique high-quality and scaled data set that has enabled Cortex, Matterport’s proprietary AI software engine, to become the pioneering engine for digital twin creation. With this data advantage initially spurred by the Pro2 Camera, Matterport has developed a capture device agnostic platform that scales and can generate new building and property insights for its subscribers across industries and geographies.

Matterport’s offerings include software subscription, data licensing, services and product hardware. As of March 31, 2024, Matterport’s subscriber base included over 26% of Fortune 1000 companies, with less than 10% of its total subscription revenue generated from its top 10 subscribers. Matterport expects more than 80% of its revenue to come from software subscription and data license solutions by 2026.

Matterport’s principal executive office is located at 352 East Java Drive, Sunnyvale, CA 94089 and its telephone number is (650) 641-2241.

Matterport Common Stock is traded on the Nasdaq Global Market under the symbol “MTTR.”

For more information about Matterport, please visit Matterport’s Internet website at www.matterport.com. Matterport’s Internet website address is provided as an inactive textual reference only. The information contained on Matterport’s Internet website is not incorporated into, and does not form a part of, this proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Matterport and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. Please see “Where You Can Find More Information.”

 

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THE MERGERS

The following is a discussion of the Mergers and the material terms of the Merger Agreement by and between CoStar Group and Matterport. You are urged to read the Merger Agreement carefully and in its entirety, a copy of which is attached as Annex A to this proxy statement/prospectus and incorporated by reference into this proxy statement/prospectus.

Background of the Mergers

The terms of the Merger Agreement were the result of extensive negotiations between Matterport, CoStar Group and their respective affiliates and representatives. The following is a brief description of certain key events and contacts that led to the signing of the Merger Agreement.

The Matterport Board and its management regularly review and assess Matterport’s performance, share price, strategy, financial position, opportunities and risks in light of current business and economic conditions, as they may affect Matterport’s strategic goals and plans. As a matter of practice, the Matterport Board and its senior management, together with their professional advisors, regularly review and evaluate a wide range of strategic opportunities for business combinations, acquisitions and other financial and strategic alternatives for Matterport, including continuing as a standalone company, with a view to maximizing stockholder value.

CoStar Group has been a customer of Matterport since January 2015. During the period between December 2022 and September 2023, Matterport executives and CoStar Group executives met periodically to discuss further deepening the companies’ existing commercial relationship in light of CoStar Group’s acquisition of Homes.com in 2021 and its increasing integration of Matterport products and services into CoStar Group’s digital offerings.

On May 15, 2023, Mr. Andrew Florance, Chief Executive Officer of CoStar Group, contacted the office of Matterport’s CEO, Mr. R.J. Pittman to request a meeting. Mr. Pittman accepted the request and met in person with Mr. Florance in San Francisco on May 18, 2023. Along with two additional CoStar Group executives, Mr. Florance shared an overview of CoStar Group’s priorities and Mr. Pittman shared an overview of Matterport’s priorities as well as an overview of Matterport’s latest product and technology capabilities. Mr. Pittman then discussed potential opportunities to enhance CoStar Group’s offerings with Matterport technologies. The meeting concluded with mutual interest in scheduling a follow-up meeting.

On June 15, 2023, Mr. Florance returned to San Francisco for general business purposes and to meet with Mr. Pittman for a follow-up meeting to discuss, among other things, commercial opportunities to expand the current business relationship. Mr. Pittman discussed several technology initiatives and commercial approaches with joint marketing potential. In response, Mr. Florance agreed that the commercial opportunities were potentially compelling and inquired as to whether Matterport would be open to receiving an acquisition offer. In response, Mr. Pittman stated that Matterport was not looking for a buyer but was otherwise neutral on the question, and the meeting concluded. No price or other specific terms of any proposed transaction were discussed during the meeting.

On September 18, 2023, Mr. Florance met with Mr. Pittman and delivered an unsolicited, non-binding written acquisition proposal. The proposal expressed CoStar’s interest to acquire all outstanding shares of Matterport Common Stock at a price per share of $4.20 to $4.60, with consideration comprised of 50% cash and 50% newly issued shares of CoStar Group Common Stock. The proposed acquisition price represented a 79% to 96% premium to the Closing trading price of Matterport Common Stock on September 15, 2023. Other aspects of the proposal included the absence of any financing contingency and a request for a 45-day exclusivity period to complete its due diligence.

On September 19, 2023, Mr. Pittman provided CoStar Group’s acquisition proposal to the Matterport Board and informed the Matterport Board that he would be scheduling a meeting to discuss the proposal. On

 

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September 21, 2023, the Matterport Board, together with certain members of senior management and a representative of Foley & Lardner LLP (“Foley”), held a special meeting by video conference. At the meeting, Mr. Pittman reported on the unsolicited acquisition proposal from CoStar Group and recounted his discussions in the June 15 and September 18 meetings with Mr. Florance that led to the proposal. Representatives of Foley reviewed the fiduciary duties owed by the directors under applicable law in connection with their consideration of CoStar Group’s proposal and any other strategic alternatives. Matterport’s Board reconvened a special meeting on September 23, 2023 to explore potential responses to CoStar Group’s proposal and discussed Matterport’s engagement of a financial advisor to assist in considering the proposal and other potential strategic alternatives. The directors authorized Mr. Pittman to begin a search for potential financial advisors. Matterport evaluated its investment banking relationships, including with Qatalyst Partners LP (“Qatalyst Partners”), to determine the qualifications and experiences of each to serve as Matterport’s financial advisor in connection with CoStar Group’s proposal and potential strategic alternatives. The Matterport Board authorized management to pursue negotiations with Qatalyst Partners in connection with preparing to potentially engage Qatalyst Partners as a financial advisor.

On October 4, 2023, the Matterport Board, after review and discussion of Qatalyst Partners’ qualifications, authorized Matterport’s management to engage Qatalyst Partners to act as Matterport’s exclusive financial advisor in connection with the proposed transaction. On October 4, Matterport executed an engagement letter formalizing such engagement of Qatalyst Partners. Qatalyst Partners was selected to act as Matterport’s financial advisor based on Qatalyst Partners’ qualifications, expertise and reputation, as well as its knowledge of Matterport’s business and the industry in which it operates.

On October 9, 2023, the Matterport Board, together with certain members of Matterport’s senior management, met with representatives of Qatalyst Partners and Foley by video conference to continue discussions regarding CoStar Group’s proposal. Representatives of Qatalyst Partners reviewed with the Matterport Board and discussed Matterport’s preliminary management projections, as prepared by Matterport’s management team for use in its analysis, analyst targets and valuations, trading performance, preliminary valuation perspectives, and strategic alternatives to the proposed transaction, including possible business combination transactions with other third parties. Foley again led a discussion regarding the Board’s fiduciary duties, possible responses to CoStar Group’s bid and various measures that Matterport could take in response thereto. After discussion regarding a range of potential responses to CoStar Group, as well as the feasibility of a limited market check, the Matterport Board determined that CoStar Group’s proposed acquisition price of $4.20 to $4.60 per share was inadequate and that it was not an appropriate time to engage in a broader process to sell Matterport. The directors then instructed Mr. Pittman to convey to Mr. Florance that, while Matterport was not for sale and did not currently intend to put itself up for sale, Matterport took CoStar Group’s September 18, 2023 proposal seriously, was willing to engage with CoStar Group and offer to provide additional information under a confidentiality agreement and engage in a discussion that could lead CoStar Group to meaningfully improve its offer.

At the direction of the Matterport Board, Mr. Pittman called Mr. Florance on October 11, 2023 and relayed the message of the Matterport Board and informed him that the range of CoStar Group’s proposed offer to acquire Matterport was too low but proposed that Matterport and CoStar Group engage in further discussions regarding potential value creation.

On October 12, 2023, Mr. Matthew Zinn, Matterport’s Chief Legal Officer, sent Mr. Gene Boxer, CoStar Group’s General Counsel, a draft mutual confidentiality agreement to facilitate discussions and the disclosure of information between Matterport and CoStar Group. The parties and their respective counsel negotiated, and the parties executed, a mutual confidentiality agreement on October 16, 2023. The confidentiality agreement contained customary “standstill” restrictions on CoStar Group with a customary “fall-away” provision that rendered the standstill inapplicable if Matterport were to enter into a definitive agreement to sell more than 50% of its capital stock and did not include a “don’t ask, don’t waive” provision.

On October 18, 2023, Matterport, CoStar Group’s respective senior management teams and CoStar Group’s financial advisor, J.P. Morgan Securities LLC (“J.P. Morgan”) held an all-day meeting, during which the parties

 

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discussed Matterport’s vision and strategy as a standalone business, potential synergies between the companies, how CoStar Group could accelerate Matterport’s growth, and how a business combination with Matterport could assist CoStar Group in achieving CoStar Group’s strategic objectives.

On October 20, 2023, Matterport’s Board met to receive a briefing from Mr. Pittman regarding the October 18 discussions between Matterport and CoStar Group executives.

On October 23 and October 30, 2023, at the direction of Matterport’s senior management, representatives of Qatalyst Partners spoke with J.P. Morgan. In those conversations, representatives of J.P. Morgan conveyed to Qatalyst Partners that CoStar Group would need to obtain additional diligence information from Matterport, including a financial model, in order to support a potentially improved CoStar Group proposal. On October 30, 2023, J.P. Morgan sent Qatalyst Partners a high-priority data request list. On November 1, 2023, Messrs. Pittman and Florance engaged in a discussion about the scope of diligence necessary for CoStar Group to submit a revised proposal to acquire Matterport. Subsequent to receiving the data request list and throughout November 2023, Matterport and CoStar Group executives, along with their respective financial advisors, engaged in additional discussions and evaluations regarding Matterport’s financial model and assumptions therein, as well as other due diligence matters.

On November 1, 2023, Messrs. Florance and Pittman discussed the status of CoStar Group’s due diligence. Mr. Pittman also informed Mr. Florance that Matterport had a regularly scheduled board meeting on November 9 and inquired as to whether CoStar Group would be providing a revised proposal prior to that date. Later that day, representatives of Qatalyst Partners contacted representatives of J.P. Morgan to reinforce Matterport’s desire to facilitate CoStar Group’s due diligence and receive an updated proposal prior to Matterport’s November 9 board meeting.

On November 3, 2023, Mr. Pittman contacted Mr. Florance by telephone to discuss the prioritization of due diligence requests and next steps with respect to the strategic discussions.

On November 6, 2023, members of CoStar Group management and representatives of J.P. Morgan requested that members of Matterport’s management and representatives of Qatalyst Partners facilitate a technology-focused due diligence call. This call took place by video conference the following day.

On November 8, 2023, Mr. Pittman contacted Mr. Florance to inquire as to whether CoStar Group would be delivering a revised acquisition offer in advance of the Matterport’s regularly scheduled board meeting set for November 9, 2023.

On November 9, 2023, at its regularly scheduled board meeting, Mr. Pittman provided an update on strategic discussions with CoStar Group. Mr. Pittman reported that since the last Board meeting on October 20, 2023, CoStar Group had conducted additional due diligence and the parties had engaged in additional discussions, but CoStar Group had not provided an updated proposal.

On November 14, 2023, representatives of Qatalyst Partners spoke by phone with representatives of J.P. Morgan to discuss the status and potential next steps with respect to the transaction, including the scope of additional due diligence requests that CoStar Group would need to conduct prior to forming a revised view on value. Over the next several days, the two companies engaged in additional due diligence discussions.

On November 28, 2023, Mr. Scott Wheeler, CoStar Group’s Chief Financial Officer, contacted Mr. Fay, Matterport’s Chief Financial Officer, to update him on the diligence process and indicated that Mr. Florance would contact Mr. Pittman the following week regarding CoStar Group’s valuation of Matterport.

On December 6, 2023, Messrs. Florance and Wheeler contacted Messrs. Pittman and Fay by telephone, and orally delivered an acquisition offer of $4.50 to $5.00 per share.

 

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On December 12, 2023, in advance of CoStar Group’s regularly scheduled board meeting the next day, Mr. Pittman called Mr. Florance to inform him of Mr. Pittman’s belief that the Matterport Board might be willing to entertain a proposal of $6.85 per share. Subsequent to this conversation, Matterport management, with the assistance of Qatalyst Partners, prepared and conveyed to CoStar Group materials outlining potential value creation to CoStar Group resulting from the proposed transaction and supporting a potential $6.85 per share offer.

On December 20, 2023, Mr. Florance told Mr. Pittman in a telephone call that while he did not yet have approval from CoStar Group’s Board, he was willing to advocate for an acquisition price of $5.50 per share.

On January 4, 2024, Mr. Pittman called Mr. Florance and informed him that, based on the strategic value and the long-term prospects of Matterport’s business, Mr. Pittman would only be supportive of a price that was $6.00 per share or greater. On January 9, 2024, Mr. Florance called Mr. Pittman and told him that CoStar Group was still evaluating Matterport’s proposed range and that he did not yet have authorization to make a revised proposal.

On January 31, 2024, Messrs. Pittman and Florance met by video conference to continue the discussion on price. In that conversation, Mr. Florance made a verbal proposal of $5.50 per share, noting that it was CoStar Group’s best offer and the maximum price he was authorized to offer by the CoStar Group Board. The following day, in a special meeting of the Matterport Board with certain members of Matterport senior management, Mr. Pittman briefed the directors on the discussions with CoStar Group and its verbal offer of $5.50 per share.

Following the board meeting, under the instructions of the Matterport Board, Mr. Pittman called Mr. Florance on February 5, 2024 and informed him that Matterport would review CoStar Group’s latest proposal and asked that CoStar Group’s revised offer be tendered in writing. Mr. Pittman also advised that any proposed transaction would need to be completed without delay or interference to Matterport’s ongoing business operations and that the definitive agreements reflect balanced terms, certainty of closing and customary protections for Matterport, such as a reverse termination fee.

On February 7, 2024, Mr. Florance delivered to Mr. Pittman a non-binding written letter of intent setting forth CoStar Group’s revised proposal of $5.50 per share, subject to completion of due diligence, consisting of $2.75 per share in cash and $2.75 per share in CoStar Group Common Stock, and proposing to commit to include a reasonable and customary termination fee in the event antitrust approval is not obtained, a 45-day exclusivity period to complete its due diligence and finalize negotiation of definitive transaction documents, which CoStar Group could extend for an additional 21 days if the parties were working in good faith and there were no changes to the proposal’s key terms. At the Matterport Board’s direction, Matterport executives discussed the letter of intent with representatives of Foley and Qatalyst Partners.

On February 8, 2024, the Matterport Board held a special meeting with certain members of Matterport senior management and representatives of Foley and Qatalyst Partners to discuss CoStar Group’s February 7, 2024 proposal and discussed a possible response to CoStar Group’s written offer. Representatives of Foley discussed the legal aspects of the proposal, including expected regulatory review, and further reminded the Matterport Board of its fiduciary duties, and representatives of Qatalyst Partners made a presentation on certain aspects of CoStar Group’s February 7, 2024 proposal as well as certain matters related to Matterport’s standalone value and a potential combination with CoStar Group. Matterport’s directors engaged in a wide-ranging discussion, including the benefits and drawbacks of continuing as a standalone business, the competitive landscape, Matterport’s future prospects as a standalone entity and alternative strategic transactions that Matterport could pursue. In addition, the Matterport Board discussed with its advisors whether Qatalyst Partners should contact other potential bidders prior to granting exclusivity to CoStar Group and concluded that the risks of doing so, including the potential that Matterport’s consideration of a potential transaction might become known to the public, outweighed the potential benefits. The Matterport Board further indicated that it would be

 

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important to obtain significant protection regarding the value of the stock portion of the consideration and that CoStar Group should bear any regulatory risk associated with any antitrust approval and agree to a customary reverse termination fee. After the meeting, Matterport sent CoStar Group a marked-up version of CoStar Group’s letter of intent which included additional detail as to the valuation of the stock component of the consideration, including a floating exchange ratio, which would provide for the payment of a number of CoStar Group shares having a value at Closing of $2.75 per share. Matterport’s revisions to the letter of intent also specified that CoStar Group pay Matterport a termination fee equal to 6% of the equity value of the proposed transaction and that the topping fee payable by Matterport would be 3% of the equity value of the proposed transaction. Additionally, Matterport proposed that the exclusivity period be shortened to 30 days from the acceptance of the proposal and be extended only by mutual agreement for an additional 15 days.

On February 12, 2024, members of Matterport’s senior management, and members of CoStar Group senior management held several meetings by video conference to discuss the terms of the letter of intent. Later that day, J.P. Morgan and Qatalyst Partners held a video conference to discuss the terms of the letter of intent.

On February 14, 2024, prior to Matterport’s regularly scheduled board meeting that day, Mr. Pittman received from Mr. Florance a revised letter of intent in which, among other things, CoStar Group (i) accepted the 30-day exclusivity period, subject to the exclusivity period beginning on the date that the parties agreed Matterport had substantially provided certain diligence materials requested with the proposal and a potential 15 day extension which would be mutually agreed; (ii) proposed a symmetrical collar to the floating share exchange ratio at Closing that Matterport had proposed; and (iii) proposed a reverse termination fee by CoStar Group of $85 million, and a termination fee by Matterport of $50 million.

At the regularly scheduled board meeting on February 14, 2024, the Matterport Board, among other things, received an overview of Matterport’s results for its most recent fiscal year. The Matterport Board, Matterport’s senior management, and representatives of Qatalyst Partners and Foley further engaged in a discussion on the specific terms of CoStar Group’s revised offer – including the fact that the offer of $5.50 per share represented a premium of 143% to the closing price of Matterport Common Stock on February 13, 2024 and potential alternatives. Representatives of Foley also provided a review of the Matterport Board’s fiduciary duties under applicable law in connection with its review and consideration of any potential transaction involving Matterport. Representatives of Qatalyst Partners reviewed certain potential acquirors for Matterport, the merits and considerations for each, and the potential benefits and drawbacks of an outreach to other potential acquirors. Representatives of Qatalyst Partners discussed that the likelihood that any other potential acquiror would have the ability and interest in pursuing a transaction with Matterport at this time at a value commensurate with that contemplated by CoStar Group’s February 14, 2024 proposal was relatively low and that a leak could be detrimental to the current negotiations with CoStar Group. It was also noted that informing CoStar Group that Matterport was not engaging in discussions with other potential acquirors was consistent with previous statements that Matterport was not actively looking for a sale. Based on these discussions and other considerations, the Matterport Board determined that it should not engage in an outreach to other potential acquirors at that time, and approved the execution of the letter of intent, subject to clarifying the language of the exclusivity period such that it ended on a specified date, to be no longer than 45 days. Also on February 14, 2024, the Matterport Board executed an Action by Written Consent approving the execution of CoStar Group’s letter of intent, with one change to reflect a change to the exclusivity period.

On February 16, 2024, Matterport signed CoStar Group Group’s nonbinding (other than as to exclusivity) letter of intent with one revision to the exclusivity period, which was revised to provide for a termination on March 25, 2024, with an extension, subject to mutual agreement, by up to 15 days if CoStar Group was proceeding in good faith and confirms no changes to the key terms of its proposal. Under the letter, neither party was bound to consummate a transaction.

Beginning on February 21, 2024, CoStar Group and its outside counsel, Latham & Watkins LLP (“Latham”), conducted due diligence on Matterport through (i) extensive review of the virtual data room

 

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information provided pursuant to a diligence request list delivered by CoStar Group to Matterport on February 15, 2024, and (ii) discussions with Matterport representatives regarding business prospects, Matterport’s outstanding litigation, and other due diligence matters. The virtual data room was iteratively updated with additional due diligence information throughout the ensuing transaction negotiations.

On February 28, 2024, representatives of CoStar Group, including Mr. Florance, Frank Simuro, CoStar Group’s Chief Technology Officer, and Lisa Ruggles, CoStar Group’s Senior Vice President of Global Operations, and representatives of Matterport, including Mr. Pittman, Mr. Gausebeck, Mr. Remley, and Mr. Tulsi held in-person meetings at Foley’s offices to discuss certain due diligence matters, including Matterport’s presentation of information concerning its products, technology and service network. Over the following weeks, CoStar Group and Matterport engaged in confirmatory due diligence on each other.

On March 5, 2024, Latham sent Foley an initial draft of the Merger Agreement.

On March 7, 2024, Matterport’s Board and members of the management team met with representatives of Foley to review the initial draft of the Merger Agreement and each of the key issues in the draft. Among other things, the initial CoStar Group draft provided that the cash portion of the purchase price would be reduced by the potential exposure from pending lawsuits against Matterport in Delaware, with such reduction to be issued in the form of a contingent value right upon successful resolution of such matters. The Board noted the value of the contingent value right which would only be realized by Matterport stockholders to the extent that CoStar Group prevailed in the various litigations and would be reduced by the amount of actual losses suffered in such lawsuits.

On March 11, 2024, Messrs. Pittman and Zinn contacted Messrs. Wheeler and Boxer to discuss the issues in CoStar Group’s initial draft of the Merger Agreement. During their conversation, Matterport executives told CoStar Group that the signed letter of intent did not contemplate a contingent value right and Matterport’s position was that the price set forth in the signed letter of intent was $5.50 per share without any portion of the amount being contingent. Pending resolution of this issue, Matterport paused due diligence calls until CoStar Group could confirm that it would proceed without the contingent value right. Later that day, Qatalyst Partners contacted J.P. Morgan to reiterate that message.

On March 14, 2024, Messrs. Pittman and Florance held a teleconference, and Mr. Florance confirmed that CoStar Group would remove the concept of a contingent value right in the Merger Agreement and leaving the proposal at $5.50 per share. Matterport resumed its cooperation with CoStar Group on its due diligence of Matterport, and Matterport instructed Foley to prepare a revised draft of the Merger Agreement.

On March 17, 2024, a representative of Qatalyst Partners contacted representatives of J.P. Morgan to confirm whether CoStar Group remained on track to sign prior to March 25, 2024, the termination date of the exclusivity period. Representatives of J.P. Morgan communicated that given the pause of due diligence, it was likely that CoStar Group would need additional time to complete due diligence.

On March 18, 2024, Latham delivered an initial draft of a voting agreement to be entered into by certain stockholders. Latham and Foley continued to exchange drafts of the voting agreement over the following weeks, during which they had several telephonic meetings to discuss the terms of the draft voting agreement.

On March 19, 2024, Foley sent to Latham a revised draft of the Merger Agreement. Foley’s revised draft included, among other things, (i) a 30-day “go-shop” provision, with a reduced break-up fee of $25 million for termination resulting from alternative proposals that were submitted during the go-shop period, (ii) tax-efficient structuring of the transaction providing for guaranteed tax-free treatment of the stock consideration, (iii) more stringent regulatory covenants, (iv) a condition to Matterport’s obligation to close that CoStar Group not have experienced a material adverse effect, and (v) other changes related to Matterport Board’s ability to comply with its fiduciary obligations.

 

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While CoStar Group and its representatives conducted due diligence related to Matterport, Matterport’s management, together with representatives of Foley and Qatalyst Partners, conducted due diligence as to certain matters related to CoStar Group. In addition to reviewing publicly available information, members of the Matterport management team and their advisors participated in due diligence sessions in which members of CoStar Group management team provided answers to questions presented by Matterport.

On March 21, 2024, CoStar Group requested that Matterport agree to extend the exclusivity period by 15 days.

On March 22, 2024, Matterport’s Board held a special meeting at which representatives of Qatalyst Partners and Foley were present. Mr. Pittman provided a status update on the parties’ diligence process, the negotiations with CoStar Group on the Merger Agreement and other transaction documents, including CoStar Group’s request to extend exclusivity and the anticipated transaction timeline. Mr. Pittman also summarized for Matterport’s Board the results of the due diligence meetings and investigation into CoStar Group. Representatives of Foley reminded the Matterport Board of its fiduciary duties. Then, representatives of Foley presented an update on the material terms of the Merger Agreement, including, among other things, (i) the merger consideration and tax treatment of CoStar Group shares received, (ii) the treatment of equity awards, (iii) the voting agreement that key executives and directors would be required to sign, (iv) interim operating covenants, (v) non-solicitation and “go-shop” provisions, (vi) consequences upon changes in Matterport Board’s recommendations, (vii) CoStar Group’s matching rights with respect to a superior proposal, (viii) Matterport’s request for a condition to Matterport’s obligations to close that CoStar Group not have experienced a material adverse effect, and (ix) termination rights and fees. Mr. Zinn, together with representatives of Foley, summarized Matterport and CoStar Group’s respective positions on the outstanding issues. The Board then discussed the potential compromises that Matterport and CoStar Group would need to make in order to reach agreement but reiterated the importance of the Matterport Board’s fiduciary duties. The Matterport Board further examined the due diligence and negotiations to date and authorized an extension of the exclusivity period for 15 days. Thereafter, representatives of Qatalyst Partners presented materials on the collar mechanics and sensitivity analysis illustrating how the collar could impact the value of the consideration under various CoStar Group Common Stock trading price scenarios.

In light of the on-going diligence and number of open issues in the Merger Agreement, on March 25, 2024, Matterport and CoStar Group agreed in writing to extend the exclusivity period through April 9, 2024.

On March 27, 2024, Latham sent a revised draft of the Merger Agreement to Foley. In that revised draft, among other things, CoStar Group (i) proposed a 5% symmetrical collar, with a midpoint price equal to the average of the volume weighted average prices (“VWAP”) of CoStar Group for the 10 consecutive trading days ending the trading day prior to the signing of the Merger Agreement, (ii) agreed to a tax-efficient structure only to the extent such structure would not result in CoStar Group issuing more consideration in CoStar Group Common Stock than as required pursuant to the aforementioned collar, (iii) reverted on certain non-solicitation and “go-shop” provisions, (iv) limited Matterport’s Board’s ability to consider non-financial factors of potential superior proposals, and (v) rejected Matterport’s request for a condition to Matterport’s obligation to close that CoStar Group not have experienced a material adverse effect.

On March 28, 2024, representatives of Latham and Foley had multiple calls to discuss the open issues in the draft Merger Agreement. In the negotiations, Latham and Foley, among other items, discussed the fiduciary exceptions to the “no-shop” and board recommendation covenants, Matterport’s interim operating covenants, and Matterport’s request for a condition to Matterport’s obligation to close that CoStar Group not have experienced a material adverse effect.

On March 29, 2024, Mr. Pittman contacted Messrs. Florance, Wheeler and Boxer with a summary of the material open items in the parties’ diligence process and transaction documents, along with target deadlines for each workstream. Mr. Pittman also separately contacted Mr. Florance to discuss the key issues in the Merger Agreement including, among other things, the collar mechanics and the non-solicitation provisions.

 

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Late in the evening of March 29, 2024, Foley delivered to Latham a revised Merger Agreement. The revised draft proposed, among other changes, a wider 13% symmetrical collar and a midpoint price equal to the average of the VWAPs of CoStar Group for the 10 consecutive trading days ending on April 5, 2024. On March 31, 2024, Mr. Pittman emailed Messrs. Florance, Wheeler and Boxer with a proposed timeline for various pre-signing workstreams.

On April 1, 2024, representatives of Foley and Latham held a call to discuss (i) the 13% symmetrical collar, (ii) Matterport’s proposed language that CoStar Group refrain from undertaking any other acquisitions that would imperil regulatory review of the current transaction with Matterport and (iii) the definition of “Good Reason” in Matterport’s executive severance plan. On the evening of April 3, 2024, Latham sent to Foley a revised Merger Agreement, with revisions that addressed CoStar Group’s issues raised in the April 1 call between Foley and Latham. In Latham’s revised draft of the Merger Agreement, CoStar Group countered Matterport’s proposal of a 13% symmetrical collar with a narrower 10% symmetrical collar.

Along with the revised Merger Agreement, Latham also sent Foley a proposed term sheet to amend and restate the existing commercial agreement between Matterport and CoStar Group, noting that CoStar Group sought to finalize the updated commercial terms concurrently with the signing of the Merger Agreement. Additionally, CoStar Group proposed that all Matterport executive officers sign a “Good Reason” waiver, whereby such officers would acknowledge that any change in the officers’ titles, authority, reporting relationships and duties, solely due to Matterport becoming a division of CoStar Group as a result of the closing of the transaction, would not constitute “Good Reason” under Matterport’s executive severance plan.

On April 4, 2024, Qatalyst Partners provided Matterport with a conflicts disclosure letter, which confirmed the absence of any conflicts in Matterport’s engagement of Qatalyst Partners in connection with the proposed transaction with CoStar Group.

On April 5, 2024, the Matterport Board and representatives of Foley and Qatalyst Partners met to discuss the status of the transaction. Mr. Pittman and representatives of Foley updated the Matterport Board on recent events, in particular CoStar Group’s proposal relating to the commercial agreement and the “Good Reason” waiver. Mr. Pittman, together with representative of Foley, summarized the key outstanding items and the key terms of the revised Merger Agreement and other transaction documents, each of which had been shared with Matterport’s Board. The Matterport Board, together with representatives of Foley and Qatalyst Partners, engaged in a discussion of (i) certain matters related to Matterport’s standalone value and a potential combination with CoStar Group, (ii) the results of the due diligence conducted on CoStar Group and (iii) certain other terms of the transaction, including acceptance of the 10% collar but shortening the VWAP period to 5 consecutive trading days from 10 consecutive trading days.

After the Matterport Board meeting on April 5, 2024, negotiations ensued on each of the commercial agreement, the Good Reason waiver and the terms of a restrictive covenant agreement with certain executive officers of Matterport, which CoStar Group had proposed.

In the morning of April 8, 2024, Matterport’s Board met to review the status of the potential transaction. Members of Matterport’s senior management team and representatives of Foley and Qatalyst Partners were also present. Mr. Pittman provided an overview of the discussions with CoStar Group since the March 22, 2024 board meeting. Representatives of Foley provided an update on the status of the Merger Agreement and other transaction agreements, copies of which were each provided to the directors in advance of the meeting. The presentation led by representatives of Foley covered, among other items, certain updates to the Merger Agreement that have been made since the directors last reviewed a copy of the Merger Agreement, SEC and other regulatory filings required and potential timing scenarios, termination provisions, signing and closing conditions and the preparation for a special stockholders’ meeting necessary for a vote to approve the proposed transaction. Thereafter, representatives of Foley discussed the directors’ fiduciary duties and responsibilities and the steps to address any potential competing or superior proposals under the non-solicitation provisions of the

 

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draft Merger Agreement; and discussed that the value of the CoStar Group Common Stock at Closing could impact the tax free reorganization structure. In addition, Director Repo presented her conclusion, based on a review of key pleadings and discussions with Matterport counsel, that derivative claims recently filed by certain shareholders on behalf of Matterport had minimal value as an asset of Matterport, and were therefore immaterial in the context of the transaction as a whole. Following the discussion, representatives of Qatalyst Partners presented an extensive summary of the financial details of the proposed transaction.

On April 9, 2024, the exclusivity period expired, and Matterport and CoStar Group had not yet finalized the terms of certain of the transaction agreements, including the Merger Agreement. In the meantime, the parties continued negotiations on the commercial agreement.

On April 16, 2024, Messrs. Wheeler and Boxer informed Mr. Pittman of CoStar Group’s proposal to announce the transaction before the commencement of trading on April 22 in order to provide Matterport and CoStar Group sufficient time to align on the commercial terms, hold their respective board meetings and prepare for sequenced communications. Between April 16 and April 20, 2024, Foley and Latham addressed all remaining diligence items and finalized the drafts of the Merger Agreement and other transactions documents.

On April 17, 2024, the management teams of Matterport and CoStar Group, together with its respective financial advisors, met to discuss the companies’ preliminary quarterly financial results. In addition, members of Matterport’s management team who had been aware of the transaction agreed to sign the Good Reason waiver on the condition that it be amended to extend the coverage of the Matterport executive severance plan for two years following consummation of the transaction. In addition, Messrs. Pittman and Dave Gausebeck, Chief Scientific Officer of Matterport, agreed to enter into a five-year restrictive covenant agreement.

On April 19, 2024, Messrs. Pittman and Florance discussed the communications plan in respect of the announcement of the transaction.

On April 20, 2024, at a special meeting of the Matterport Board, at which members of Matterport’s senior management team and representatives of Foley and Qatalyst Partners were present, Mr. Pittman provided the directors with an overview of the discussions with CoStar Group since the last board meeting and a status update on the proposed transaction, including all critical open items, how each had been addressed, and the finalization of all definitive agreements relating to the transaction. Mr. Pittman also presented a summary of the commercial agreement with CoStar Group and drafts of the communication materials. Thereafter, representatives of Foley described the proposed final terms of the Merger Agreement, the voting agreement, the “Good Reason” waiver and other transaction documents, copies of which were provided to the directors in advance of the meeting (in execution form), together with detailed summaries thereof. Representatives of Foley again highlighted the material terms in the Merger Agreement, non-solicitation provision, operating covenants of Matterport, the termination provisions and the closing conditions. Then, representatives of Foley again reviewed the fiduciary duties of the directors, including the specifics of such duties in connection with consideration of approving the proposed Merger Agreement and the transactions contemplated thereby. The Matterport Board reviewed the management projections, as prepared by Matterport’s management team for use in its analysis (the “Management Projections”) with representatives of Qatalyst Partners (see the section entitled “Matterport Unaudited Prospective Financial Information” for a further discussion of the Management Projections), and then reviewed the Qatalyst Partners financial analysis materials, copies of which were provided to the directors prior to the meeting. After reviewing the foregoing, representatives of Qatalyst Partners then delivered to the Matterport Board Qatalyst Partners’ oral opinion, subsequently confirmed in Qatalyst Partners’ written opinion dated April 21, 2024, to the effect that, as of such date, and based upon and subject to the factors and assumptions set forth in Qatalyst Partners’ written opinion, the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of the shares of Matterport Common Stock, was fair, from a financial point of view, to such Matterport holders, as more fully described in the section entitled “The Mergers—Opinion of Qatalyst Partners” beginning on page 52 and the full text of the written opinion of Qatalyst Partners which is attached as Annex B to this proxy statement/prospectus. The Matterport Board then conducted a final review of its findings regarding the proposed transaction with CoStar Group. Based on the

 

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foregoing and other factors and considerations, the Matterport Board unanimously (i) determined that the terms of the Merger Agreement and other transaction documents and the transactions contemplated thereby, including the proposed merger and the proposed merger consideration, were advisable, fair to, and in the best interests of, Matterport and its stockholders, (ii) approved the execution and delivery of the Merger Agreement by Matterport, the performance by Matterport of its covenants and other obligations thereunder and the consummation of the merger and other transactions contemplated by the Merger Agreement and (iii) resolved to recommend that the stockholders of Matterport adopt the Merger Agreement.

On Sunday, April 21, 2024, Matterport and CoStar Group executed the Merger Agreement. On April 22, 2024, Matterport and CoStar Group announced the transaction.

Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board

At a special meeting held on April 20, 2024, the Matterport Board determined by unanimous vote that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, are fair to, and in the best interests of Matterport and its stockholders; approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers; and resolved to recommend that Matterport stockholders approve the transactions contemplated by the Merger Agreement, including the Mergers, and adopt the Merger Agreement. The Matterport Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Transaction Related Compensation Proposal, on an advisory, non-binding basis and “FOR” the Adjournment Proposal.

In evaluating the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, the Matterport Board consulted with management, its financial advisor and outside legal counsel. In recommending the stockholder vote in favor of the adoption of the Merger Agreement, the Matterport Board considered a variety of factors, including without limitation the following principal factors (not in any relative order of importance):

 

   

historical information regarding (i) Matterport’s business, financial performance and results of operations, (ii) market prices, volatility and trading activity with respect to Matterport Common Stock and (iii) market prices with respect to the industry participants and general market indices.

 

   

current information regarding (i) Matterport’s business, prospects, financial conditions, operations, technology, products and services, management, competitive position and strategic business goals, objectives, (ii) general economic, industry and financial market conditions and (iii) opportunities and competitive factors within Matterport’s industry.

 

   

the belief of the Matterport Board that the value offered to the Matterport stockholders pursuant to the Mergers is more favorable to the Matterport stockholders than the potential value from other alternatives reasonably available to Matterport, including remaining an independent public company and a standalone entity, after reviewing Matterport’s business, financial condition, results of operations, market trends, competitive landscape and execution risks, and discussions with Matterport’s management and advisors;

 

   

the fact that the merger consideration represents an implied premium of approximately 216.1% over the Matterport Common Stock closing price on April 19, 2024, the last trading day before the Merger Agreement was announced, and a premium of 181.4% over the 20-day volume weighted average on the same date.

 

   

the belief of the Matterport Board, based upon arm’s length negotiations resulting in CoStar Group’s submission of its final offer of $5.50 per share, that the price to be paid by CoStar Group was the highest price per share that CoStar Group was willing to pay for Matterport.

 

   

the belief that the potential synergies available to CoStar Group as a result of its proposed integration of Matterport were factored into its final offer of $5.50 per share.

 

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the fact that 50% of the merger consideration is expected to be paid in cash, and provides certainty, immediate value and liquidity to Matterport’s stockholders, enabling them to realize value for their interest in Matterport while eliminating, to a limited degree, business and execution risk inherent in Matterport’s business, including uncertainties and risks associated with operating as a standalone entity.

 

   

the fact that 50% of the merger consideration will be paid in CoStar Group Common Stock, which allows Matterport’s stockholders to participate in future growth of CoStar Group and, indirectly, Matterport, including any potential appreciation that may be reflected of the combined company and to maintain liquidity should any Matterport’s stockholders choose not to retain its shares of CoStar Group Common Stock.

 

   

the fact that, subject to certain limitations, the transaction is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and taxation on the portion of the merger consideration paid in CoStar Group Common Stock may be deferred for U.S. federal income tax purposes.

 

   

the fact that the Merger Agreement was the product of arm’s length negotiations, as well as the Matterport Board’s belief, based on these negotiations, that these were the most favorable terms to Matterport and its stockholders on which CoStar Group was willing to transact.

 

   

prior acquisitions of CoStar Group, the business reputation and capabilities of CoStar Group and its management, and the ability of CoStar Group to complete the Mergers.

 

   

the likelihood that the Mergers will be consummated, based upon, among other things, the number of conditions to the Mergers, the absence of a financing condition, the likelihood of obtaining required regulatory approvals and contractual commitments by CoStar Group to use its reasonable best efforts to obtain such regulatory approvals and the remedies available under the Merger Agreement to Matterport in the event of any breaches by CoStar Group.

 

   

the oral opinion of Qatalyst Partners rendered to the Matterport Board on April 20, 2024, and subsequently confirmed in a written opinion, dated April 21, 2024, that as of the respective dates thereof, and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in Qatalyst Partners’ written opinion, the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar or any affiliate of CoStar) was fair from a financial point of view to such holders, as more fully described under the section entitled “The Mergers—Opinion of Qatalyst Partners” beginning on page 52 and the full text of the written opinion of Qatalyst Partners, which is attached as Annex B to this proxy statement/prospectus; and

 

   

the terms and conditions of the Merger Agreement and other transaction agreements, including the following related factors:

 

   

the representations, warranties and covenants of Matterport in the Merger Agreement;

 

   

the right, prior to receipt of the Requisite Stockholder Approval, for the Matterport Board to engage in negotiations and furnish information with regard to any competing proposal made by a third party that the Matterport Board determines in good faith, after consultation with Matterport’s outside legal counsel and financial advisor, constitutes or could reasonably expected to result in a superior proposal and the failure to take any of the foregoing actions would reasonably be inconsistent with the directors’ fiduciary duties to Matterport’s stockholders;

 

   

the ability of Matterport Board, subject to certain limitations, to withdraw or modify its recommendation that stockholders vote in favor of adoption of the Merger Agreement in connection with the receipt of a superior proposal or the occurrence of an intervening event, if the Matterport Board determines in good faith, after consultation with Matterport’s outside legal counsel and financial advisor, that such competing proposal constitutes a superior proposal or failure to change its recommendation would reasonably be excepted to be inconsistent with the directors’ fiduciary duties to the Matterport stockholders;

 

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the right of Matterport Board, subject to a four-day period to negotiate with CoStar Group with regard to any adjustment or amendment to the Merger Agreement, to terminate the Merger Agreement to accept a superior proposal and enter into a definitive agreement with respect to such superior proposal, subject to payment of a termination fee;

 

   

the absence of a financing condition to CoStar Group’s obligation to consummate the Mergers;

 

   

the fact that the adoption of the Merger Agreement is not subject to the approval of CoStar Group’s stockholders;

 

   

the fact that certain members of Matterport’s management team and Matterport Board, who will be receiving the same consideration as Matterport’s other stockholders in their capacity as Matterport stockholders, supported the transaction and agreed to enter into a voting agreement (the “Voting Agreement”) and the Matterport Common Stock beneficially owned by them in the aggregate represent approximately 15% of the outstanding shares of Matterport Common Stock, as of April 20, 2024;

 

   

the fact that if the Mergers are not consummated under certain circumstances, as an alternative to specific performance under the Merger Agreement, CoStar Group will pay Matterport an $85 million reverse termination fee;

 

   

the fact that the Mergers would be subject to the Requisite Stockholder Approval and that Matterport’s stockholders would be free to evaluate the Mergers and vote for or against the adoption of the Merger Agreement at the Special Meeting; and

 

   

the availability of statutory appraisal rights to Matterport’s stockholders who do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures applicable to appraisal rights under Section 252 of the DGCL.

The Matterport Board also considered a number of potentially negative factors in its deliberations concerning the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, including the following (not in any relative order of importance):

 

   

the risk that the conditions to the consummation of the Mergers may not be satisfied (including the failure to obtain the required antitrust approvals) and, as a result, the possibility that the Mergers may not be completed in a timely manner or at all, even if the Merger Agreement is adopted by Matterport’s stockholders, and that any such delays could diver Matterport’s management attention and resources from the operations of Matterport’s business and increase expenses in attempts to complete the Mergers;

 

   

the potential effect of the uncertainty of the proposed Mergers, regardless of whether the Mergers are completed, on Matterport’s employees, customers and other parties, including the negative impact on Matterport’s ability to attract, retain and motivate key employees and changes in Matterport’s existing business relationships with its customers, suppliers and other parties.

 

   

the potential difficulties of integrating the businesses of Matterport and CoStar Group and the risk that all or some portion of the potential synergies might not be realized or might take longer to realize than expected.

 

   

the restrictions on the conduct of Matterport’s business prior to the consummation of the Mergers under the Merger Agreement, including covenants that Matterport operate in the ordinary course of business and refrain from taking certain actions without CoStar Group’s consent, which could delay or prevent Matterport from undertaking business opportunities that may arise while the consummation of the Mergers is pending and otherwise limit Matterport’s operations prior to the Closing.

 

   

the restrictions in the Merger Agreement on soliciting competing proposals to acquire Matterport from the date of the Merger Agreement.

 

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the restrictions in the Merger Agreement on Matterport’s ability to terminate the Merger Agreement in connection with the receipt of a superior proposal, including the fact that the Matterport Board must (i) provide four days’ written notice to CoStar Group of its intention to make an adverse change to its recommendation with respect to the Mergers in order to provide CoStar Group with an opportunity to match a superior proposal and (ii) if requested by CoStar Group, negotiate in good faith with CoStar Group during such period, and the discouraging effect this may have on potential bidders;

 

   

that Matterport may be required to pay CoStar Group a $50 million termination fee under certain circumstances after the date of the Merger Agreement, including if Matterport’s stockholders do not vote to approve the Mergers and Matterport receives a superior proposal.

 

   

the potential effect of the termination fee to deter other potential bidders from making a competing proposal for Matterport and the impact of the termination fee on Matterport’s ability to engage in another transaction for twelve months if the Merger Agreement is terminated in certain circumstances.

 

   

the fact that the Voting Agreement only terminates upon a termination of the Merger Agreement and not upon an adverse change of the Matterport Board’s recommendation in favor of the adoption of the Merger Agreement and the Mergers.

 

   

the tax treatment of any gains arising from the receipt of the merger consideration, which would generally be taxable to Matterport’s stockholders for U.S. federal income tax purposes.

 

   

the fact that if the Mergers are completed, Matterport will no longer be a standalone public company and Matterport’s stockholders will not participate in any potential future earnings or growth of Matterport and forgo any appreciation in its value as a standalone public company; and

 

   

the fact that the value of CoStar Group Common Stock will fluctuate depending on its performance prior to the Closing and that Matterport is not permitted to terminate the Merger Agreement solely because of the decline in the trading price of CoStar Group Common Stock.

In the judgment of the Matterport Board, however, the potential benefits of the Mergers discussed above outweighed these potential risks.

The foregoing discussion is not intended to be an exhaustive list of the information and considered by the Matterport Board in its consideration of the Mergers but includes the material positive factors and material negative factors considered by the Matterport Board in that regard. In view of the number and variety of factors, the amount of information considered and the complexity of these matters, Matterport Board did not find it useful and did not attempt to quantify, rank or assign any relative or specific weights to the various factors that it considered. Individual members of the Matterport Board may have given different weights to different factors. The Matterport Board considered all these factors as a whole, and overall considered the factors to be favorable to, and to support, its unanimous determination.

In considering the Matterport Board’s recommendation to adopt the Merger Agreement, Matterport’s stockholders should be aware that the executive officers and directors of Matterport have certain interests in the Mergers that may be different from, or in addition to, the interests of Matterport’s stockholders generally, as more fully described below under the section captioned section titled “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers.” The Matterport Board was aware of these interests and considered them when adopting the Merger Agreement and recommending that Matterport stockholders vote to adopt the Merger Agreement.

Opinion of Matterport’s Financial Advisor

Opinion of Qatalyst Partners

Matterport retained Qatalyst Partners to act as its financial advisor in connection with the Mergers and to evaluate whether the merger consideration to be received pursuant to, and in accordance with, the terms of the

 

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Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group) was fair, from a financial point of view, to such holders. Matterport selected Qatalyst Partners to act as Matterport’s financial advisor based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of the business and affairs of Matterport and the industry in which it operates. Qatalyst Partners has provided its written consent to the reproduction of its opinion in this proxy statement/prospectus. At the meeting of the Matterport Board on April 20, 2024, Qatalyst Partners rendered to the Matterport Board its oral opinion, which was confirmed by delivery of a written opinion dated April 21, 2024, to the effect that, as of such date and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group) was fair, from a financial point of view, to such holders.

The full text of Qatalyst Partners’ written opinion, dated April 21, 2024, is attached hereto as Annex B. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. Holders of shares of Matterport Common Stock should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the Matterport Board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group), to such holders, and it does not address any other aspect of the Mergers. It does not constitute a recommendation as to how any holder of shares of Matterport Common Stock should vote with respect to the Merger Proposal or any other matter and does not in any manner address the price at which Matterport Common Stock will trade or otherwise be transferable at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion.

In arriving at its opinion, Qatalyst Partners reviewed the Merger Agreement, certain related documents and certain publicly available financial statements of Matterport and CoStar Group and other business and financial information of Matterport and CoStar Group. Qatalyst Partners also reviewed certain forward-looking information relating to Matterport prepared by the management of Matterport, including financial projections and operating data of Matterport described in the section below entitled “The Mergers—Matterport Unaudited Prospective Financial Information.” Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of Matterport and CoStar Group with senior management of Matterport and CoStar Group, respectively. Qatalyst Partners also reviewed the historical market prices and trading activity for Matterport Common Stock and CoStar Group Common Stock and compared the financial performance of Matterport and CoStar Group and the prices and trading activity of Matterport Common Stock and CoStar Group Common Stock with that of certain other selected publicly traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as Qatalyst Partners deemed appropriate.

In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, Qatalyst Partners by Matterport and CoStar Group. With respect to the Management Projections, Qatalyst Partners was advised by the management of Matterport, and Qatalyst Partners assumed based on discussions with the management of Matterport and the Matterport Board, that the Management Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Matterport of the future financial performance of Matterport and other matters covered thereby. Qatalyst Partners expressed no view as to the Management Projections or the assumptions on which they were based. Qatalyst Partners assumed that the Mergers will be consummated in accordance with the terms set forth in the Merger Agreement, without any modification, waiver or delay and with no adjustment to the merger consideration. In addition, Qatalyst Partners assumed that in connection with the

 

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receipt of all the necessary approvals of the Mergers, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on Matterport, CoStar Group or the contemplated benefits expected to be derived in the Mergers. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Matterport or CoStar Group or their respective affiliates, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of the management of Matterport as to the existing and future technology and products of Matterport and the risks associated with such technology and products. In arriving at its opinion, Qatalyst Partners was not authorized to solicit, and did not solicit, interest from any party with respect to an acquisition, business combination or other extraordinary transaction involving Matterport. Qatalyst Partners’ opinion has been approved by its opinion committee in accordance with its customary practice.

Qatalyst Partners’ opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after the date of the opinion may affect Qatalyst Partners’ opinion and the assumptions used in preparing it, and Qatalyst Partners has not assumed any obligation to update, revise or reaffirm its opinion. Qatalyst Partners’ opinion does not address the underlying business decision of Matterport to engage in the Mergers, or the relative merits of the Mergers as compared to any strategic alternatives that may be available to Matterport. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group), and Qatalyst Partners expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of the officers, directors or employees of Matterport or CoStar Group or any of their respective affiliates, or any class of such persons, relative to such consideration.

The following is a brief summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated April 21, 2024. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized, among other things, the Management Projections, described in the section below entitled “The Mergers—Matterport Unaudited Prospective Financial Information” and third-party research analyst consensus estimates as of April 19, 2024 (the “Street Estimates”). Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.

Discounted Cash Flow Analysis

Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a range of potential per-share present values for Matterport Common Stock as of December 31, 2023 (which, at the time of such analysis, was the end of Matterport’s most recent publicly reported fiscal quarter and most recent publicly reported balance sheet) with respect to the Management Projections by:

 

   

adding:

 

  (a)

the implied net present value of the estimated future unlevered free cash flows (the “UFCF”) of Matterport, based on the Management Projections for the calendar year 2024 through calendar year 2032 (which implied present value was calculated using a range of discount rates of 14.5% to 21.5%, based on an estimated weighted average cost of capital for Matterport);

 

  (b)

the implied net present value of a corresponding terminal value of Matterport, calculated by multiplying Matterport’s estimated UFCF in fiscal year 2033 of approximately $309 million, based

 

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  on Management Projections, by a range of fully diluted enterprise value to next-twelve-months’ estimated UFCF multiples of 22.0x to 32.0x (which were chosen based on Qatalyst Partners’ professional judgment and experience), and discounted to present value using the same range of discount rates used in item (a) above; and

 

  (c)

the cash and cash equivalents of Matterport as of December 31, 2023, as based on Matterport financial statements filed with the SEC by Matterport on February 27, 2024.

 

   

dividing the resulting amount by the number of fully diluted shares of Matterport Common Stock outstanding (calculated using the treasury stock method, taking into account the Matterport Equity Awards as of April 17, 2024), as provided by management of Matterport, with each of the above-referenced estimated future UFCFs and terminal value having also been adjusted for the degree of estimated dilution to current stockholders through the applicable period (approximately 33% cumulative dilution through the applicable period) due to the estimated net effects of equity issuances and cancellations related to future equity compensation, based on estimates of future dilution provided by management of Matterport.

Based on the calculations set forth above, this analysis implied a range of values for Matterport Common Stock of approximately $4.13 to $8.01 per share.

Selected Companies Analysis

Qatalyst Partners reviewed and compared selected financial information and public market multiples for Matterport with publicly available financial information and public market multiples for selected companies. The companies used in this comparison were those companies listed below, which were selected by Qatalyst Partners in its professional judgment, based on factors including that they are publicly traded companies in similar lines of business to Matterport, have a similar business model, have similar financial performance or have other relevant or similar characteristics.

Based upon third-party research analyst consensus estimates as of April 19, 2024 and using the closing prices as of April 19, 2024 for shares of the selected companies, Qatalyst Partners calculated, among other things, the fully diluted enterprise value divided by (i) the estimated consensus revenue for calendar year 2024 (the “CY2024E revenue multiples”) and (ii) the estimated consensus revenue for calendar year 2025 (the “CY2025E revenue multiples”), for each of the selected companies, as shown below:

 

Selected Internet of Things

   CY2024E Revenue Multiple      CY2025E Revenue Multiple  

Cognex Corp.

     6.6x        5.8x  

Planet Labs PBC

     1.0x        1.0x  

Spire Global, Inc.

     2.3x        1.8x  

Trimble Inc.

     4.8x        4.6x  

 

Selected Real Estate

  CY2024E Revenue Multiple     CY2025E Revenue Multiple  

AppFolio, Inc.

    9.8x       8.1x  

CoStar Group Group, Inc.

    11.1x       9.5x  

Procore Technologies, Inc.

    9.1x       7.6x  

 

Selected 3D / Metaverse

   CY2024E Revenue Multiple      CY2025E Revenue Multiple  

Adobe Inc.

     9.9x        8.9x  

Autodesk, Inc.

     8.0x        7.2x  

Roblox Corp.

     5.4x        4.6x  

Unity Software Inc.

     6.1x        5.5x  

 

Selected SPAC Presentation
Companies

  CY2024E Revenue Multiple     CY2025E Revenue Multiple  

Appian Corp.

    4.3x       3.8x  

 

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Selected SPAC Presentation
Companies

  CY2024E Revenue Multiple     CY2025E Revenue Multiple  

DocuSign Inc.

    4.0x       3.8x  

Elastic N.V.

    7.2x       6.1x  

MongoDB, Inc.

    12.7x       10.5x  

Based on an analysis of the CY2024E revenue multiples for the selected companies and the application of its professional judgment, Qatalyst Partners selected a representative multiple range of 1.5x to 6.0x. Qatalyst Partners then applied this range to the Matterport’s revenue estimates for calendar year 2024, based on each of the Management Projections and the Street Estimates.

Based on an analysis of the CY2025E revenue multiples for the selected companies and the application of its professional judgment, Qatalyst Partners selected a representative multiple range of 1.5x to 5.5x. Qatalyst Partners then applied this range to the Matterport’s revenue estimates for calendar year 2025, based on each of the Management Projections and the Street Estimates.

Based on the fully diluted shares of Matterport Common Stock outstanding as of April 17, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis), this analysis implied a range of values for Matterport Common Stock as follows:

 

Public Trading Multiples

   Implied Value per
Share Range of
Matterport
Common Stock ($)
 

Enterprise Value / CY2024E Revenue Multiple

  

Management Projections

   $ 1.93-$4.20  

Street Estimates

   $ 1.87-$3.98  

Enterprise Value / CY2025E Revenue Multiple

  

Management Projections

   $ 2.12-$4.63  

Street Estimates

   $ 1.97-$4.09  

No company included in the selected companies analysis is identical to Matterport. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of Matterport, such as the impact of competition on Matterport’s business or the industry in general, industry growth and the absence of any material adverse change in Matterport’s financial condition and prospects or the industry or in the financial markets in general. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.

Selected Transactions Analysis

Qatalyst Partners compared 74 selected public company transactions, including transactions involving companies participating in similar lines of business to Matterport or with similar business models, similar financial performance or other relevant or similar characteristics.

 

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For each of the selected transactions listed below, Qatalyst Partners reviewed, among other things, (a) the implied fully diluted enterprise value of the target company as a multiple of the actual revenue from the last completed twelve-months of such target company (the “LTM Revenue Multiples”) and (b) the implied fully diluted enterprise value of the target company as a multiple of third-party research analyst consensus estimates of the next-twelve-months’ revenue of such target company (the “NTM Revenue Multiples”).

 

Announcement Date

  

Target

 

Acquiror

   LTM
Revenue
Multiples
    NTM
Revenue
Multiples
 

04/08/24

   Model N, Inc.   Vista Equity Partners      5.0x       4.8x  

03/01/24

   Everbridge, Inc.   Thoma Bravo, L.P.      4.0x       3.9x  

02/15/24

   Altium Ltd.   Renesas Electronics Corporation      20.4x       16.4x  

01/16/24

   Ansys, Inc.   Synopsys, Inc.      16.1x       14.5x  

12/18/23

   Alteryx, Inc.   Clearlake Capital Group, L.P. and Insight Partners      4.7x       4.2x  

10/23/23

   EngageSmart, Inc.   Vista Enquiry Partners      10.6x       8.8x  

09/21/23

   Splunk Inc.   Cisco Systems, Inc.      7.7x       7.1x  

08/09/23

   Avid Technology, Inc.   Symphony Technology Group      3.3x       3.0x  

07/31/23

   New Relic, Inc.   Francisco Partners Management LLC and TPG      6.4x       5.8x  

05/04/23

   Software AG   Silver Lake Partners LP      2.8x       2.6x  

03/14/23

   Cvent, Corp.   Blackstone Inc.      7.6x       6.5x  

03/13/23

   Qualtrics International Inc.   Canada Pension Plan Investment Board and Silver Lake Partners LP      8.0x       7.1x  

03/13/23

   Momentive Global Inc.   STG Partners LLC      3.1x       3.0x  

02/09/23

   Sumo Logic, Inc.   Francisco Partners Management LLC      4.9x       4.2x  

01/09/23

   Duck Creek Technologies, Inc.   Vista Equity Partners      7.7x       7.0x  

12/12/22

   Coupa Software Incorporated   Thoma Bravo, L.P.      9.8x       8.4x  

10/27/22

   UserTesting, Inc.   Thoma Bravo, L.P.      6.2x       5.3x  

10/11/22

   ForgeRock, Inc.   Thoma Bravo, L.P.      10.5x       8.4x  

09/28/22

   BTRS Holdings Inc. (Billtrust)   EQT      9.7x       7.9x  

08/08/22

   Avalara, Inc.   Vista Equity Partners      10.7x       8.8x  

08/03/22

   Ping Identity Holding Corp.   Thoma Bravo, L.P.      8.9x       8.0x  

06/24/22

   Zendesk, Inc.   Hellman & Friedman LLC and Permira      6.8x       5.4x  

06/06/22

   Anaplan, Inc.   Thoma Bravo, L.P.      16.0x       12.8x  

04/11/22

   Datto Holding Corp.   Kaseya and Insight Partners      9.7x       8.3x  

04/11/22

   SailPoint Technologies Holdings, Inc.   Thoma Bravo L.P.      15.7x       13.3x  

04/07/22

   CDK Global, Inc.   Brookfield Business Partners L.P.      4.7x       4.5x  

01/31/22

   Citrix Systems, Inc.   Evergreen Coast and Vista Equity Partners      5.2x       5.1x  

12/07/21

   Mimecast Limited   Permira      10.0x       8.8x  

 

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12/01/21

   Blue Prism Group plc   SS&C Technologies Holdings, Inc.      7.2x       5.8x  

08/19/21

   Inovalon Holding, Inc.   Nordic Capital      10.0x       8.8x  

08/05/21

   Cornerstone OnDemand, Inc.   Clearlake Capital Group, L.P.      6.3x       5.9x  

07/26/21

   Medallia, Inc.   Thoma Bravo, L.P.      13.0x       10.8x  

06/28/21

   QAD Inc.   Thoma Bravo, L.P.      5.8x       5.3x  

06/01/21

   Cloudera, Inc.   Clayton, Dubilier & Rice, LLC, KKR & Co. L.P.      5.5x       5.2x  

04/26/21

   Proofpoint, Inc.   Thoma Bravo, L.P.      10.8x       9.4x  

03/10/21

   Talend S.A.   Thoma Bravo, L.P.      8.5x       7.4x  

03/08/21

   Pluralsight, Inc.   Vista Equity Partners      9.8x       8.4x  

12/21/20

   RealPage, Inc.   Thoma Bravo, L.P.      9.1x       8.2x  

12/01/20

   Slack Technologies, Inc.   Salesforce.com, Inc.      37.4x       29.0x  

11/02/20

   Endurance International Group Holdings, Inc.   Clearlake Capital Group, L.P.      2.7x       2.6x  

07/15/20

   Forescout Technologies, Inc.   Advent International Corporation      4.8x       4.5x  

12/17/19

   LogMeIn, Inc.   Francisco Partners Management LLC      3.5x       3.4x  

12/04/19

   Instructure, Inc.   Thoma Bravo, LLC      7.7x       6.5x  

11/11/19

   Carbonite, Inc.   Open Text Corporation      2.8x       2.7x  

10/22/19

   Cision Ltd.   Platinum Equity, LLC      3.8x       3.5x  

10/14/19

   Sophos Ltd.   Thoma Bravo, LLC      5.5x       5.0x  

08/22/19

   Pivotal Software, Inc.   VMWare LLC      3.9x       3.4x  

08/22/19

   Carbon Black, Inc.   VMWare LLC      9.2x       8.0x  

06/12/19

   Medidata Solutions, Inc.   Dassault Systèmes SA      8.8x       7.5x  

06/10/19

   Tableau Software, Inc.   Salesforce.com, Inc.      13.2x       10.9x  

02/12/19

   Ellie Mae, Inc.   Thoma Bravo, LLC      7.0x       6.8x  

02/04/19

   The Ultimate Software Group, Inc.   Investor Group (Hellman & Friedman)      10.0x       8.4x  

12/24/18

   MINDBODY, Inc.   Vista Equity Partners      7.8x       6.7x  

12/23/18

   MYOB Group Ltd.   KKR & Co      5.4x       4.9x  

11/11/18

   athenahealth, Inc.   Veritas Capital & Elliott Management      4.3x       3.9x  

11/11/18

   Apptio, Inc.   Vista Equity Partners      8.1x       7.0x  

10/28/18

   Red Hat, Inc.   International Business Machines Corporation      10.8x       9.3x  

10/15/18

   SendGrid, Inc.   Twilio Inc.      14.3x       11.5x  

10/10/18

   Imperva, Inc.   Thoma Bravo, LLC      5.4x       5.1x  

10/03/18

   Hortonworks, Inc.   Cloudera, Inc.      6.4x       5.3x  

08/06/18

   Web.com Group, Inc.   Siris Capital Group, LLC      2.8x       2.8x  

03/06/18

   CommerceHub, Inc.   GTCR LLC and Sycamore Partners      9.4x       8.6x  

01/29/18

   Callidus Software Inc.   SAP AG      9.8x       8.3x  

12/17/17

   Aconex Ltd.   Oracle Corp.      9.4x       8.1x  

11/27/17

   Barracuda Networks, Inc.   Thoma Bravo, LLC      3.8x       3.6x  

10/23/17

   BroadSoft, Inc.   Cisco Systems, Inc.      5.3x       4.6x  

08/31/16

   Interactive Intelligence Group, Inc.   Genesys Telecommunications Laboratories, Inc. (Permira)      3.4x       3.2x  

08/01/16

   Fleetmatics Group PLC   Verizon      7.6x       6.3x  

06/13/16

   LinkedIn Corporation   Microsoft      8.1x       6.7x  

06/02/16

   Qlik Technologies Inc.   Thoma Bravo, L.P.      4.1x       3.6x  

 

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06/01/16

   Demandware, Inc.   Salseforce.com, Inc.      11.2x       8.9x  

05/31/16

   Marketo, Inc.   Vista Equity Partners      7.5x       5.9x  

05/18/16

   inContact, Inc.   NICE-Systems Ltd.      4.2x       3.6x  

04/18/16

   Cvent Holding Corp.   Vista Equity Partners Management LLC      8.0x       6.5x  

Based on the analysis of the LTM Revenue Multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 4.9x to 9.8x, then applied this range to Matterport’s last twelve-months’ revenue (calculated for the twelve-month period ending on December 31, 2023) based on Matterport financial statements filed with the SEC by Matterport on February 27, 2024. Based on the fully diluted shares of Matterport Common Stock outstanding as of April 17, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis), as provided by management of Matterport, this analysis implied a range of values for Matterport Common Stock of approximately $3.24 to $5.27 per share.

Based on the analysis of the NTM Revenue Multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 4.6x to 8.4x, then applied this range to Matterport’s estimated next-twelve-months’ revenues (calculated for the twelve-month period ending on December 31, 2024) based on Street Estimates. Based on the fully diluted shares of Matterport Common Stock outstanding as of April 17, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis), as provided by management of Matterport, this analysis implied a range of values for Matterport Common Stock of approximately $3.31 to $5.10 per share.

No company or transaction utilized in the selected transactions analysis is identical to Matterport or the Mergers. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond Matterport’s control, such as the impact of competition on Matterport’s business or the industry generally, industry growth and the absence of any material adverse change in Matterport’s financial condition and prospects or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected transactional data. Because of the unique circumstances of each of these transactions and the Mergers, Qatalyst Partners cautioned against placing undue reliance on this information.

Miscellaneous

In connection with the review of the Mergers by the Matterport Board, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of Matterport. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Matterport. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

 

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Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group), to such holders. These analyses do not purport to be appraisals or to reflect the price at which Matterport Common Stock might actually trade or otherwise be transferable at any time.

Qatalyst Partners’ opinion and its presentation to the Matterport Board was one of many factors considered by the Matterport Board in deciding to approve the Merger Agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Matterport Board with respect to the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Matterport Common Stock (other than CoStar Group or any affiliate of CoStar Group) or of whether the Matterport Board would have been willing to agree to different consideration. The merger consideration payable in the Mergers was determined through arm’s-length negotiations between Matterport and CoStar Group and was approved by the Matterport Board. Qatalyst Partners provided advice to Matterport during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to Matterport or that any specific consideration constituted the only appropriate consideration for the Mergers.

Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions and may trade or otherwise effect transactions in debt or equity securities or loans of Matterport, CoStar Group or certain of their respective affiliates. During the two-year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and Matterport or CoStar Group pursuant to which compensation was received by Qatalyst Partners or its affiliates. Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to Matterport or CoStar Group or their respective affiliates for which Qatalyst Partners would expect to receive compensation.

Under the terms of its engagement letter, Qatalyst Partners provided Matterport with financial advisory services in connection with the Mergers for which it will be paid an aggregate amount currently estimated at approximately $36 million, $250,000 of which was payable upon the execution of the engagement letter, $4 million of which was payable upon delivery of its opinion (regardless of the conclusion reached in the opinion), and the remaining portion of which will be paid upon, and subject to, the completion of the Mergers. Matterport has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. Matterport has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under the federal securities laws, and certain expenses related to or arising out of Qatalyst Partners’ engagement.

Matterport Unaudited Prospective Financial Information

Matterport does not as a matter of course make public forecasts or projections as to future revenues, operating income or other results. However, Matterport’s management regularly prepares and reviews with the Matterport Board its strategic and operating plans. In connection with Matterport’s strategic planning and budgeting process, Matterport’s management reviewed with the Matterport Board the Management Projections, consisting of certain unaudited prospective financial information of Matterport for the fiscal years 2024 through 2033, as prepared and used as described below. Matterport prepared the Management Projections and provided them to Qatalyst Partners and instructed Qatalyst Partners to use the Management Projections in connection with Qatalyst Partners’ evaluations of the Mergers and rendering of the fairness opinion in connection with the Mergers (as described in more detail in the section entitled “The Mergers—Opinion of Qatalyst Partners”).

The Management Projections were provided on a confidential basis to CoStar Group’s management and financial advisors in the due diligence process. The inclusion of the Management Projections in this proxy statement/prospectus should not be regarded as an indication that any of CoStar Group, Matterport or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results or

 

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material information, and, in fact, Matterport views the Management Projections as non-material because of the inherent risks and uncertainties associated with such forecasts. The Projections included in this proxy statement/prospectus are presented solely to give Matterport stockholders access to the information that was provided to Matterport’s financial advisor and made available to CoStar Group and CoStar Group’s financial advisors. The Management Projections included in this document have been prepared by, and are the responsibility of, Matterport, Inc.’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Management Projections and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this document relates to Matterport, Inc.’s previously issued financial statements. It does not extend to the Management Projections and should not be read to do so.

The Management Projections were developed through Matterport’s customary strategic planning and budgeting process utilizing reasonable available estimates and judgments at the time of their preparation. The Management Projections were developed on a stand-alone basis without giving effect to the Mergers, and therefore the Management Projections do not give effect to the transaction or any changes to Matterport’s operations or strategy that may be implemented after the consummation of the Mergers, including potential synergies that may be realized as a result of the transaction, or to any costs incurred in connection with the transaction. Furthermore, the Management Projections do not take into account the effect of any failure of the transaction to be completed and should not be viewed as relevant or continuing in that context.

Matterport does not intend to update or otherwise revise the Management Projections to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events or changes in general economic or industry conditions even in the event that any or all of the underlying assumptions may have changed.

The Management Projections are not included in this proxy statement/prospectus in order to induce any stockholder to vote in favor of the Merger Proposal or any of the other proposals to be voted on at the special meeting or to influence any stockholder to make any investment decision with respect to the Mergers or otherwise. For the reasons described above, readers of this proxy statement/prospectus are cautioned not to place undue, if any, reliance on the Management Projections. Matterport has not made any representation in the Merger Agreement concerning the Management Projections.

Subject to the following qualifications, the following is a summary of the Management Projections of Matterport:

 

(in millions)   2024E     2025E     2026E     2027E     2028E     2029E     2030E     2031E     2032E     2033E  

Revenue

  $ 190     $ 236     $ 295     $ 368     $ 454     $ 558     $ 688     $ 851     $ 1,057     $ 1,311  

Non-GAAP Gross Profit(1)

  $ 110     $ 141     $ 183     $ 233     $ 293     $ 371     $ 470     $ 597     $ 760     $ 963  

Non-GAAP Gross Profit Margin(2)

    58     60     62     63     65     66     68     70     72     73

Unlevered Free Cash Flow(3)

  ($ 33   ($ 8   $ 11     $ 39     $ 62     $ 101     $ 151     $ 164     $ 216     $ 309  

 

(1)

Matterport defines Non-GAAP Gross Profit as GAAP gross profit adjusted to exclude stock-based compensation expense and the employer payroll taxes related to stock-based compensation awards.

(2)

Matterport defines Non-GAAP Gross Profit Margin as Non-GAAP Gross Profit divided by GAAP revenue.

(3)

Matterport defines Unlevered Free Cash Flow as GAAP operating income adjusted to exclude stock-based compensation-related charges, amortization of acquired intangible assets, acquisition-related transaction costs, depreciation minus cash taxes, capitalized software expense, and investment in working capital.

The principal assumptions reflected in the Management Projections include:

 

   

Matterport continuing to drive a progressive business model transition by growing its subscription revenue faster than services and product revenue

 

   

Subscriber growth rates remaining at or ahead of the current pace, fueled by Matterport Property Intelligence and continued launching of new product offerings on the platform

 

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Expanding Gross Margin primarily attributable to the majority of revenue coming from subscription in the overall revenue mix and the impact from the certain lower margin hardware products being reduced

 

   

Generating positive operating cash flow in fiscal year 2024 and increasing free cash flow year-over-year thereafter, collectively related to subscription revenue expansion, gross profit margin improvements, and overall operational investments and expense normalization.

Important Information About the Matterport Forecasts

The Management Projections were not prepared with a view toward public disclosure or toward complying with GAAP, nor were they prepared with a view toward compliance with the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projections of prospective financial information. The non-GAAP financial measures used in the Management Projections were approved by Matterport for the use by its financial advisor in connection with its opinion and were relied upon by the Matterport Board in connection with its consideration of the Mergers and the transaction consideration. The SEC rules, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure, do not apply to non-GAAP financial measures provided to Qatalyst Partners or to the Matterport Board in connection with a proposed business combination like the Mergers if the disclosure is included in a document like this proxy statement/prospectus. In addition, reconciliations of non-GAAP financial measures to a GAAP financial measure were not relied upon by Qatalyst Partners for purposes of its opinion or by the Matterport Board in connection with its consideration of the Merger Agreement, the Mergers and the transaction consideration. Accordingly, Matterport has not provided a reconciliation of the financial measures included in the Management Projections to the relevant GAAP financial measures. In addition, the Management Projections were not prepared with a view towards complying with GAAP. The Management Projections may differ from published analyst estimates and forecasts and do not take into account any events or circumstances after the date they were prepared, including the announcement of the Mergers.

While the Management Projections are presented with numerical specificity, the Management Projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond Matterport management’s control. Further, given that the Management Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year beyond their preparation. Important factors that may affect actual results and may result in such projections not being achieved include: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, the inability to complete the Mergers, or the failure to satisfy other conditions to completion of the Mergers, including that a governmental entity may prohibit, delay or refuse to grant approval for the completion of the Mergers, and risks and uncertainties pertaining to our business, including the risks and uncertainties detailed in our public periodic filings with the SEC. In addition, the ability to achieve the Management Projections may depend on, in part, whether or not the strategic goals, objectives and targets are reached over the applicable period. The assumptions upon which the Management Projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which Matterport operates, and the risks and uncertainties described in the section “Risk Factors” and Item IA of Matterport’s Annual Report on Form 10-K for the year ended December 31, 2023, all of which are difficult or impossible to predict accurately and many of which are beyond Matterport’s control. The Management Projections also reflect assumptions by Matterport management that are subject to change and are susceptible to multiple interpretations and periodic revisions based on actual results, revised prospects for the Matterport business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated when such projections were prepared.

Interests of Matterport Directors and Executive Officers in the Mergers

In considering the recommendations of the Matterport Board with respect to the Mergers, Matterport stockholders should be aware that the directors and executive officers of Matterport have certain interests in the

 

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Mergers, including financial interests, which may be different from or in addition to those of Matterport stockholders generally. The Matterport Board was aware of these interests and considered them, among other matters, in approving the Merger Agreement. Please see “The Mergers—Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board.” These interests are summarized below. As used below, each reference to an executive officer of Matterport refers to an individual who has served as an executive officer of Matterport at any time since the beginning of Matterport’s previous fiscal year.

Executive Officers

For the purpose of this disclosure, Matterport’s current “named executive officers” (determined in accordance with SEC rules) are:

 

   

R.J. Pittman, Chief Executive Officer

 

   

James D. Fay, Chief Financial Officer

 

   

Jay Remley, Chief Revenue Officer

 

   

Japjit Tulsi, Chief Technology Officer

 

   

Matthew Zinn, Chief Legal Officer

Matterport’s current executive officers include the named executive officers identified above as well as Peter Presunka, Chief Accounting Officer. The current non-employee directors include Mike (Gus) Gustafson, Jason Krikorian, Peter Hebert and Susan Repo.

Continuing Employment with Matterport

It is currently expected that the executive officers of Matterport will continue their employment with Matterport following the Closing on substantially comparable terms and conditions as in existence immediately prior to the First Effective Time, until successors are duly elected or appointed and qualified.

Mergers-Related Compensation for Matterport’s Named Executive Officers

Matterport’s named executive officers (a) are Matterport stockholders and will receive merger consideration in such capacities as a result of the Mergers, (b) are holders of Matterport Options and Matterport RSUs and will receive equivalent replacement awards with respect to CoStar Group Common Stock in such capacities as a result of the Mergers as described herein, (c) may receive cash and other severance benefits, in each case in connection with certain terminations of employment that could occur prior to or after Closing as described below, and (d) may receive new equity awards following the Mergers granted under CoStar Group’s equity incentive plans.

This section sets forth information required by Item 402(t) of Regulation S-K regarding the compensation for each of Matterport’s named executive officers that is based on or otherwise related to the Mergers and that will or may become payable to the named executive officer at the completion of the Mergers or on a qualifying termination of employment upon or following the consummation of the Mergers. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules.

The following table assumes:

 

   

the Closing occurs on May 14, 2024 (which is the assumed date solely for purposes of this golden parachute compensation disclosure);

 

   

the number of unvested Matterport Equity Awards held by the named executive officers is as of May 14, 2024;

 

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the employment of each named executive officer will terminate immediately following the Closing without cause or due to resignation for good reason, entitling the named executive officer to the benefits provided under the Executive Severance Plan;

 

   

the value of a share of Matterport Common Stock is (for purposes of this table) based on the average market closing price over the first five business days following the first public announcement of the transaction; and

 

   

each named executive officer’s base salary rate and annual target bonus remain unchanged from that in effect as of the date of this filing:

GOLDEN PARACHUTE COMPENSATION

 

Name

   Cash ($)     Equity ($)(3)      Perquisites/
Benefits ($)
    Total ($)(6)  

R.J. Pittman

   $ 1,368,650 (1)    $ 24,032,242      $ 57,425 (4)    $ 25,458,317  

James D. Fay

   $ 727,178 (2)    $ 9,611,611      $ 39,717 (5)    $ 10,378,507  

Jay Remley

   $ 742,400 (2)    $ 7,358,857      $ 38,283 (5)    $ 8,139,541  

Japjit Tulsi

   $ 553,725 (2)    $ 5,795,177      $ 29,421 (5)    $ 6,378,323  

Matthew Zinn

   $ 627,188 (2)    $ 8,778,391      $ 38,283 (5)    $ 9,443,862  

 

(1)

For Matterport’s CEO, represents the value of (i) 18 months of the executive’s base salary, (ii) any earned but unpaid cash performance bonus for any applicable performance period ending immediately prior to the performance period ongoing during which the date of termination occurs, and (iii) an amount equal to 150% of the participant’s target annualized cash bonus opportunity for the year in which the termination date occurs.

(2)

For all other named executive officers, represents the value of (i) 12 months of the executive’s base salary, (ii) any earned but unpaid cash performance bonus for any applicable performance period ending immediately prior to the performance period ongoing during which the date of termination occurs, (iii) an amount equal to 100% of the participant’s target annualized cash bonus opportunity for the year in which the termination date occurs.

(3)

Represents the value of unvested equity awards accelerated at the time of a change in control held by the participant following the event of a CIC Termination (as defined below).

(4)

For Matterport’s CEO, represents the value of payment of COBRA premiums, or, if eligible, participant contributions under our group health plans, for the participant and eligible dependents for 18 months following the date of termination.

(5)

For all other named executive officers, represents the value of payment of COBRA premiums, or, if eligible, participant contributions under our group health plans, for the participant and eligible dependents for 12 months following the date of termination.

Treatment of Matterport Equity Awards held by Executive Officers

At the First Effective Time, each Matterport Option (whether or not vested) that is outstanding immediately prior to the First Effective Time, other than each Matterport Option that is held by an individual who, as of immediately prior to the Closing, is no longer an employee or other service provider to Matterport or any Matterport subsidiary will automatically and without any required action on the part of CoStar Group, Matterport or the holder thereof, be converted into an option to acquire CoStar Group Common Stock with respect to that number of shares of CoStar Group Common Stock that is equal to the product of (i) the number of shares of Matterport Common Stock subject to such Matterport Option as of immediately prior to the First Effective Time, multiplied by (ii) the Equity Award Conversion Factor, rounded down to the nearest whole number of shares of CoStar Group Common Stock, at an exercise price per share of CoStar Group Common Stock equal to the quotient obtained by dividing (x) the per share exercise price of Matterport Option by (y) the Equity Award Conversion Factor, rounded up to the nearest whole cent, provided, however, that the exercise price and the

 

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number of shares of CoStar Group Common Stock covered by such Matterport Option will be determined in a manner that is intended to be consistent with the requirements of Sections 424(a) and 409A of the Code.

At the First Effective Time, each Matterport RSU that is outstanding immediately prior to the First Effective Time, other than the Matterport RSUs that becomes fully vested as a result of the Closing, will automatically and without any required action on the part of CoStar Group, Matterport or the holder thereof, be converted into an award of restricted stock units covering a number of shares CoStar Group Common Stock that is equal to the product of (i) the number of shares of Matterport Common Stock subject to such Matterport RSU award as of immediately prior to the First Effective Time, multiplied by (ii) the Equity Award Conversion Factor, rounded down to the nearest whole number of shares of CoStar Group Common Stock.

These equity awards also may be subject to accelerated vesting in the event of the named executive officer’s termination of employment in certain circumstances, as described under “Severance Benefits” below.

The following table summarizes the outstanding Matterport Equity Awards held by Matterport’s executive officers as of May 14, 2024 and the estimated aggregate value of such Matterport Equity Awards, with such numbers and amounts calculated based on the average closing market price of Matterport Common Stock over the five business day period commencing on May 13, 2024.

 

Name

   Number of
Matterport
Options (#)
     Estimated
Value of
Matterport
Options ($)
     Number of
Matterport
RSUs (#)
     Estimated
Value of
Matterport
RSUs ($)
 

R.J. Pittman

     12,998,935      $ 49,390,753        5,855,347      $ 26,114,848  

James D. Fay

     1,210,695      $ 4,592,783        2,332,661      $ 10,403,668  

Jay Remley

     1,996,983      $ 7,587,737        1,780,506      $ 7,491,057  

Japjit Tulsi

     2,883,496      $ 10,956,131        1,408,149      $ 6,280,345  

Matthew Zinn

     —         —         2,081,065      $ 9,281,550  

Peter Presunka

     —         —         458,251      $ 2,043,799  

The treatment of Matterport’s equity compensation awards in connection with the Mergers is further described in the section titled “The Merger Agreement—Treatment of Outstanding Matterport Equity Awards in the Mergers.

Severance Benefits

All of Matterport’s named executive officers are participants in the Executive Severance Plan. The Executive Severance Plan superseded any existing change in control and severance benefits previously provided to the participants prior to the adoption of the Executive Severance Plan. In connection with the Mergers, certain Matterport executive officers entered into a Severance Plan Waiver Agreement, dated as of April 21, 2024 (the “Good Reason Waiver”), modifying the terms of their participation in the Executive Severance Plan.

The Executive Severance Plan, as modified by the Good Reason Waiver, provides for the payment of severance and other benefits to participants if a termination of employment with the Matterport without cause or for good reason (each as defined in the Executive Severance Plan and modified, as applicable, by the Good Reason Waiver) occurs during the period beginning three months prior to (and including) the date on which a change in control (as defined in the Executive Severance Plan) occurs and ending on (and including) the two-year anniversary of the consummation of the change in control (a “CIC Termination”). The Mergers will constitute a change in control for purposes of the Executive Severance Plan. If a CIC Termination occurs, then subject to the applicable participant’s execution of a general release of claims in favor of us, the following payments and benefits will be paid or provided to the participants:

 

   

a lump sum cash payment equal to 18 months of base salary for Matterport’s CEO and one year of base salary for Matterport’s other executive officers.

 

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a cash payment of any earned but unpaid cash performance bonus for any applicable performance period ending immediately prior to the performance period during which the date of termination occurs.

 

   

a lump sum cash payment equal to 100% of the participant’s target annualized cash bonus opportunity, with such amount to be 150% of the target annualized cash bonus for Matterport’s CEO for the year in which the date of termination occurs.

 

   

accelerated vesting of each unvested equity award held by the participant; and

 

   

provision of COBRA benefits under our group health plans at the same cost as applies to similarly situated active employees for 18 months, in the case of Matterport’s Chief Executive Officer, or 12 months, in the case of Matterport’s other executive officers, following the date of termination, or until the participant becomes covered by a group health plan of a subsequent employer.

If a Matterport executive officer experiences a CIC Termination during the three-month period preceding the consummation of the Mergers, then upon such termination the participant will receive a reduced amount of severance and benefits (as would normally be provided under the Severance Plan for non-CIC Terminations), and upon consummation of the Mergers, the remaining severance payments and benefits due would be provided or paid at such time.

280G Mitigation Actions

The Executive Severance Plan provides for a “best pay cap” approach, such that if the payment or benefit received by the executive officer would be subject to the excise tax provisions of Section 280G of the Code, then the payments under such plan would be reduced to an amount below the threshold at which such penalty tax provisions apply if such a reduction (and the avoidance of such penalty taxes) would be more favorable to the executive on an after-tax basis. While Matterport may be permitted to take certain actions to reduce the amount of any potential “excess parachute payments” for “disqualified individuals” (each as defined in Section 280G of the Code), no specific actions have yet been approved by the Matterport Board or compensation committee to mitigate the anticipated impact of Section 280G of the Code on Matterport and any disqualified individuals. Executive officers are not entitled to receive gross-ups or tax reimbursements from Matterport with respect to any potential excise taxes.

Mergers-Related Consideration for Matterport’s Non-Employee Directors

The non-employee directors of Matterport (a) are stockholders of Matterport and will receive merger consideration in such capacities as a result of the Mergers, and (b) are holders of Matterport RSUs, all of which are subject to accelerated vesting in the event of a change in control under the terms of the Matterport Non-Employee Director Compensation Program (the “Accelerated RSUs”), and will receive the benefit of the accelerated vesting of such Accelerated RSUs and merger consideration per share of Matterport Common Stock subject to each such Accelerated RSU in such capacities as a result of the Mergers.

The following table summarizes the outstanding Matterport Equity Awards held by Matterport’s non-employee directors as of May 14, 2024 and the estimated aggregate value of such Matterport Equity Awards, with such numbers and amounts calculated based on the average closing market price of Matterport Common Stock over the five business day period commencing on May 13, 2024.

 

Name

   Number of
Matterport
Options (#)
     Estimated
Value of
Matterport
Options ($)
     Number of
Matterport
RSUs (#)
     Estimated
Value of
Matterport
RSUs ($)
 

Mike (Gus) Gustafson

     475,645      $ 1,956,233        60,763      $ 271,003  

Jason Krikorian

     —         —         60,763      $ 271,003  

Peter Hebert

     —         —         60,763      $ 271,003  

Susan Repo

     —         —         112,963      $ 503,815  

 

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In the event that the First Effective Time occurs on or after the date of the 2024 annual meeting of Matterport stockholders (the “2024 Annual Meeting”), each director who is serving on the Matterport Board as of the date of the 2024 Annual Meeting and who will continue to serve on the Matterport Board immediately following the 2024 Annual Meeting shall be automatically granted an equity award in the form of RSUs, as set forth in the Matterport Non-Employee Director Compensation Program. Any additional RSUs granted as of the 2024 Annual Meeting that remain unvested as of the First Effective Time will become vested in full upon a change in control, which includes the consummation of the Mergers.

Indemnification; Directors and Officers Insurance

Pursuant to the terms of the Merger Agreement, Matterport’s directors and executive officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies following the Mergers for matters based on or arise out of the fact that such person is or was a director or officer of Matterport or its subsidiaries at or prior to the First Effective Time. Such indemnification and insurance coverage is further described in the section titled “The Merger Agreement—Indemnification and Insurance.

Accounting Treatment

The Mergers will be accounted for as a “business combination,” as that term is used under GAAP, for accounting and financial reporting purposes. Under acquisition accounting, the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of Matterport as of the First Effective Time will be recorded at their respective fair values and added to those of CoStar Group. Any excess of purchase price over the fair values is recorded as goodwill. Costs related to the Mergers are expensed as incurred.

Regulatory Approvals

Completion of the Mergers is conditioned upon the receipt of certain governmental clearances or approvals as summarized below. The process for obtaining the requisite regulatory clearances or approvals for the Mergers is ongoing. Although CoStar Group and Matterport currently believe that they should be able to obtain all required regulatory clearances and approvals in a timely manner, the parties cannot be certain when or if they will obtain them or, if obtained, whether the clearances and approvals will contain terms, conditions or restrictions not currently contemplated that will be detrimental to the combined company after the completion of the Mergers.

Such regulatory clearances or approvals do not mean that the applicable regulatory authority has determined that the consideration to be received by holders of Matterport Common Stock and/or the Mergers are fair to CoStar Group stockholders or Matterport stockholders. Regulatory clearance or approval does not constitute an endorsement or recommendation of the Mergers by any regulatory authority.

U.S. Antitrust Filing

Under the HSR Act, certain transactions, including the Mergers, may not be completed unless certain waiting period requirements have expired or been terminated early. The HSR Act provides that each party must file its respective HSR notification with the FTC and the Antitrust Division of the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-day waiting period following the parties’ filings of their respective HSR notifications or the early termination of that waiting period. In the event the parties receive a request for additional information and documentary material (a “Second Request”) from the FTC or the DOJ, the waiting period is suspended, and the transaction may not be completed until the expiration or termination of a 30-day waiting period following the parties’ substantial compliance with the Second Request.

The parties’ HSR notifications were filed with the FTC and the DOJ on May 3, 2024. Following discussions with the FTC, CoStar Group voluntarily withdrew its initial HSR Act notification and refiled a new HSR Act notification. The withdrawal and refiling are standard procedural steps that provide the FTC with additional time to complete its review of the proposed Mergers. The waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern Time, on July 3, 2024.

 

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At any time before or after the expiration or termination of any applicable waiting period or any extension thereof, under the HSR Act, or before or after the Mergers are completed, the DOJ or the FTC may take action under the antitrust laws in opposition to the Mergers, including seeking to enjoin completion of the Mergers, to rescind the Mergers or to conditionally permit completion of the Mergers subject to regulatory concessions or conditions. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the Mergers or only permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances.

Although neither CoStar Group nor Matterport believes that the Mergers will violate the antitrust laws, there can be no assurance that a challenge to the Mergers on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

Foreign Antitrust and Other Regulatory Filings

Consummation of the Mergers is further subject to notification and approval under the U.K.’s National Security and Investment Act 2021 (“NSIA”).

CoStar Group submitted a filing under the NSIA on May 7, 2024 and CoStar Group also submitted a briefing paper to the UK Competition and Markets Authority on June 5, 2024.

SEC Effectiveness of Registration Statement

In connection with the shares to be issued in the Mergers, CoStar Group has filed a registration statement with the SEC under the Securities Act, of which this proxy statement/prospectus is a part. The completion of the Mergers is conditioned on the registration statement being declared effective by the SEC and the absence of any stop order suspending the effectiveness of the registration statement or proceedings for such purpose having been initiated or threatened in writing by the SEC.

Efforts to Obtain Regulatory Approvals

In the Merger Agreement, CoStar Group and Matterport have agreed to use their reasonable best efforts, subject to certain limitations, to consummate and make effective the transactions contemplated by the Merger Agreement, including obtaining all necessary actions or non-actions, consents and approvals from governmental authorities, making all necessary registrations and filings (including filings with governmental authorities), and taking all reasonable steps as may be necessary to obtain an approval from, or to avoid any action by, any governmental authority necessary in connection with the consummation of the transactions contemplated by the Merger Agreement, including the Mergers. If any action is brought challenging any of the transactions contemplated by the Merger Agreement as violative of any antitrust laws or foreign investment laws, CoStar Group and Matterport have agreed to use reasonable best efforts to contest and defend (including through appeal)

such action, in order to avoid the entry of, or seek to have vacated, reversed or terminated, any order (whether temporary, preliminary or permanent) that would restrain, enjoin, prohibit or delay the consummation of the transactions contemplated by the Merger Agreement.

Neither CoStar Group nor Matterport may knowingly take any action that is intended to materially delay, impede or prevent the consummation of the Mergers and the other transactions contemplated by the Merger Agreement without the other party’s prior written consent. Furthermore, CoStar Group and its affiliates are not required to, and, without the prior written consent of CoStar Group, Matterport, its subsidiaries and their respective affiliates will not: (i) sell, divest, license or otherwise dispose of any assets, or hold separate and agree to sell, divest, license or otherwise dispose of, any assets of Matterport, CoStar Group, Merger Subs or their respective affiliates, (ii) terminate, amend or assign existing relationships and contractual rights and obligations, (iii) require CoStar Group, Merger Subs, Matterport or any of their respective affiliates to grant any right or commercial or other accommodation to, or enter into any material commercial contractual or other commercial

 

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relationship with, any third party, (iv) impose limitations with respect to how they own, retain, conduct or operate all or any portion of their respective businesses or assets, or (v) otherwise offer, propose, negotiate, agree to, commit to or effect any other remedy, condition or undertaking of any kind. CoStar Group has also agreed that, from the date of the Merger Agreement through the earlier of the Closing Date or the termination of the Merger Agreement, CoStar Group will not, and will cause its subsidiaries not to, directly or indirectly acquire or agree to acquire any business, enterprise, operation, activity or service that involves, researches, develops, manufactures, operates, markets, supplies, licenses, sells or provides, in each case, directly or indirectly, spatial data, 3D capture products, 3D cameras or camera accessories, 3D photography, drone imaging capture or virtual tours, including but not limited to related technology or data platforms, software subscriptions, data licensing, applications, services or product hardware.

No Assurances of Obtaining Approvals

There can be no assurances that any of the regulatory approvals described above will be obtained and, if obtained, there can be no assurance as to the timing of such approvals, the ability to obtain such approvals on satisfactory terms or the absence of any litigation challenging such approvals.

Timing

CoStar Group and Matterport each have a right to terminate the Merger Agreement if the Mergers are not consummated on or before the Termination Date, which Termination Date will be automatically extended for up to three periods of 90 days each if, at the time of each such extension, all closing conditions other than with respect to receipt of clearance and approvals under certain specified antitrust or foreign investment laws have been satisfied or waived; provided that the terminating party’s breach of its obligations under the Merger Agreement may not have been a principal cause of or have resulted in the failure of the First Effective Time to occur on or before the Termination Date. For more information, see “The Merger Agreement—Termination of the Merger Agreement.

Exchange of Shares in the Mergers

Prior to the First Effective Time, upon the terms and subject to the conditions of the Merger Agreement, CoStar Group will appoint the exchange agent to handle the exchange of Matterport Certificates or book-entry securities formerly representing Matterport Common Stock for the merger consideration. After the First Merger is completed, upon the terms and subject to the conditions of the Merger Agreement, if a stockholder held Matterport Certificates immediately prior to the First Effective Time, the exchange agent will send them a letter of transmittal and instructions for exchanging their Matterport Certificates for the merger consideration. Upon surrender of the Matterport Certificates for cancellation along with the executed letter of transmittal and other required documents described in the instructions, a holder of one share of Matterport Common Stock will receive (i) $2.75 in cash, without interest, (ii) the number of shares of CoStar Group Common Stock determined by application of the Exchange Ratio, together with cash in lieu of any fractional shares of CoStar Group Common Stock.

Holders of shares of Matterport Common Stock in book-entry form immediately prior to the First Effective Time will not need to take any action to receive the merger consideration.

If you are a CoStar Group stockholder, you are not required to take any action with respect to your CoStar Group stock certificates. Such certificates will continue to represent shares of CoStar Group Common Stock after the Mergers.

Listing of CoStar Group Common Stock in the Mergers

It is a condition to the completion of the Mergers that the CoStar Group Common Stock issuable in the First Merger and such other CoStar Group Common Stock to be reserved for issuance in connection with the First Merger be approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance.

 

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CoStar Group will use its reasonable best efforts to cause the shares of CoStar Group Common Stock to be issued in connection with the First Merger to be approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance.

De-Listing and Deregistration of Matterport Common Stock

If the First Merger is completed, Matterport Common Stock currently listed on the Nasdaq Global Market will be delisted from the Nasdaq Global Market and will be de-registered under the Exchange Act.

 

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THE MERGER AGREEMENT

The following section summarizes material provisions of the Merger Agreement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. This summary is subject to, and qualified in its entirety by reference to, the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus and is incorporated by reference into this proxy statement/prospectus. The rights and obligations of the parties are governed by the express terms and conditions of the Merger Agreement and not by this summary or any other information contained in this proxy statement/prospectus. You are urged to read the Merger Agreement carefully and in its entirety before making any decisions regarding the Merger Agreement and the Merger contemplated thereby.

The Merger Agreement and the following summary have been included to provide you with information regarding the terms and conditions of the Merger Agreement and the transactions contemplated thereby. They are not intended to provide any other factual information about CoStar Group, Merger Sub I, Merger Sub II or Matterport or any of their respective subsidiaries or affiliates. That information can be found elsewhere in this proxy statement/prospectus and in the other public documents that CoStar Group and Matterport file with the SEC. The provisions of the Merger Agreement and the description of such provisions in this proxy statement/prospectus should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings that each of CoStar Group and Matterport files with the SEC and the other information in this proxy statement/prospectus. See the section titled “Where You Can Find More Information.”

The representations, warranties and covenants contained in the Merger Agreement (and summarized below) were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by disclosures not reflected in the Merger Agreement, were made for the purpose of allocating contractual risk between the parties to the Merger Agreement instead of establishing matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to you and other investors and reports and documents filed with the SEC. You are not third party beneficiaries under the Merger Agreement, and you should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of CoStar Group, Merger Sub I, Merger Sub II or Matterport or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in CoStar Group’s or Matterport’s public disclosures.

Form of the Mergers

On the terms and subject to the conditions set forth in the Merger Agreement, at the First Effective Time, (i) Merger Sub I will merge with and into Matterport, with Matterport surviving the First Merger as a wholly owned subsidiary of CoStar Group and the Surviving Corporation, and (ii) in the event that the Threshold Percentage is at least 40%, immediately following the First Merger and as part of a single integrated transaction, the Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of CoStar Group and the Surviving Company. As a result of the Mergers, Matterport will cease to be an independent, publicly traded company.

Closing; Effective Times of the Mergers

Unless the parties otherwise agree, upon the terms and subject to the conditions of the Merger Agreement, Closing will take place at 9:00 am (New York City time) on a date to be specified by Matterport and CoStar Group, but not later than the 3rd business day after the satisfaction or, to the extent not prohibited by law, waiver of all of the conditions set forth in the Merger Agreement (other than those conditions that, by their terms, are to be satisfied at the Closing, but subject to the satisfaction or, to the extent not prohibited by law, waiver of such conditions). See the section titled “The Merger Agreement—Conditions to Completion of the Mergers.”

 

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The First Merger will become effective at the First Effective Time, when the certificate of merger with respect to the First Merger (“First Certificate of Merger”) has been accepted for filing by the Secretary of State of the State of Delaware, or such later time as may be agreed to by CoStar Group, Merger Sub I and Matterport and set forth in the First Certificate of Merger. In the event that the Threshold Percentage is at least 40%, immediately following the First Effective Time, a certificate of merger with respect to the Second Merger (“Second Certificate of Merger”) will be filed with the Secretary of State of the State of Delaware. The Second Merger will become effective at the Second Effective time, when the Second Certificate of Merger has been accepted for filing by the Secretary of State of the State of Delaware, or such later time as may be agreed to by CoStar Group, Merger Sub II and the Surviving Corporation. If (and only if) the Threshold Percentage is less than 40%, CoStar Group will have the right, in its sole discretion, to abandon the Second Merger at any time prior to the Second Effective Time.

Merger Consideration

The Merger Agreement provides that at the First Effective Time, each share of Matterport Common Stock issued and outstanding immediately prior to the First Effective Time, other than (x) shares of Matterport Common Stock held by Matterport (including in treasury), CoStar Group or their respective subsidiaries and (y) shares of Matterport Common Stock that are held by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to the DGCL will automatically be cancelled and converted into the right to receive (i) $2.75 in cash, without interest, and (ii) the number of shares of CoStar Group Common Stock equal to the Exchange Ratio, together with cash in lieu of any fractional shares of CoStar Group Common Stock.

The “Exchange Ratio” means:

 

   

if the Average CoStar Group Share Price is greater than or equal to $94.62, then the Exchange Ratio will be 0.02906;

 

   

if the Average CoStar Group Share Price is less than or equal to $77.42, then the Exchange Ratio will be 0.03552; or

 

   

if the Average CoStar Group Share Price is greater than $77.42 and less than $94.62 per share, then the Exchange Ratio shall be the quotient of (a) $2.75 divided by (b) the Average CoStar Group Share Price.

In the event that the Threshold Percentage is at least 40%, for U.S. federal income tax purposes, the Mergers are intended to qualify as a reorganization under Section 368(a) of the Code. Whether the Mergers so qualify depends upon certain factors including the Average CoStar Group Share Price. If the Mergers so qualify, a holder of Matterport Common Stock will generally only recognize any taxable gain with respect to such stock up to the amount of cash received pursuant to the Mergers but will not recognize any taxable gain in excess of the amount of cash received.

Treatment of Outstanding Matterport Equity Awards in the Mergers

As described in more detail below, at the First Effective Time, certain Matterport Equity Awards will be cancelled, and others will be assumed by CoStar Group.

Any payments due or shares of CoStar Group Common Stock issuable pursuant to the cancellation of Matterport Equity Awards will be completed by CoStar Group promptly following the First Effective Time, and in any event within 10 business days, with cash payments being made through the Surviving Company’s or its affiliates’ regular payroll.

Any Matterport Equity Awards that are assumed by CoStar Group will continue to have, and will be subject to, the same terms and conditions, including vesting and acceleration of vesting terms and conditions, as those that applied to the corresponding Matterport Equity Award immediately prior to the First Effective Time, except that each reference to Matterport shall be deemed to be a reference to CoStar Group.

 

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Matterport Options

Matterport Options Held by Continuing Employees and Other Service Providers. At the First Effective Time, each Matterport Option that is outstanding and unexercised and held by an individual who is then an employee or other service provider to Matterport will be assumed by CoStar Group and converted into a CoStar Group stock option award (A) with respect to a number of shares of CoStar Group Common Stock below (rounding down to the nearest whole share of CoStar Group Common Stock) equal to the product obtained by multiplying (x) the number of shares of Matterport Common Stock subject to such Matterport Option by (y) the Equity Award Conversion Factor and (B) with an exercise price per share of CoStar Group Common Stock (rounded up to the nearest cent) equal to the quotient obtained by dividing (x) the exercise price per share of Matterport Common Stock under such option by (y) the Equity Award Conversion Factor.

Matterport Options Held by Former Employees and Service Providers. Each Matterport Option that is outstanding and unexercised and held by an individual who is not an employee or other service provider to Matterport at the First Effective Time will be cancelled at the First Effective Time and converted into the right to receive a combination of shares of CoStar Group Common Stock and a cash payment, less withholding taxes, determined as follows:

 

   

The number of shares of CoStar Group Common Stock issuable is determined by multiplying (x) the number of shares of Matterport Common Stock subject to the Matterport Option being cancelled by (y) the quotient obtained by dividing (A) the excess, if any, of the Equity Award Per Share Stock Consideration Value (as defined below) over the amount determined by multiplying the Stock Consideration Percentage (as defined below) by the per share exercise price of such Matterport Option, by (B) the volume weighted average price of a share of CoStar Group Common Stock for the five consecutive trading days ending with the trading day immediately preceding (but not including) the Closing Date (as it applies only for purposes of these equity award provisions, the “CoStar Group Closing Share Price”).

“Equity Award Per Share Stock Consideration Value” means the Exchange Ratio multiplied by the CoStar Group Closing Share Price.

“Stock Consideration Percentage” means the quotient obtained by dividing the Equity Award Per Share Stock Consideration Value by the sum of (x) the Equity Award Per Share Stock Consideration Value and (y) $2.75.

 

   

The amount of cash payable is determined by multiplying (x) the number of shares of Matterport Common Stock subject to the Matterport Option being cancelled by (y) the excess, if any, of $2.75 over the amount determined by multiplying the Cash Consideration Percentage (as defined below) by the per share exercise price of such Matterport Option.

“Cash Consideration Percentage” means the quotient obtained by dividing $2.75 by the sum of (i) the Equity Award Per Share Stock Consideration Value plus (ii) $2.75.

Any withholding taxes due as a result of the issuance of shares or payment of cash as described above shall first be satisfied from the cash portion of the option cancellation payment, and then if needed, by withholding a number of shares of CoStar Group Common Stock having a fair market value equal to the remaining withholding taxes due.

If the amount determined under the formulas above is zero, then the Matterport Option will be cancelled at the First Effective Time for no payment.

Matterport RSUs

At the First Effective Time, each outstanding Matterport RSU that provides for accelerated vesting as a result of the Merger shall become vested in full and cancelled and converted into the right to receive the merger consideration per share of Matterport Common Stock subject to such award.

 

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At the First Effective Time, all other outstanding Matterport RSUs will be assumed by CoStar Group and converted into a CoStar Group restricted stock unit award with respect to a number of shares of CoStar Group Common Stock determined by multiplying the number of shares of Matterport Common Stock subject to the Matterport RSU by the Equity Award Conversion Factor (rounding down to the nearest whole share of CoStar Group Common Stock).

Matterport ESPP Awards

In accordance with the Merger Agreement, the Matterport Board has adopted resolutions providing that (i) the Offering Period in effect as of the date of the Merger Agreement will be the final Offering Period (such period, the “Final Offering Period”) and no further Offering Period will commence, and (ii) each individual participating in the Final Offering Period on the date of the Merger Agreement will not be permitted to (A) increase his or her payroll contribution rate pursuant to the Matterport ESPP from the rate in effect when the Final Offering Period commenced or (B) make separate non-payroll contributions to the Matterport ESPP on or following the date of the Merger Agreement. Prior to the First Effective Time, Matterport will take all actions that may be necessary to (x) cause the Final Offering Period, to the extent that it would otherwise be outstanding at the First Effective Time, to be terminated no later than 10 business days prior to the date on which the First Effective Time occurs; (y) after review and consent of CoStar Group, make any pro rata adjustments that may be necessary to reflect the Final Offering Period, but otherwise treat the Final Offering Period as a fully effective and completed Offering Period for all purposes pursuant to the Matterport ESPP; and (z) cause the exercise (as of no later than ten business days prior to the date on which the First Effective Time occurs) of each outstanding purchase right pursuant to the Matterport ESPP. On such exercise date, Matterport will apply the funds credited as of such date pursuant to the Matterport ESPP within each participant’s payroll withholding account to the purchase of whole shares of Matterport Common Stock in accordance with the terms of the Matterport ESPP, and such shares of Matterport Common Stock will be entitled to the merger consideration. As promptly as practicable following the purchase of shares of Matterport Common Stock in accordance with the preceding sentence, Matterport will return to each participant the funds, if any, that remain in such participant’s account after such purchase. Immediately prior to and effective as of the First Effective Time (but subject to the consummation of the First Merger), Matterport will terminate the Matterport ESPP.

Treatment of Outstanding Matterport Warrants in the Mergers

The Merger Agreement provides that, following the date of the Merger Agreement, Matterport shall use commercially reasonable efforts to cause the holders of each outstanding and unexercised private warrant exercisable for shares of Matterport Common Stock (each, a “Private Warrant”) to execute a conditional exchange agreement (the “Conditional Exchange Agreement”).

Pursuant to the Conditional Exchange Agreement, holders of each Private Warrant agree to exchange their Private Warrants for merger consideration upon Closing. The warrant price applicable to the Conditional Exchange Agreements would be calculated in accordance with the terms of the Private Warrant agreement. Such “Conditional Warrant Price” will equal the warrant price in effect as of the Closing, reduced by an amount (in dollars), calculated at the Closing, equal to the difference of (i) the warrant price in effect prior to the Closing minus (ii) (A) $2.75 minus (B) the Black-Scholes warrant value, each of which shall be calculated in accordance with the terms of the Private Warrants.

Once any holder of a Private Warrant executes a Conditional Exchange Agreement, it may not be revoked or amended by the parties; provided, however, that in the event that the Closing does not occur and the Merger Agreement is validly terminated in accordance with its terms, the terms of the Conditional Warrant Agreement will be null and void.

Dissenting Matterport Shares

The Merger Agreement provides that Dissenting Matterport Shares will not be converted into or represent the right to receive the merger consideration, but instead at the First Effective Time will be converted into such

 

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consideration as may be determined to be due to the holders thereof in respect of such Dissenting Matterport Shares pursuant to Section 262 of the DGCL. If any holder of Dissenting Matterport Shares fails to perfect, withdraws or otherwise loses or forfeits the right to appraisal of the fair value of such Dissenting Matterport Shares under Section 262 of the DGCL, such Dissenting Matterport Shares will no longer be considered to be Dissenting Matterport Shares and will be deemed to have been converted into, and to have become exchangeable for, as of the First Effective Time, the right to receive, without interest, the merger consideration.

Charter and Bylaws

At the First Effective Time, by virtue of the First Merger, the certificate of incorporation and bylaws of the Surviving Corporation will be amended and restated in their entirety to be identical to the certificate of incorporation and bylaws of Merger Sub I, until thereafter amended in accordance with the applicable law. At the Second Effective Time, by virtue of the Second Merger, the certificate of formation and limited liability company agreement of the Surviving Company will be amended and restated in their entirety to be identical to the certificate of formation and limited liability company agreement of Merger Sub II, until thereafter amended in accordance with the applicable law (except that references to the name of Merger Sub II will be replaced by reference to the name of the Surviving Company).

Directors and Management

Under the Merger Agreement, the parties have agreed that, at the First Effective Time, the directors of Merger Sub I or such other individuals designated by CoStar Group will be the directors of the Surviving Corporation and the officers of Matterport or such other individuals designated by CoStar Group will be the officers of the Surviving Corporation until their respective successors are duly elected, designated and qualified, or until their earlier death, resignation or removal in accordance with the governing documents of the Surviving Corporation. At the Second Effective Time, the managing member of Merger Sub II will be the managing member of the Surviving Company and the officers of the Surviving Corporation or such other individuals designated by CoStar Group will be the officers of the Surviving Company, until their respective successors are duly elected, designated and qualified, or until their earlier death, resignation or removal in accordance with the governing documents of the Surviving Company.

Representations and Warranties of CoStar Group and Matterport

The Merger Agreement contains representations and warranties made by each of CoStar Group and Matterport to each other. These representations and warranties are subject to qualifications and limitations agreed to CoStar Group and Matterport in connection with negotiating the terms of the Merger Agreement. Some of the significant representations and warranties of both CoStar Group and Matterport contained in the Merger Agreement relate to, among other things:

 

   

organization, standing, corporate power and organizational documents;

 

   

capital structure;

 

   

authority to execute, deliver and perform the obligations under the Merger Agreement;

 

   

board approval of the Merger Agreement and the transactions contemplated thereby, including the Mergers;

 

   

the absence of conflicts with, or violations of, laws, organizational documents or other obligations or contracts as a result of the Mergers;

 

   

possession of required authorizations, permits, consents and approvals relating to the Mergers;

 

   

compliance with applicable laws;

 

   

SEC documents, financial statements, SEC correspondence and accounting or auditing practices;

 

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disclosure controls and procedures and internal controls;

 

   

absence of certain changes and non-existence of a material adverse effect since January 1, 2024;

 

   

absence of undisclosed material liabilities;

 

   

absence of certain litigation; and

 

   

accuracy of information supplied or to be supplied in this proxy statement/prospectus and the registration statement of which it forms a part.

The Merger Agreement also contains representations and warranties of Matterport regarding:

 

   

benefits matters and compliance with ERISA;

 

   

absence of collective bargaining agreements and other labor matters;

 

   

confirmation that Matterport and its subsidiaries has conducted their respective businesses in the ordinary course in all material respects;

 

   

ownership of or licenses to certain intellectual property;

 

   

compliance with certain data privacy laws and policies;

 

   

tax matters;

 

   

existence and validity of certain material contracts;

 

   

ownership of or interest in, and condition of, certain real property;

 

   

compliance with environmental laws;

 

   

required stockholder approval (or lack thereof);

 

   

receipt of an opinion from Matterport’s financial advisor;

 

   

brokers’ and finders’ fees in connection with the Mergers;

 

   

existence of insurance policies;

 

   

exemption from anti-takeover statutes;

 

   

absence of certain affiliate transactions;

 

   

compliance with anti-bribery and money laundering laws and sanctions;

 

   

absence of ownership in the shares of CoStar Group or Merger Subs; and

 

   

absence of material disputes with certain of Matterport’s material customers and suppliers.

The Merger Agreement also contains representations and warranties of CoStar Group and Merger Subs regarding:

 

   

the authorization and issuance of CoStar Group Common Stock to be issued as merger consideration;

 

   

the sufficiency and availability of funds to consummate the Mergers,

 

   

absence of ownership in the shares of Matterport;

 

   

formation and absence of other business activities, liabilities or obligations of Merger Subs; and

 

   

absence of any action taken by CoStar Group and its subsidiaries that would reasonably be expected to prevent the Mergers from qualifying for the tax treatment intended under the Merger Agreement.

Definition of “Material Adverse Effect”

Many of the representations of CoStar Group and Matterport are qualified by a “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct,

 

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individually or in the aggregate, would have a material adverse effect). For purposes of the Merger Agreement, “material adverse effect” with respect to either CoStar Group or Matterport means any change, event, effect, fact, condition, development, occurrence, or circumstance, which individually or in the aggregate, has resulted in or would reasonably be expected to (i) prevent, materially impede or materially delay either party from consummating the Mergers or any of the other transactions contemplated by the Merger Agreement or (ii) result in a material adverse effect on the business, financial condition, assets, liabilities, or results of operations of either party and its subsidiaries, taken as a whole. However, the changes, events, effects, facts, conditions, developments, occurrences or circumstances relating to or resulting from the following will be excluded from the determination of material adverse effect:

 

   

any change, event, effect, fact, condition, development, occurrence or circumstance generally affecting any of the industries or markets in which either party or its subsidiaries operate;

 

   

any change or proposed change in any law or GAAP (or changes in interpretations of any law or GAAP) and, to the extent relevant to the business of either party or its subsidiaries, in any legal or regulatory requirement or condition or the regulatory enforcement environment;

 

   

general economic, regulatory or political conditions (or changes therein) or conditions (or changes therein) in the financial, credit, or securities markets (including changes in interest or currency exchange rates) in any country or region in which either party or its subsidiaries conduct business;

 

   

any acts of God, natural disasters, force majeure events, terrorism, sabotage, armed hostilities, declared or undeclared acts of war, epidemics, pandemics or disease outbreaks, or any escalation or worsening of any of the foregoing;

 

   

the negotiation, execution, announcement, consummation or existence of the Merger Agreement or the transactions contemplated thereby, including by reason of the identity of either party;

 

   

any action or omission of either party taken with the consent of the other party or as required of either party by the terms of the Merger Agreement (other than either parties’ obligations to operate its business in the ordinary course); or

 

   

any changes in the market price or trading volume of the CoStar Group Common Stock or Matterport Common Stock, any failure by either party or its subsidiaries to meet internal, analysts’ or other earnings estimates or financial projections or forecasts for any period, any changes in credit ratings and any changes in any analysts’ recommendations or ratings with respect to either party or any of its subsidiaries;

Notwithstanding the exclusions described above, any changes, events, effects, facts, conditions, developments, occurrences or circumstances referred to in the first four bullets above will be taken into account in determining whether there has been a material adverse effect if, and only to the extent that such changes have a disproportionate effect on CoStar Group or Matterport and their subsidiaries relative to other participants in the industries in which CoStar Group or Matterport and their subsidiaries operate.

Conduct of Business Pending the Mergers

Restrictions on Matterport’s Interim Operations

Under the Merger Agreement, the parties have agreed that until the earlier of the First Effective Time or the termination of the Merger Agreement, subject to certain exceptions, unless (i) required by law, (ii) consented to in advance in writing by CoStar Group (which consent will not be unreasonably withheld, conditioned or delayed), (iii) expressly required or permitted by the Merger Agreement, or (iv) set forth in the Matterport’s disclosure letter (each of (i) through (iv), the “Matterport Interim Operating Exceptions”), Matterport will cause its subsidiaries to use reasonable best efforts to (A) conduct its business and the business of its subsidiaries in all material respects in the ordinary course of business consistent with past practice, (B) preserve substantially intact its current business organization and material assets, and (C) preserve in all material respects its present

 

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relationships with key customers, suppliers, employees and other persons with which it has material business relations.

In addition, Matterport and its subsidiaries have agreed that, until the earlier of the First Effective Time or the termination of the Merger Agreement, subject to the Matterport Interim Operating Exceptions, they will not:

 

   

amend, modify, waive, rescind or otherwise change the Matterport Charter or the Matterport Bylaws (or the comparable organizational or governing documents of any of Matterport’s subsidiaries);

 

   

(i) split, combine, reclassify, redeem, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests or rights, other than repurchases of shares of Matterport Common Stock in connection with the exercise, vesting or settlement of Matterport Equity Awards that were outstanding on the date of the Merger Agreement or (ii) enter into any agreement with respect to the voting of Matterport Common Stock or other securities or the capital stock or other securities of a subsidiary of Matterport;

 

   

issue, sell, pledge, dispose, transfer, encumber or grant any shares of its or its subsidiaries’ capital stock or other equity interests, or any options, restricted stock units, restricted stock awards, warrants, convertible securities or other rights of any kind to acquire any shares of its or its subsidiaries’ capital stock or equity interests except for transactions among Matterport and its direct or indirect wholly owned subsidiaries or among Matterport’s direct or indirect wholly owned subsidiaries; provided, however, that Matterport may issue shares of Matterport Common Stock (i) upon the exercise, vesting or settlement of Matterport Equity Awards or Private Warrants that are outstanding as of the date hereof or (ii) in respect of any awards existing as of the date of the Merger Agreement under the Matterport ESPP in respect of the Final Offering Period.

 

   

authorize, declare, set aside, pay or make any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to Matterport’s or any of its subsidiaries’ capital stock or other equity interests, other than dividends paid by any wholly owned subsidiary of Matterport to Matterport or any wholly owned subsidiary of Matterport;

 

   

except as required under the terms of a Matterport Benefit Plan or collective bargaining agreement, in each case, as in effect as of the date of the Merger Agreement, (i) increase, or promise to increase, or accelerate the vesting or timing of payment of, the compensation or benefits payable or to become payable to any current or former director, officer, employee or other individual service provider of Matterport or any of its subsidiaries, except, with respect to employees whose annual base salary is less than $250,000, for increases in salary or hourly wage rates in the ordinary course of business consistent with past practice up to 6% of annual base salaries in the aggregate for such employees or 10% of annual base salary for any such individual (in each case, calculated prior to any such increase), (ii) establish, adopt, renew, enter into (other than offer letters entered into in the ordinary course of business in substantially the form provided to CoStar Group that provide for at-will employment and that provide for no severance or change in control benefits), materially amend or terminate any Matterport Benefit Plan (or any arrangement which in existence as of the date hereof would constitute a Matterport Benefit Plan), other than changes to welfare benefits in the ordinary course of business consistent with past practice in connection with annual renewals that would not have a material financial impact on CoStar Group, Matterport or any of its subsidiaries following the Closing, (iii) enter into, adopt, renew, materially amend or terminate any collective bargaining, works council, or other collective labor agreement with any labor union, works council or similar employee representative body, or recognize any labor union, works council or similar employee representative body as a bargaining (or similar employee) representative; or (iv) hire, terminate (other than for cause), promote, demote or change the employment status or title of any employee, individual consultant or service provider who is or upon hiring or promotion will become an employee of Matterport whose annual base salary is in excess of $250,000 or an officer of Matterport or any of its subsidiaries;

 

   

grant, confer, award, extend the exercisability of or accelerate the vesting of any Matterport Equity Awards or any other equity-based compensation award under a Matterport Equity Plan;

 

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acquire (including by merger, consolidation, or acquisition of stock or assets) any equity interest in or material amount of assets of any person, or sell, lease, license or otherwise encumber or dispose of any material tangible properties, rights (excluding intellectual property) or assets of Matterport or its subsidiaries other than (i) the purchase of equipment and sales of inventory in the ordinary course of business consistent with past practice, (ii) pursuant to agreements in effect prior to the execution of the Merger Agreement or (iii) entered into after the execution of the Merger Agreement in the ordinary course of business consistent with past practice with total consideration not exceeding $2,500,000 in value, other than any acquisitions by Matterport of any equity interests in any person or any assets thereof;

 

   

sell, lease, license (other than any nonexclusive licenses granted in the ordinary course of business consistent with past practice), abandon, permit to lapse or expire, dedicate to the public, subject to a lien other than a permitted lien or otherwise dispose of any material Matterport intellectual property, except pursuant to transactions solely among Matterport and its wholly owned subsidiaries or solely among wholly owned subsidiaries of Matterport;

 

   

(i) incur, or amend in any material respect the terms of, any indebtedness for borrowed money, or create, assume, issue, guarantee or otherwise become liable for any such indebtedness for any person, except for indebtedness incurred solely between or among Matterport or any of its wholly owned subsidiaries or (ii) make any loans, advances or capital contributions to, or investments in, any other person, except for (i) trade receivables arising in the ordinary course of business consistent with past practice, or (ii) loans solely between or among Matterport and its wholly owned subsidiaries;

 

   

implement any employee layoffs that would require notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign state or local law;

 

   

enter into, modify, amend, renew or terminate (i) any material contract with a material customer or a material supplier, other than in the ordinary course of business consistent with past practice, subject to certain exceptions, (ii) any real property lease agreements or (iii) any contract which if so entered into, modified, amended or terminated would (A) have a material adverse effect, (B) impair in any material respect the ability of Matterport to perform its obligations under the Merger Agreement or (C) prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement;

 

   

fail to maintain, or allow to lapse, or abandon, including by failure to pay the required fees in any jurisdiction, any Matterport registered intellectual property other than in the ordinary course of business consistent with past practice regarding registered intellectual property that is not material to the conduct of the business of Matterport and its subsidiaries, or intentionally disclose or intentionally fail to maintain any material trade secrets included in Matterport intellectual property (other than where such trade secrets are required to be disclosed as part of a patent application filed by Matterport or its subsidiaries);

 

   

make any material change to its methods of accounting in effect on December 31, 2023, except (i) as required by GAAP (or any interpretation thereof), Regulation S-X of the Exchange Act or a governmental authority or a quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization), (ii) to permit the audit of Matterport’s financial statements in compliance with GAAP or (iii) as required by a change in applicable law;

 

   

implement any material new policies or practices (or make any material changes to existing policies or practices) with respect to equity, interest rate, currency or commodity derivatives or hedging transactions;

 

   

except as contemplated by the Merger Agreement, with respect to Matterport and its subsidiaries, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

   

commence (other than any collection action in the ordinary course of business), settle or compromise or otherwise voluntarily resolve any action, other than the compromise or settlement of any action that

 

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is not brought by governmental authorities and that: (i) is for an amount not to exceed, for any such compromise or settlement individually, $1,000,000, or in the aggregate, $2,000,000 and (ii) does not impose any material continuing non monetary obligations on Matterport or any of its subsidiaries (or, to the knowledge of Matterport, CoStar Group or any of its other affiliates from and after the Closing), including any monitoring or reporting obligations to any other person;

 

   

knowingly take any action that is intended to materially delay, impede or prevent the consummation of the Mergers and the other transactions contemplated by the Merger Agreement on or before the Termination Date;

 

   

incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith that, individually or in the aggregate, are in excess of $5,000,000, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with Matterport’s annual capital expenditure budget for periods following the date of the Merger Agreement, as provided to CoStar Group, or delay any material capital expenditures;

 

   

waive, release, grant or transfer any right of material value, other than in the ordinary course of business consistent with past practice;

 

   

cancel any material insurance policies, materially reduce the amount of insurance coverage, or fail to renew any material insurance policies upon expiration on substantially the same terms as those in place on the date of the Merger Agreement, to the extent insurance policies on such terms are available on commercially reasonable terms;

 

   

engage in any transaction with, or enter into any agreement, arrangement or understanding with any affiliate of Matterport or other Person covered by Item 404 of Regulation S-K promulgated under the Exchange Act that would be required to be disclosed under such Item 404;

 

   

enter into any new line of business;

 

   

with respect to Matterport and each of its subsidiaries (i) make or change any material Tax election (which shall include, for the avoidance of doubt, any entity classification election in accordance with Treasury Regulations under Section 7701 of the Code and any election pursuant to Section 965 of the Code), (ii) settle or compromise any claim, notice, audit report or assessment in respect of material taxes, (iii) change any annual tax accounting period, adopt or change any method of tax accounting, (iv) file or amend any material tax return, (v) enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any material tax, (vi) surrender any right to claim or make a claim for a material tax refund, (vii) consent to any extension or waiver of the statute of limitations period applicable to any material tax claim or assessment, (viii) assume any liability for the taxes of any other person (whether by contract or otherwise), (ix) change its residence for any tax purpose or establish any branch, agency, permanent establishment or other taxable presence in any jurisdiction outside its jurisdiction of incorporation, (x) enter into intercompany transactions giving rise to material deferred gain or loss of any kind or (xi) fail to accrue or pay when due any material taxes; or

 

   

agree, or permit any of its subsidiaries to agree, in writing or otherwise, to resolve or enter into any agreement to do any of the foregoing.

 

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Restrictions on CoStar Group, Merger Sub I and Merger Sub II’s Interim Operations

Under the Merger Agreement, CoStar Group has agreed that until the earlier of the First Effective Time or the termination of the Merger Agreement unless (i) set forth in CoStar Group’s confidential disclosure letter, (ii) required by applicable law, or (iii) consented to in advance in writing by Matterport (which consent will not be unreasonably withheld, conditioned or delayed) (each of (i) through (iii), the “CoStar Group Interim Operating Exceptions”), CoStar Group, Merger Sub I and Merger Sub II will not:

 

   

amend, modify, waive, rescind or otherwise change any of the CoStar Group’s organizational documents in a manner that would adversely affect the stockholders of Matterport relative to the other holders of CoStar Group Common Stock;

 

   

split, combine, subdivide, reduce or reclassify any of its capital stock or other equity interests, except for (i) any such transactions involving only wholly owned subsidiaries of CoStar Group, and (ii) any transactions that would require an adjustment to the merger consideration under the Merger Agreement, and for which the proper adjustment is made;

 

   

liquidate (completely or partially), dissolve or adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, or recapitalization of CoStar Group;

 

   

declare, authorize, set aside, pay or make any dividend or other distribution payable in cash, stock, property or otherwise, with respect to CoStar Group’s capital stock or other equity interests;

 

   

knowingly take any action that is intended to materially delay, impede or prevent the consummation of the Mergers and the other transactions contemplated by the Merger Agreement on or before the Termination Date; or

 

   

commit to, resolve or enter into any agreement to do any of the foregoing.

Employee Matters

For the period commencing at the First Effective Time and ending on the first anniversary of the Closing Date (or, if earlier, the date of the applicable employee’s termination of employment) (the “Continuation Period”), CoStar Group will provide, or will cause to be provided, to each Matterport Continuing Employee, (i) annual base salary or hourly wage rate that is no less than what was provided to such Matterport Continuing Employee immediately prior to the First Effective Time, (ii) target annual cash incentive compensation opportunities that are no less than those in effect for each Matterport Continuing Employee immediately prior to the First Effective Time (excluding equity or equity-based incentive compensation opportunities and specific performance goals), (iii) employee benefits (including defined contribution retirement plan benefits, remote work arrangements and health and welfare benefits, but excluding equity or equity-based incentive compensation opportunities, change in control, retention or similar benefits, supplemental executive retirement arrangements, deferred compensation arrangements, retiree health and welfare benefits or defined benefit pension plans and specific performance goals for any cash incentive compensation) that are substantially comparable in the aggregate to those in effect for such Matterport Continuing Employee immediately prior to the First Effective Time and (iv) severance payments and benefits to each Matterport Continuing Employee who is terminated by CoStar Group other than for cause during the Continuation Period that are no less favorable than what the Matterport Continuing Employee would have been eligible to receive under a specified severance arrangement sponsored or maintained by Matterport or its subsidiaries.

For purposes of any benefit plans maintained by CoStar Group and its subsidiaries that will provide benefits to any Matterport Continuing Employees after the First Effective Time, CoStar Group will, or will cause its applicable subsidiary to, (i) use commercially reasonable efforts so that the Matterport Continuing Employees will be immediately eligible to participate, without any waiting time or satisfaction of any other eligibility requirements, in any and all CoStar Group benefit plans to the extent that (A) coverage under such CoStar Group benefit plan replaces coverage under a corresponding Matterport Benefit Plan in which such Matterport

 

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Continuing Employee participated immediately before the First Effective Time and (B) such Matterport Continuing Employee has satisfied all waiting time and other eligibility requirements under the Matterport Benefit Plan being replaced by the CoStar Group benefit plan and (ii) for purposes of each CoStar Group benefit plan providing medical, dental, pharmaceutical and/or vision benefits to any Matterport Continuing Employee, CoStar Group will use reasonable best efforts to cause (A) all pre-existing condition exclusions and actively-at-work requirements of such CoStar Group benefit plan to be waived for such Matterport Continuing Employee and his or her covered dependents to the extent such conditions were inapplicable or waived under the comparable Matterport Benefit Plan and (B) any expenses incurred by any Matterport Continuing Employee and his or her covered dependents during the portion of the plan year of the Matterport Benefit Plan ending on the Closing Date begins to be taken into account under such CoStar Group benefit plan for the calendar year in which the Closing Date occurs for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Matterport Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such CoStar Group benefit plan.

If requested by CoStar Group not less than five business days before the expected Closing Date, Matterport will terminate any Matterport Benefit Plans that are 401(k) plans, effective as of the day prior to the Closing Date. If any such Matterport Benefit Plan is terminated prior to the Closing, CoStar Group will cause the Matterport Continuing Employees who participated in such Matterport Benefit Plan as of the day prior to the Closing Date to be eligible to participate in a 401(k) plan of CoStar Group as of the Closing Date and will use take all steps reasonably necessary to cause such plan to accept eligible rollover distributions from the terminated Matterport Benefit Plan, including any associated plan loans, from such participants who are Matterport Continuing Employees and who elect a rollover.

Other Covenants and Agreements

The Merger Agreement contains certain other covenants and agreements, including covenants related to:

 

   

cooperation between CoStar Group and Matterport in the preparation of this proxy statement/prospectus;

 

   

Matterport’s agreement to afford CoStar Group and its representatives reasonable access to Matterport’s properties, books and records during normal business hours and upon reasonable advance notice;

 

   

each party’s agreement to maintain the confidentiality of certain nonpublic information provided by the other party;

 

   

each party’s agreement to promptly notify the other party of (i) any notice or other substantive communication received by such party concerning the Merger Agreement or the transactions contemplated thereby from any governmental authority or third party alleging that the consent of such third party is or may be required in connection with the Mergers or transactions thereby;(ii) any claim, demand, action, investigation, notice, complaint, audit, suit or proceeding commenced pursuant to a formal complaint or written demand to Matterport or, to such party’s knowledge, threatened against, relating to or involving or otherwise affecting such party or any of its subsidiaries which relates to the Merger Agreement, the Mergers or the transactions contemplated thereby; and (iii) any event, change, or effect between the date of the Merger Agreement and the First Effective Time which individually or in the aggregate causes or is reasonably likely to cause or constitute the failure of any of the closing conditions set forth in the Merger Agreement;

 

   

consultation with the other party before issuing any press release or otherwise making any public statements with respect to the Merger Agreement or the transactions contemplated thereby;

 

   

cooperation between CoStar Group and Matterport to (i) cause Matterport’s securities to be de-listed from the Nasdaq Global Market and de-registered under the Exchange Act as soon as practicable following the First Effective Time (provided that such delisting and termination will not be effective

 

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until after the First Effective Time) and (ii) use reasonable best efforts to cause the shares of CoStar Group Common Stock to be issued in the First Merger, or reserved for issuance in connection with, the First Merger to be approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance;

 

   

Matterport’s use of reasonable best efforts to obtain and deliver to CoStar Group resignations executed by each director of Matterport, in each case, as in office as of immediately prior to the First Effective Time and which such resignations shall be effective upon (and conditioned upon) the First Effective Time;

 

   

Matterport’s agreement to take any and all actions reasonably necessary to render any state takeover statute that becomes or is deemed to become applicable to Matterport or the Mergers, the Voting Agreement or the other transactions contemplated by the Merger Agreement, inapplicable to the foregoing;

 

   

Matterport’s agreement to (i) promptly advise CoStar Group of any claim, demand, action, investigation, notice, complaint, audit, suit or proceeding commenced after the date of the Merger Agreement against Matterport and/or any of its directors (in their capacity as such) by any Matterport stockholders (on their own behalf or on behalf of Matterport) relating to the Merger Agreement or the transactions contemplated thereby, and keep CoStar Group reasonably informed; (ii) allow CoStar Group the opportunity to consult with Matterport regarding, or participate in, the defense or settlement of any such claim, demand, action, investigation, notice, complaint, audit, suit or proceeding and give reasonable and good faith consideration to CoStar Group’s advice; and (iii) not enter into any settlement agreement against Matterport and/or its directors or officers relating to the Merger Agreement or any of the other transactions contemplated thereby without CoStar Group’s prior written consent;

 

   

Matterport’s use of commercially reasonable efforts to cause the holders of each Private Warrant that is outstanding and unexercised to execute a Conditional Exchange Agreement in substantially the form attached as Exhibit B to the Merger Agreement.

Conditions to Completion of the Mergers

The obligations of CoStar Group and Matterport to complete the Mergers are subject to certain conditions being satisfied or, where legally permissible, waived. These conditions include, among others:

 

   

receipt of the Requisite Stockholder Approval;

 

   

(i) the expiration or termination of any applicable waiting period (or any extension thereof) under the HSR Act and the expiration or termination of any commitment to, or agreement with, any governmental authority to delay the consummation of, or not to consummate before a certain date or event, the Mergers and (ii) the obtainment, termination or expiration of applicable waiting periods (or extensions thereof) or clearance, as applicable, under certain other specified antitrust and foreign investment laws;

 

   

the absence of (i) a law or order issued, entered, promulgated or enacted that restrains, enjoins, or otherwise prohibits or makes illegal the consummation of the Mergers and remains in force and (ii) an injunction, order or award by any governmental authority having jurisdiction over any party restraining or enjoining, or otherwise prohibiting, the consummation of the Mergers;

 

   

the approval for listing on the Nasdaq Global Select Market of shares of CoStar Group Common Stock to be issued or reserved for issuance in connection with the First Merger; and

 

   

the SEC having declared effective the registration statement of which this proxy statement/prospectus forms a part and no stop order having been issued by the SEC, and no proceedings for that purpose initiated or threatened (and not withdrawn) by the SEC.

 

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In addition, the obligation of Matterport to effect the Mergers is subject to the satisfaction or waiver of the following additional conditions:

 

   

each of the representations and warranties of CoStar Group and Merger Subs contained in the Merger Agreement with respect to organization and qualification, capitalization, authority relative to the agreement, the absence of certain changes or events, and share ownership being true and correct in all material respects as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of a specific date, in which case as of such specific date only);

 

   

all other representations and warranties of CoStar Group and Merger Subs contained in the Merger Agreement, without giving effect to any materiality or CoStar Group material adverse effect qualifications, being true and correct as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of a specific date, in which case as of such specific date only), except for such failures to be true and correct as would not reasonably be expected to have, individually or in the aggregate, a CoStar Group material adverse effect;

 

   

CoStar Group and Merger Subs having performed or complied in all material respects with their respective obligations required under the Merger Agreement to be performed or complied with on or prior to the Closing Date;

 

   

from the date of the Merger Agreement until the Closing Date, no material adverse effect on CoStar Group having occurred; and

 

   

CoStar Group having delivered a certificate to Matterport, dated as of the Closing Date and duly executed by a senior executive officer of CoStar Group, certifying to the effect that the preceding conditions have been satisfied.

The obligation of CoStar Group and Merger Subs to effect the Mergers is subject to the satisfaction or waiver of the following additional conditions:

 

   

the representations and warranties of Matterport contained in the Merger Agreement with respect to the absence of certain changes or events being true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date;

 

   

the representations and warranties of Matterport contained in the Merger Agreement with respect to capitalization being true and correct in all but de minimis respects as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of a specific date, in which case as of such specific date);

 

   

the representations and warranties of Matterport contained in the Merger Agreement with respect to organization and qualification, subsidiaries, authority relative to the agreement, vote required, fairness opinion, brokers, takeover statutes, and ownership of shares of CoStar Group stock being true and correct in all material respects as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of a specific date, in which case as of such specific date);

 

   

all other representations and warranties of Matterport contained in the Merger Agreement, without giving effect to any materiality or Matterport material adverse effect qualifications, being true and correct as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of a specific date, in which case as of such specific date only), except for such failures to be true and correct as would not reasonably be expected to have, individually or in the aggregate, a Matterport material adverse effect;

 

   

from the date of the Merger Agreement until the Closing Date, no material adverse effect on Matterport having occurred.

 

   

Matterport having performed or complied in all material respects with its obligations required under the Merger Agreement to be performed or complied with on or prior to the Closing Date; and

 

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Matterport having delivered a certificate to CoStar Group, dated as of the Closing Date and duly executed by a senior executive officer (or similar authorized person) of Matterport, certifying to the effect that the preceding conditions have been satisfied.

No Solicitation

Matterport has agreed that neither it nor any of its subsidiaries, nor any of its or their respective officers and directors, will, and Matterport will instruct and use its reasonable best efforts to cause its and its subsidiaries’ representatives not to, directly or indirectly:

 

   

initiate, seek, facilitate, solicit or knowingly encourage (including by way of furnishing information or assistance of any kind) the making of any Competing Proposal (as defined below) or take any other action designed or intended to lead to, or that would reasonably be expected to lead to any inquiry with respect to, or the making, submission or announcement of, any Competing Proposal;

 

   

enter into, continue or otherwise participate or engage in negotiations or discussions with or furnish (or cause to be furnished) any material nonpublic information to, any person relating to a Competing Proposal or any inquiry or request that would reasonably be expected to lead to a Competing Proposal;

 

   

enter into any letter of intent, agreement in principle, memorandum of understanding, Merger Agreement or other agreement, arrangement or understanding relating to any Competing Proposal (other than a confidentiality agreement containing confidentiality terms that are not materially less favorable to Matterport than those contained in its confidentiality agreement with CoStar Group);

 

   

submit to Matterport stockholders for their approval any Competing Proposal; or

 

   

resolve to do, or agree or announce an intention to do, any of the foregoing.

Notwithstanding these limitations, the Merger Agreement provides that, prior to obtaining the Requisite Stockholder Approval, if Matterport receives a Competing Proposal from any person, Matterport and its representatives may:

 

   

contact such person (and its representatives) to clarify the terms and conditions of such Competing Proposal;

 

   

engage in negotiations or substantive discussions with, or furnish any information and other access to, any person making such Competing Proposal and its representatives or potential sources of financing if the Matterport Board determines in good faith (after consultation with Matterport’s outside legal counsel and financial advisor) that (i) such Competing Proposal either constitutes a Superior Proposal or could reasonably be expected to result in a Superior Proposal and (ii) that the failure to take any of the foregoing actions would reasonably be expected to be inconsistent with the directors’ fiduciary duties to the Matterport stockholders under applicable law, provided that (i) prior to furnishing any material nonpublic information concerning Matterport or its subsidiaries, Matterport receives from such person an executed confidentiality agreement with such person containing confidentiality terms that are not materially less favorable to Matterport than those contained in its confidentiality agreement with CoStar Group, and (ii) any such material nonpublic information so furnished in writing shall be furnished to CoStar Group prior to or substantially concurrently with furnishing such information to such third party to the extent it was not previously made available to CoStar Group or its representatives.

Under the Merger Agreement, a “Competing Proposal” means any bona fide written proposal or offer made by any person (other than CoStar Group, the Merger Subs or any of their respective controlled affiliates) or group of persons as defined in Section 13(d)(3) of the Exchange Act that, for purposes of evaluating whether such Competing Proposal may constitute a Superior Proposal, did not result from a material breach of Section 6.5 of the Merger Agreement, to purchase or otherwise acquire, directly or indirectly, in one transaction or a series of transactions, (i) beneficial ownership (as defined under Section 13(d) of the Exchange Act) of twenty percent

 

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(20%) or more of any class of equity securities of Matterport pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, tender offer (including a self-tender offer), exchange offer, liquidation, dissolution or similar transaction, or (ii) any one or more assets or businesses of Matterport and its subsidiaries that constitute 20% or more of the revenues, earnings or assets (based on the fair market value thereof, as determined by the Matterport Board (or any committee thereof) in good faith) of the Matterport and its subsidiaries, taken as a whole.

Additionally, under the Merger Agreement, a “Superior Proposal” means a Competing Proposal (with all percentages in the definition of Competing Proposal increased to 80%) made by a third party that did not result from a material breach of Matterport’s non-solicitation covenant under the Merger Agreement and that the Matterport Board determines in good faith, after consultation with its legal counsel and financial advisor and taking into account at the time of determination all such factors as the Matterport Board considers to be appropriate, including the various legal, financial and regulatory aspects or conditions of such Competing Proposal, (i) that is reasonably likely to be consummated if accepted and (ii) that contains terms more favorable to Matterport stockholders than the transactions contemplated by the Merger Agreement (including any changes to the terms of the Merger Agreement committed to by CoStar Group to Matterport in writing in response to such Competing Proposal).

Matterport is required to promptly (and in any case within 24 hours) notify CoStar Group (i) upon receipt of a Competing Proposal and (ii) any inquiries, proposals or offers received by, or any discussions or negotiations with, Matterport, any of its subsidiaries or any of its or its subsidiaries’ representatives concerning a Competing Proposal or proposal that would reasonably be expected to constitute or lead to or result in a Competing Proposal. The Merger Agreement requires that Matterport identify the other party and disclose the material terms of such inquiry, offer, proposal, request, discussion or negotiation and, in the case of written materials, provide copies of such materials to CoStar Group. Additionally, Matterport is obligated to make available to CoStar Group all material non-public information not previously shared with CoStar Group and provided to the third party making a Competing Proposal to keep CoStar Group reasonably informed on a prompt basis (and, in any case, within 24 hours of any significant development, discussions or negotiations) of the status and material details (including amendments and proposed amendments) of any such Competing Proposal or other inquiry, offer, proposal, request, discussion or negotiation (which shall include copies of any proposed transaction agreements) relating to any Competing Proposal.

Permitted Change in Recommendation

Under the Merger Agreement, the Matterport Board has agreed, except as otherwise set forth in the Merger Agreement, that it will not:

 

   

withdraw, withhold, qualify or modify in a manner adverse to CoStar Group or Matterport, the Matterport Board’s recommendation that the Matterport stockholders vote in favor of the approval of the Mergers (the “Matterport Board Recommendation”);

 

   

adopt, approve, declare advisable, endorse or recommend, or propose to adopt, approve, declare advisable, endorse or recommend, to the Matterport stockholders any Competing Proposal;

 

   

if a Competing Proposal is publicly announced, fail to publicly reaffirm the Matterport Board Recommendation within five business days after CoStar Group so requests in writing;

 

   

in the event a tender offer that constitutes a Competing Proposal subject to Regulation 14D under the Exchange Act is commenced, fail to recommend against such Competing Proposal subject to Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 within ten business days after the commencement of such Competing Proposal;

 

   

fail to include the recommendation of the Matterport Board in favor of the approval and adoption of the Merger Agreement and the Mergers in this proxy statement/prospectus (any of the preceding four bullets or this bullet, a “change in recommendation”); or

 

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adopt, approve or authorize, or propose to adopt, approve or authorize, or allow Matterport or any of its subsidiaries or any of their respective representatives to execute, approve or enter into, any letter of intent, memorandum of understanding, joint venture agreement, partnership agreement, share or asset purchase agreement, merger agreement, or any other similar agreement (i) with respect to any Competing Proposal or (ii) that would reasonably be expected to lead to a Competing Proposal (other than an acceptable confidentiality agreement permitted by and in compliance with the terms of the Merger Agreement).

Nevertheless, the Matterport Board may make a change in recommendation in the following circumstances:

 

   

if the Matterport Board (i) determines that an Intervening Event (as defined below) has occurred and is continuing and (ii) determines in good faith (after consultation with its outside legal counsel and financial advisor) that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law; or

 

   

if Matterport has received a Competing Proposal (which is not withdrawn) that the Matterport Board (i) has determined in good faith (after consultation with its outside legal counsel and financial advisor) constitutes a Superior Proposal and (ii) determines in good faith (after consultation with its outside legal counsel and financial advisor) that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law.

Prior to making any change in recommendation, the Matterport Board must give 4 business days’ notice to CoStar Group of its intention to make a change in recommendation. Such notice must contain certain information relating to the Superior Proposal or Intervening Event (as applicable) and the development or change in circumstances leading to the proposed change in recommendation. If requested by CoStar Group, Matterport must engage in good faith discussions with CoStar Group regarding any adjustments or modifications to the terms of the Merger Agreement proposed by Matterport. Following such four business day period and prior to making any change in recommendation, Matterport must again determine in good faith (after consultation with its outside legal counsel and financial advisor) that the failure to make a change in recommendation would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law. Any material change in facts with respect to such Intervening Event or amendment to the financial terms or any other material amendment of such Superior Proposal shall, in each case, require a new notice to be delivered by Matterport, except that the four business day notice period referenced above shall instead be equal to two business days.

Under the Merger Agreement, an “Intervening Event” means any change, event, effect, fact, condition or circumstance (other than any change, event, effect, fact, condition or circumstance resulting from a breach of the Merger Agreement by Matterport) that is material to or otherwise materially affects the business, assets or operations of Matterport and its subsidiaries as a whole that was not known to or reasonably foreseeable by (or if known or reasonably foreseeable, the material consequences of which were not reasonably foreseeable) the Matterport Board as of or prior to the date of the Merger Agreement and that became known to, or reasonably foreseeable by, the Matterport Board following the date of the Merger Agreement and does not involve or relate to a Competing Proposal. None of the following, however, whether alone or in combination, will constitute or be deemed to contribute to an Intervening Event: (i) any Competing Proposal; (ii) the fact, in and of itself, that Matterport or CoStar Group meets or exceeds (or fails to meet or exceed) internal budgets or plans or internal or published forecasts of its revenues, earnings or other financial performance or results of operations (however, the underlying causes of such performance that are not otherwise excluded may be taken into account); and (iii) changes in Matterport’s or CoStar Group’s stock price or the trading volume of Matterport’s or CoStar Group’s stock (however, the underlying causes of such changes that are not otherwise excluded may be taken into account).

In addition, subject to compliance with the foregoing terms, prior to obtaining the Requisite Stockholder Approval, the Matterport Board (or a committee thereof) may terminate the Merger Agreement in order to enter into an acquisition agreement with respect to a Superior Proposal as further described below in “The Merger Agreement—Termination of the Merger Agreement.

 

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Matterport Stockholder Vote

Pursuant to the Merger Agreement, Matterport has begun a broker search in anticipation of the Special Meeting in compliance with SEC Rule 14a-3 and, from time to time, will conduct additional broker searches as reasonably requested by CoStar Group or as reasonably necessary to comply with the terms of the Merger Agreement.

Matterport has agreed to take all lawful action to call, give notice of, convene and hold a meeting of its stockholders as soon as practicable following the effective date of the registration statement of which this proxy statement/prospectus forms a part for the purpose of obtaining the Requisite Stockholder Approval and if applicable, the stockholder advisory vote contemplated by Rule 14a-21(c) under the Exchange Act, regardless of the outcome of such advisory vote (and in any event within 40 calendar days after such declaration, or if Matterport’s nationally recognized proxy solicitor advises that 40 days from the date of effectiveness is insufficient time to submit and obtain the Requisite Stockholder Approval, such later date to which CoStar Group consents (such consent not to be unreasonably withheld, conditioned or delayed)). Unless a permitted change in recommendation has occurred, as described below, the Matterport Board has agreed to use its reasonable best efforts to solicit such Requisite Stockholder Approval, which includes issuing a recommendation to its stockholders to approve the adoption of the Merger Agreement. Notwithstanding any permitted change in recommendation, Matterport will submit the Merger Agreement to Matterport’s stockholders at the Special Meeting for a vote on the approval and adoption thereof. Matterport has further agreed that, unless the Merger Agreement is terminated pursuant to the terms of the Merger Agreement, Matterport’s obligations to hold the Special Meeting will not be affected by the commencement, public proposal, public disclosure or communication to Matterport or any other person of any Competing Proposal or by a permitted change in recommendation.

Matterport, in consultation with CoStar Group, has set the Record Date for determining the persons entitled to notice of, and to vote at, the Special Meeting. Matterport will not change the date of (or the record date for), postpone or adjourn the Special Meeting without the consent of CoStar Group (which consent shall not be unreasonably withheld, delayed or conditioned), except that Matterport will have the right to postpone or adjourn the Special Meeting for no longer than 30 days in the aggregate under certain circumstances specified in the Merger Agreement, including (a) to the extent necessary to obtain a quorum if, as of the time at which the Special Meeting is scheduled, there are insufficient shares of Matterport Common Stock represented (either present virtually or represented by proxy) to constitute a quorum necessary to conduct the business to be conducted at the Special Meeting and (b) to the extent necessary to ensure that any supplement or amendment to this proxy statement/prospectus that is required by applicable law is properly disclosed to Matterport’s stockholders.

Fees and Expenses

Other than as provided below, all costs and expenses incurred in connection with the Mergers and the transactions contemplated by the Merger Agreement (including, but not limited to, expenses incurred in connection with filing, printing and mailing this proxy statement/prospectus and all required filings in connection with antitrust or foreign investment law matters) will be paid by the party incurring those expenses, whether or not the Mergers are completed. All transfer, stamp and documentary Taxes or fees and sales, use, gains, real property transfer and other similar taxes or fees arising out of or in connection with entering into and carrying out the Merger Agreement shall be paid by the party legally responsible for such taxes.

 

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Termination of the Merger Agreement

Termination. The Merger Agreement may be terminated at any time prior to the First Effective Time, whether before or after the Requisite Stockholder Approval is obtained (except as otherwise noted), under the following circumstances:

 

   

by mutual written consent of each of CoStar Group and Matterport;

 

   

by either CoStar Group or Matterport if:

 

   

the Mergers have not been consummated on or before January 21, 2025 (the “Termination Date”), which will be automatically extended for up to three periods of 90 days each if, at the time of each such extension, all closing conditions other than with respect to receipt of clearance and approvals under certain specified antitrust or foreign investment laws have been satisfied or waived, except that this termination right is not available to any party whose breach of its obligations under the Merger Agreement may not have been a principal cause of or have resulted in the failure of the First Effective Time to occur on or before the Termination Date;

 

   

prior to the First Effective Time, any governmental entity of competent jurisdiction issues a final and nonappealable law or order or takes any other action that permanently restrains, enjoins, renders illegal or otherwise prohibits the Mergers, and any appeal of such law or order or other action has become final and non-appealable; except that this termination right is not available to any party whose breach of its obligations under the Merger Agreement has been a principal cause of or has resulted in the issuance of such law or order or taking of such action; or

 

   

the Requisite Stockholder Approval is not obtained at the Special Meeting (or any adjournment or postponement thereof); except that this termination right is not available to Matterport if Matterport’s failure to perform any of its obligations under the Merger Agreement has been the principal cause of the failure to obtain the Requisite Stockholder Approval.

 

   

by Matterport if:

 

   

CoStar Group or Merger Subs have breached or failed to perform their representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions, subject to a cure period, provided that Matterport is not, at the time of such termination, in breach of any of its representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions; or

 

   

prior to obtaining the Requisite Stockholder Approval, the Matterport Board (or a committee thereof) determines to terminate the Merger Agreement in order to concurrently with such termination enter into a definitive agreement with respect to a Superior Proposal, provided that the Merger Agreement may not be so terminated (a) if Matterport breaches the provisions of the Merger Agreement regarding nonsolicitation of Competing Proposals and such breach was the principal cause of or has resulted in such Superior Proposal and (b) unless concurrently with or prior to such termination, Matterport pays CoStar Group the termination fee discussed below.

 

   

by CoStar Group if:

 

   

Matterport has breached or failed to perform its representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions, subject to a cure period, provided that CoStar Group and Merger Subs are not, at the time of such termination, in breach of any of their representations, warranties, covenants or agreements in the Merger Agreement in a way that prevents satisfaction of certain closing conditions; or

 

   

the Matterport Board makes a change in recommendation of the Mergers (whether or not permitted under the terms of the Merger Agreement).

 

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Effect of Termination. If the Merger Agreement is validly terminated and the Mergers are abandoned, written notice thereof shall be given to the other party or parties, specifying the provisions of the Merger Agreement pursuant to which such termination is made. Upon such termination, the Merger Agreement will become null and void and of no effect without liability on the part of any party thereto (or any of its representatives), and all rights and obligations of any party thereto will cease. However, no party will be relieved or released from any liabilities or damages arising out of its fraud or willful breach of the Merger Agreement occurring prior to such termination, and the provisions of the Merger Agreement relating to effects of termination, termination fees, expenses and transfer taxes and general provisions will continue in effect notwithstanding such termination of the Merger Agreement.

Termination Fee and Expense Reimbursement

Matterport may be obligated to pay CoStar Group a termination fee of $50 million in the following circumstances:

 

   

if Matterport or CoStar Group terminates the Merger Agreement because the Requisite Stockholder Approval has not been obtained at a time when the Merger Agreement is terminable or terminated because the Matterport Board made a change in recommendation, and the termination fee will be payable within two business days after such termination;

 

   

if Matterport terminates the Merger Agreement to enter into a Superior Proposal, and the termination fee will be paid concurrently with such termination;

 

   

if the Merger Agreement is terminated because (i) the Requisite Stockholder Approval was not been obtained, (ii) Matterport breached any of its representations, warranties, covenants or agreements in the Merger Agreement, or (ii) the Mergers have not been consummated prior to or on the Termination Date, provided that (A) prior to such termination and after the date of the Merger Agreement, a Competing Proposal has been publicly announced or otherwise communicated to the Matterport Board (and not withdrawn) and (B) if within 12 months after the date of such termination, a transaction in respect of such Competing Proposal is consummated or Matterport enters into a definitive agreement in respect of such Competing Proposal, and such termination fee will be payable within two business days after such termination (except for purposes of this clause (B), the references to “20%” in the definition of Competing Proposal are deemed to refer instead to “50%”).

CoStar Group may be obligated to pay Matterport a reverse termination fee of $85 million if (i) the Merger Agreement is terminated because the Mergers have not have been consummated prior to or on the Termination Date or due to an applicable law or order arising under the HSR Act or any other antitrust law or foreign investment law that prohibits or makes illegal the consummation of the Mergers; and (ii) all of the conditions to Closing set forth in the Merger Agreement have been satisfied or validly waived (except for those conditions that by their terms must be satisfied at the Closing; provided that such conditions would have been so satisfied if the Closing would have occurred on or before the date of termination), other than the conditions to Closing relating to the expiration of any waiting period or clearance, as applicable, under the HSR Act or any other antitrust law or foreign investment law or the existence of any legal restraints arising under the HSR Act or any other antitrust law or foreign investment law.

Indemnification and Insurance

The Merger Agreement provides that for six years after the First Effective Time, the Surviving Company will indemnify, defend, and hold harmless each current or former directors or officers of Matterport and its subsidiaries to the fullest extent permitted by law against all losses, expenses (including reasonable attorneys’ fees and expenses), judgments, fines, claims, damages or liabilities or amounts paid in settlement, arising out of actions or omissions occurring at or prior to the First Effective Time (and whether asserted or claimed prior to, at or after the First Effective Time (and whether asserted or claimed prior to, at or after the First Effective Time) to

 

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the extent that they arise out of or relate to (i) the fact that such person is or was a director or officer of Matterport or its subsidiaries and (ii) the transactions contemplated by the Merger Agreement, whether asserted or claimed prior to, at or after the First Effective Time.

Matterport may, prior to the First Effective Time, and if Matterport fails to do so, CoStar Group will, and CoStar Group will cause the Surviving Company to, obtain and fully pay the premium for an insurance and indemnification policy that provides coverage for a period of six years from the First Effective Time for events occurring prior to the First Effective Time that is substantially equivalent to and not less favorable in the aggregate to the intended beneficiaries thereof than Matterport’s existing policy. The premium of such policy will not exceed the maximum amount as agreed to by Matterport and CoStar Group.

Amendment, Extension and Waiver of the Merger Agreement

Amendment. At any time before or after receipt of the Requisite Stockholder Approval, the Merger Agreement may be amended by mutual written agreement of Matterport and CoStar Group. However, after receipt of the Requisite Stockholder Approval, no amendment that requires further approval by the Matterport stockholders may be made without such further approval by such stockholders.

Extension; Waiver. At any time prior to the First Effective Time, Matterport or CoStar Group, may (i) extend the time for the performance for its benefit of any obligation or other act of any other party; (ii) waive any inaccuracy in the representations and warranties made to it by another party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement; and (iii) waive compliance with any agreement or condition for its benefit contained in the Merger Agreement.

Governing Law

The Merger Agreement is governed by the laws of the State of Delaware (without giving effect to choice of law principles thereof).

Summary of Voting Agreement

Concurrently with the execution of the Merger Agreement, on April 21, 2024, the following parties (the “Voting Parties”) entered into a voting agreement with CoStar Group and Matterport (the “Voting Agreement”):

 

   

R.J. Pittman, Matterport’s Chief Executive Officer and Chairman of the Matterport Board;

 

   

Lux Capital Management, LLC, LUX Ventures III, L.P., Lux Ventures III Special Founders Fund, L.P., Lux Venture Cayman III, L.P., Lux Co-Invest Opportunities, L.P. and Lux Total Opportunities, L.P.;

 

   

David Gausebeck, Matterport’s Chief Scientist Officer;

 

   

James D. Fay, Matterport’s Chief Financial Officer;

 

   

Jay Remley, Matterport’s Chief Revenue Officer;

 

   

Japjit Tulsi, Matterport’s Chief Technology Officer;

 

   

Matthew Zinn, Matterport’s Chief Legal Officer;

 

   

Jean Barbagelata, Matterport’s Chief People Officer;

 

   

Peter Presunka, Matterport’s Chief Accounting Officer;

 

   

Susan Repo, a member of the Matterport Board;

 

   

Peter Hébert, a member of the Matterport Board;

 

   

Jason Krikorian, a member of the Matterport Board; and

 

   

Mike Gustafson, a member of the Matterport Board.

 

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As of April 21, 2024, the Voting Parties collectively beneficially owned shares representing approximately 15% of the voting power of Matterport Common Stock. Under the Voting Agreement, the Voting Parties agreed to, among other things, vote their shares (i) in favor of the adoption of the Merger Agreement and approval of the Mergers and the transactions contemplated thereby and any other action reasonably requested by CoStar Group in furtherance thereof, (ii) in favor of any proposal to adjourn a meeting of the stockholders of Matterport to solicit additional proxies in favor of the adoption of the Mergers, the Merger Agreement and the transactions contemplated thereby, (iii) against any Competing Proposal and (iv) against any other action, agreement or transaction that is intended to, or would reasonably be expected to, impede, impair, interfere with, delay, postpone, or adversely affect the Mergers or the other transactions contemplated by the Merger Agreement or the Voting Agreement or the performance by Matterport of its obligations under the Merger Agreement or by the Voting Parties of their obligations under the Voting Agreement. The form of the Voting Agreement is attached to this proxy statement/prospectus as Annex C and is incorporated herein by reference.

Litigation Relating to the Mergers

On June 3, 2024, a purported Matterport stockholder filed a complaint in the U.S. District Court for the Northern District of California, captioned Andrew Rose v. Matterport, Inc., et al., Case No. 5:24-cv-3313, naming Matterport and each member of the Matterport Board as defendants. The complaint alleges that CoStar Group’s Form S-4 Registration Statement filed with the SEC on May 21, 2024 is materially misleading and omits certain purportedly material information relating to the sales process, financial projections of Matterport and CoStar Group, the valuation analyses performed by Qatalyst Partners, and negotiations over the terms of post-transaction employment of certain Matterport employees. The complaint asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the Company’s Board. The complaint seeks, among other things, an injunction enjoining consummation of the Merger, an order directing the individual defendants to issue a new Registration Statement, and an award of plaintiff’s costs of the action, including plaintiff’s reasonable attorneys’ and experts’ fees. Additionally, certain purported Matterport shareholders have delivered demand letters alleging similar deficiencies or omissions regarding the disclosures made in the Registration Statement, and requesting relevant books and records. These demand letters, if not resolved, could lead to post-or pre-Mergers lawsuits against Matterport, seeking an injunction to enjoin the consummation of the Mergers. Matterport believes the lawsuits are without merit and intends to vigorously defend against them. Additional lawsuits and demand letters arising out of or relating to the Merger Agreement or the Mergers may be filed or made in the future, which could prevent or delay completion of the Mergers and result in additional costs to Matterport.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

This section describes the material U.S. federal income tax consequences of the Mergers to U.S. Holders (defined below) of Matterport Common Stock who exchange shares of Matterport Common Stock for a combination of shares of CoStar Group Common Stock and cash pursuant to the Mergers. The following discussion is based on the Code, existing and proposed regulations thereunder and published rulings and decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this discussion. This discussion represents the opinion of Foley & Lardner LLP, acting as counsel to Matterport.

For purposes of this discussion, a “U.S. Holder” is holder that is for U.S. federal income tax purposes:

 

   

a citizen or resident of the United States;

 

   

a corporation created or organized in the United States or under the laws of the United States, or of any state thereof, or the District of Columbia;

 

   

an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or

 

   

a trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person.

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Matterport Common Stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Matterport Common Stock, you should consult your own tax advisor regarding the tax consequences of the Mergers.

This discussion addresses only those Matterport stockholders that hold their Matterport Common Stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment), and does not address all of the U.S. federal income tax consequences that may be relevant to particular Matterport stockholders in light of their individual circumstances or to Matterport stockholders subject to special treatment under U.S. federal income tax law, including, without limitation:

 

   

banks, insurance companies or other financial institutions;

 

   

pass-through entities or investors in pass-through entities;

 

   

tax-exempt organizations or governmental organizations;

 

   

dealers in securities;

 

   

traders in securities that elect to use a mark-to-market method of accounting;

 

   

persons who exercise dissenters’ rights;

 

   

persons holding Matterport Common Stock as part of a “straddle,” “hedge,” “conversion Mergers,” “synthetic security” or other integrated investment;

 

   

regulated investment companies or real estate investment trusts;

 

   

persons who hold Matterport Common Stock on behalf of another person as a nominee;

 

   

persons who receive Matterport Common Stock through the exercise of employee stock options or otherwise as compensation;

 

   

persons that purchased or sell their shares of Matterport Common Stock as part of a wash sale;

 

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certain expatriates or persons that have a functional currency other than the U.S. dollar; and

 

   

persons that are not U.S. Holders.

In addition, this discussion does not address any other U.S. federal tax consequences, such as gift or estate taxes, alternative minimum taxes, or any state, local or non-U.S. tax consequences of the Mergers, nor does it address any tax reporting requirements that may be applicable with respect to the Mergers contemplated by the Merger Agreement.

ALL HOLDERS OF MATTERPORT COMMON STOCK (AND HOLDERS OF MATTERPORT EQUITY INCENTIVE AWARDS) SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE TRANSACTION, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY U.S. STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.

Material U.S. Federal Income Tax Consequences of the Mergers

It is intended that, for U.S. federal income tax purposes, the First Merger, together with the Second Merger, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, which is referred to as the Intended Tax Treatment. However, the completion of the Mergers is not conditioned on the Mergers qualifying for the Intended Tax Treatment or upon the receipt of an opinion of counsel to that effect, and whether or not the Mergers will qualify for the Intended Tax Treatment depends on facts that will not be known until the Mergers are completed.

In particular, the Intended Tax Treatment requires that the value of the shares of CoStar Group Common Stock issued to holders of Matterport Common Stock in the Mergers, determined as of completion of the Mergers, represents at least a minimum percentage of the total consideration paid to holders of Matterport Common Stock in the Mergers. While there is no specific guidance as to precisely what minimum percentage is necessary to satisfy this requirement, it would be satisfied if the value of CoStar Group Common Stock received in the Mergers (valued as of completion of the Mergers) represents at least 40% of the total consideration. Because this test is based on the value of CoStar Group Common Stock as of completion of the Mergers, a substantial decline in the value of the CoStar Group Common Stock could cause this requirement to not be met. Accordingly, no assurance can be given that the Mergers will qualify for the Intended Tax Treatment.

Moreover, neither CoStar Group nor Matterport intends to request a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the Mergers. Accordingly, even if CoStar Group and Matterport conclude that the Mergers qualify for the Intended Tax Treatment, no assurance can be given that the Internal Revenue Service will not challenge that conclusion or that a court would not sustain such a challenge. If the Internal Revenue Service successfully challenges the Intended Tax Treatment, U.S. Holders will be treated as if they sold their Matterport Common Stock in a fully taxable transaction (as described below).

Tax Consequences if the Mergers Qualify for the Intended Tax Treatment

Assuming that the Mergers qualify for the Intended Tax Treatment, the U.S. federal income tax consequences of the Mergers to U.S. Holders of Matterport Common Stock are as follows:

 

   

a U.S. Holder of Matterport Common Stock will recognize gain (but not loss) in an amount equal to the lesser of (i) the amount by which the sum of the fair market value of the CoStar Group Common Stock and cash received by a holder of Matterport Common Stock exceeds such U.S. Holder’s tax basis in its Matterport Common Stock, and (ii) the amount of cash received by such U.S. Holder (in each case excluding any cash received instead of fractional share interests in CoStar Group Common Stock, which shall be treated as discussed below);

 

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the aggregate tax basis of the CoStar Group Common Stock received in the Mergers (including any fractional share interests in CoStar Group Common Stock deemed received and exchanged for cash, as discussed below) will be the same as the aggregate tax basis of the Matterport Common Stock exchanged for the CoStar Group Common Stock, decreased by the amount of cash received in the Mergers (excluding any cash received instead of fractional share interests in CoStar Group Common Stock), and increased by the amount of any gain recognized in the exchange (regardless of whether such gain is classified as capital gain or dividend income, as discussed below), excluding any gain recognized with respect to fractional share interests in CoStar Group Common Stock for which cash is received, as discussed below; and

 

   

the holding period of CoStar Group Common Stock received in exchange for shares of Matterport Common Stock (including any fractional share interests in CoStar Group Common Stock deemed received and exchanged for cash, as discussed below) will include the holding period of the Matterport Common Stock exchanged for the CoStar Group Common Stock.

It will not be known at the time of the Special Meeting whether the requirements for the Mergers to qualify for the Intended Tax Treatment will be met. CoStar Group will make a public announcement no later than 45 days after the First Effective Time as to whether or not the Mergers will be reported as a reorganization within the meaning of Section 368(a) of the Code. HOWEVER, MATTERPORT WILL NOT RESOLICIT STOCKHOLDER VOTES IN THE EVENT THAT THE MERGERS FAIL TO QUALIFY FOR THE INTENDED TAX TREATMENT.

Tax Consequences if the Mergers Fail to Qualify as a Reorganization

If any requirement for the Mergers to qualify for the Intended Tax Treatment is not satisfied, a U.S. Holder whose shares of Matterport Common Stock are exchanged in the First Merger for the merger consideration generally will recognize capital gain or loss in an amount equal to the difference between (i) the fair market value of the shares of CoStar Group Common Stock and the amount of cash received in the First Merger (including cash received in lieu of fractional shares of CoStar Group Common Stock) and (ii) the holder’s tax basis in the Matterport Common Stock surrendered. Additionally, a U.S. Holder’s holding period in shares of CoStar Group Common Stock received in the First Merger would begin on the day following the First Merger.

If a U.S. Holder acquired different blocks of Matterport Common Stock at different times or different prices, any gain will be determined separately with respect to each block of Matterport Common Stock, and such U.S. Holder’s tax basis and holding period in its shares of CoStar Group Common Stock may be determined with reference to each block of Matterport Common Stock. Any such U.S. Holders should consult their own tax advisors regarding the manner in which cash and CoStar Group Common Stock received in the exchange should be allocated among different blocks of Matterport Common Stock and with respect to identifying the tax bases or holding periods of the particular shares of CoStar Group Common Stock received in the Mergers.

Any gain or loss recognized by a U.S. Holder generally would be long-term capital gain or loss if the U.S. Holder’s holding period in a particular block of Matterport Common Stock exceeds one year at the First Effective Time of the First Merger. Long-term capital gain of non-corporate U.S. Holders (including individuals) is currently eligible for preferential U.S. federal income tax rates. The deductibility of capital losses is subject to limitations.

In some cases, including if a U.S. Holder actually or constructively owns CoStar Group Common Stock other than CoStar Group Common Stock received pursuant to the First Merger, the recognized gain could be treated as having the effect of a distribution of a dividend under the tests set forth in Section 302 of the Code, in which case such gain would be treated as dividend income. Because the possibility of dividend treatment depends on each U.S. Holder’s particular circumstances, including the application of constructive ownership rules, U.S. Holders of Matterport Common Stock should consult their own tax advisors regarding the application of the foregoing rules to such holders’ particular circumstances.

 

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Cash Received Instead of a Fractional Share of CoStar Group Common Stock

A U.S. Holder of Matterport Common Stock who receives cash instead of a fractional share of CoStar Group Common Stock generally will be treated as having received the fractional share pursuant to the Mergers and then as having sold to CoStar Group that fractional share of CoStar Group Common Stock for cash. As a result, a U.S. Holder of Matterport Common Stock generally will recognize gain or loss equal to the difference between the amount of cash received and the tax basis allocated to such fractional share of CoStar Group Common Stock. Gain or loss recognized with respect to cash received in lieu of a fractional share of CoStar Group Common Stock will generally be capital gain or loss, and will be long-term capital gain or loss if, as of the First Effective Time, the holding period for such shares is greater than one year. The deductibility of capital losses is subject to limitations.

Medicare Net Investment Income Tax

A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (i) the U.S. Holder’s “net investment income” (or “undistributed net investment income” in the case of an estate or trust) for the relevant taxable year and (ii) the excess of the U.S. Holder’s modified adjusted gross income (or adjusted gross income, in the case of an estate or trust) for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual’s circumstances). For this purpose, net investment income generally includes dividend income and net gain recognized with respect to a disposition of shares of Matterport Common Stock pursuant to the Mergers, unless such dividend income or net gain is derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a U.S. Holder that is an individual, estate or trust, please consult your own tax advisors regarding the applicability of the Medicare tax with respect to your disposition of shares of Matterport Common Stock pursuant to the Mergers.

Information Reporting and Backup Withholding

Payments of cash to a U.S. Holder of Matterport Common Stock may, under certain circumstances, be subject to information reporting and backup withholding, unless the U.S. Holder provides proof of an applicable exemption or furnishes the U.S. Holder’s taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a U.S. Holder under the backup withholding rules are not an additional tax and will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.

The preceding discussion is intended only as a general discussion of material U.S. federal income tax consequences of the Mergers. The preceding discussion is not a complete analysis or discussion of all potential tax effects that may be important to you. You are strongly encouraged to consult your own tax advisors as to the specific tax consequences of the Mergers including tax return reporting requirements, the applicability and effect of federal, state, local and other tax laws and the effect of any proposed changes in the tax laws.

 

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THE SPECIAL MEETING

This proxy statement/prospectus is being provided to Matterport stockholders as part of a solicitation of proxies by the Matterport Board for use at the Special Meeting. This proxy statement/prospectus contains important information regarding the Special Meeting, the proposals on which Matterport stockholders are being asked to vote, considerations that Matterport stockholders may find useful in determining how to vote and voting procedures.

Date, Time and Place of Meeting

The Special Meeting will be held virtually on July 26, 2024, at 10:00 a.m. Pacific Time. You will be able to attend the Special Meeting online by visiting https://web.lumiconnect.com/216187135 (password: matterport2024).

Purpose of the Special Meeting

The Special Meeting will be held for the purpose of considering and voting on the following matters:

 

   

The Merger Proposal (Item 1 on the proxy card). To adopt the Merger Agreement and to approve the Mergers and the other transactions contemplated by the Merger Agreement.

 

   

The Transaction Related Compensation Proposal (Item 2 on the proxy card). To approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Matterport’s named executive officers in connection with the Mergers.

 

   

The Adjournment Proposal (Item 3 on the proxy card). To approve one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Recommendation of the Matterport Board

The Matterport Board has determined that the Mergers are advisable and in the best interests of Matterport and its stockholders and has unanimously adopted the Merger Agreement. The Matterport Board unanimously recommends that Matterport stockholders vote “FOR” the Merger Proposal, “FOR” the Transaction Related Compensation Proposal, and “FOR” the Adjournment Proposal. See “The Mergers—Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board” on page 49 for a more detailed discussion of the Matterport Board’s recommendation.

Matterport Record Date; Who Can Vote at the Special Meeting

The Matterport Board has fixed the close of business on June 6, 2024 as the Record Date for determining the holders of Matterport Common Stock entitled to receive notice of and to vote at the Special Meeting. Only Matterport stockholders of record at the close of business on the Record Date are entitled to receive notice of, attend and vote the shares of Matterport Common Stock that they held on that date at the Special Meeting or at any adjournment of the meeting. At the close of business on the Record Date, there were 318,762,400 shares of Matterport Common Stock issued and entitled to vote, held by approximately 171 holders of record. Each share of Matterport Common Stock owned on Matterport’s Record Date is entitled to one vote on each proposal at the Special Meeting.

Vote Required for the Proposals

 

   

Approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Matterport Common Stock entitled to vote at Special Meeting on the Merger Proposal.

 

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Approval of the Transaction Related Compensation Proposal, on an advisory, non-binding basis, requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Transaction Related Compensation Proposal.

 

   

Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Adjournment Proposal, and the chairman of the Special Meeting also has the power to adjourn the Special Meeting from time to time.

Quorum Requirement

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of all outstanding shares of Matterport Common Stock entitled to vote as of the Record Date are present at the Special Meeting or represented by proxy. At the close of business on the Record Date, there were 318,762,400 shares of Matterport Common Stock outstanding and entitled to vote. This means that at least 159,381,201 shares must be represented by stockholders present at the Special Meeting or represented by proxy to have a quorum. Your shares will be counted towards the quorum if you submit a valid proxy or attend the Special Meeting. In the event that a quorum is not present at the Special Meeting, Matterport expects that the Special Meeting will be adjourned to solicit additional proxies.

Shares Held by Officers and Directors

As of the Record Date, the directors and executive officers of Matterport beneficially owned and were entitled to vote, in the aggregate, approximately 33,808,500 issued and outstanding shares of Matterport Common Stock, representing approximately 10.61% of the shares of Matterport Common Stock outstanding on the Record Date. Pursuant to the Voting Agreement, the officers and directors of Matterport have agreed to vote in favor of adoption of the Merger Agreement and approval of the Mergers and the other transactions contemplated by the Merger Agreement, subject to the terms and conditions of the Voting Agreement, as described under “The Merger Agreement—Summary of Voting Agreement” beginning on page 91.

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote at the Special Meeting. Alternatively, you may vote by proxy by signing, dating and returning the proxy card, over the Internet or by telephone. Whether or not you plan to attend the Special Meeting, Matterport urges you to vote by proxy to ensure your vote is counted. Even if you have submitted a proxy before the Special Meeting, you may still attend the Special Meeting and vote virtually. In such case, your previously submitted proxy will be disregarded.

 

   

To vote by proxy over the Internet, follow the instructions provided on the proxy card.

 

   

To vote by telephone, you may vote by proxy by calling the toll-free number found on the proxy card.

 

   

To vote by mail, complete, sign and date the proxy card and return it promptly in the envelope provided. If you return your signed proxy card to Matterport before the Special Meeting, Matterport will vote your shares as you direct.

Beneficial Owners: Shares Registered in the Name of Broker, Bank or Other Agent

If on the Record Date, your shares were held in an account at a broker, bank or other similar organization as your nominee, then you are the beneficial owner of shares held in “street name” and you should have received a voting instruction card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the voting instruction card to ensure that your vote is counted. To vote at the Special Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

 

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Proxy Card Voting Instructions

All shares represented by valid proxies that Matterport receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the Merger Proposal, “FOR” the Transaction Related Compensation Proposal, and “FOR” the Adjournment Proposal. No matters other than the matters described in this proxy statement/prospectus are anticipated to be presented for action at the Special Meeting or at any adjournment or postponement of the Special Meeting. However, if other business properly comes before the Special Meeting, the proxy agents will, in their discretion, vote upon such matters in their best judgment.

Shares Held in “Street Name”; Broker Non-Votes

Under stock exchange rules, banks, brokers and other nominees who hold shares of Matterport Common Stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank or other nominee that are represented at the Special Meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker, bank or other nominee holds your shares of Matterport Common Stock in “street name,” your broker, bank, or other nominee will vote your shares of Matterport Common Stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank or other nominee with this proxy statement/prospectus.

Abstentions and Broker Non-Votes

If you attend the Special Meeting virtually and do not vote or submit a proxy card on which you indicate that you abstain from voting, your abstention will count as present for purposes of establishing a quorum and will have the effect of a vote “AGAINST” the Merger Proposal, “AGAINST” the Transaction Related Compensation Proposal and “AGAINST” the Adjournment Proposal. If you are a holder of shares of Matterport Common Stock entitled to vote at the Special Meeting and you do not attend the Special Meeting virtually or return a proxy, or if you hold your shares in “street name” and you do not provide voting instructions to your broker, bank or other similar organization, your shares will not be voted and will not be treated as present for purposes of establishing a quorum and will have the effect of a vote “AGAINST” the Merger Proposal and assuming a quorum is present at the Special Meeting, will have no effect on the Transaction Related Compensation Proposal and the Adjournment Proposal.

Revocation of Proxies

Matterport stockholders of record may change their vote or revoke their proxy at any time before it is exercised at the Special Meeting by:

 

   

Submitting notice in writing to Matterport’s Secretary at legal@matterport.com;

 

   

Executing and delivering a later-dated proxy card or submitting a later-dated proxy by telephone or on the Internet; or

 

   

Voting while virtually present at the Special Meeting.

Attending the Special Meeting without voting will not revoke your proxy. If your shares of Matterport Common Stock are held in “street name” by a bank or broker, you should follow the instruments of your bank or broker regarding the revocation of proxies.

 

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Solicitation of Proxies

The solicitation of proxies from Matterport stockholders is made on behalf of the Matterport Board. Matterport has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies and provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $13,500 in total. Matterport will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to stockholders. Directors, officers, and employees of Matterport may also solicit proxies in person, by telephone or by other means of communication deemed appropriate. Directors, officers, and employees of Matterport will not be paid any additional compensation for soliciting proxies.

Printed Copies of Our Proxy Materials

Instructions regarding how you can vote are contained on the proxy card included in your proxy materials.

Technical Difficulties

If you have technical difficulties accessing the Special Meeting live audio webcast, technicians will be ready to assist you. Please be sure to check in by 9:00 a.m., Pacific Time, on July 26, 2024, the day of the Special Meeting, so Matterport may address any technical difficulties before the Special Meeting live audio webcast begins. If you encounter any difficulties accessing the Special Meeting live audio webcast during the check-in or meeting time or any difficulties emerge during the meeting, please call the technical support number that will be posted on the Special Meeting log-in page.

Questions and Answers During the Special Meeting

As part of the Special Meeting, Matterport will conduct a live question and answer (“Q&A”) session during which Matterport intends to answer as many questions as possible submitted online during or prior to the Special Meeting that are pertinent to Matterport and Special Meeting matters. If you are a stockholder, you may submit a question one (1) hour in advance of the Special Meeting at https://web.lumiconnect.com/216187135 (password: matterport2024) after logging in with your control number.

Only stockholders that have accessed the Special Meeting as a stockholder by following the procedures outlined above will be permitted to submit questions during the Special Meeting. Each stockholder is limited to no more than two questions during the Special Meeting. Questions should be succinct and only cover a single topic. Matterport will not address questions that are, among other things:

 

   

irrelevant to the business of Matterport or to the business of the Special Meeting;

 

   

related to material non-public information of Matterport, including the status or results of our business since Matterport’s last Quarterly Report on Form 10-Q;

 

   

related to any pending, threatened or ongoing litigation;

 

   

related to personal grievances;

 

   

derogatory references to individuals;

 

   

substantially repetitious of questions already made by another stockholder;

 

   

in excess of the two-question limit;

 

   

in furtherance of the stockholder’s personal or business interests; or

 

   

out of order or not otherwise suitable for the conduct of the Special Meeting as determined by the chair of the Special Meeting or Matterport’s Chief Legal Officer in his or her reasonable judgment.

 

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Additional information regarding the Q&A session will be available in the “Rules of Conduct” available on the Special Meeting webpage for stockholders that have accessed the Special Meeting as a stockholder (rather than as a “Guest”) by following the procedures outlined above.

Assistance

If you have any questions concerning the Mergers or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, or need help voting your shares of Matterport Common Stock, please reach out to Matthew Zinn, Matterport, Inc., 352 East Java Drive, Sunnyvale, California 94089, (650) 641-2241, or Matterport’s proxy solicitor, D.F. King & Co., Inc., toll-free at (866) 356-7813 or via email at mttr@dfking.com.

 

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MATTERPORT PROPOSALS

PROPOSAL 1: THE MERGER PROPOSAL

At the Special Meeting, the Matterport stockholders will be asked to adopt the Merger Agreement. Holders of Matterport Common Stock should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the Merger Agreement and the Mergers. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

After careful consideration, the Matterport Board unanimously adopted the Merger Agreement, authorized and approved the Mergers and the transactions contemplated by the Merger Agreement and determined the Merger Agreement and the Mergers to be advisable and in the best interests of Matterport and its stockholders. Please see “The Mergers—Matterport’s Reasons for the Mergers; Recommendations of the Matterport Board” included elsewhere in this proxy statement/prospectus for a more detailed discussion of the Matterport Board’s recommendation.

Approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Matterport Common Stock entitled to vote at the Special Meeting on the Merger Proposal.

Matterport Board Recommendation

The Matterport Board unanimously recommends that the Matterport stockholders vote “FOR” the Merger Proposal.

 

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PROPOSAL 2: THE TRANSACTION RELATED COMPENSATION PROPOSAL

Section 14A of the Exchange Act, and Rule 14a-21(c) under the Exchange Act require that Matterport seek a non-binding, advisory vote from its stockholders to approve the “golden parachute” compensation that may be paid or become payable to Matterport’s named executive officers that is based on or otherwise relates to the Mergers, as disclosed in “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers” beginning on page 62, including the table titled “Golden Parachute Compensation” in the section entitled “The Mergers—Mergers-Related Compensation for Matterport’s Named Executive Officers” and its accompanying footnotes.

As required by these provisions, Matterport is asking the Matterport stockholders to cast an advisory vote on the adoption of the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to Matterport’s named executive officers that is based on or otherwise relates to the Mergers, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case, as disclosed pursuant to Item 402(t) of Regulation S-K in “The Mergers—Interests of Matterport Directors and Executive Officers in the Mergers” (including the associated footnotes, tables, and narrative discussion) on page 62, are hereby APPROVED.”

The vote with respect to this proposal is an advisory vote and will not be binding on Matterport, the Matterport Board, CoStar Group, any of Matterport’s or CoStar Group’s subsidiaries or the Surviving Company. Therefore, regardless of whether the Matterport stockholders approve this proposal, if the Merger Agreement is approved by Matterport stockholders and completed, the compensation that is based on or otherwise related to the Mergers will still be paid to Matterport’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements.

Approval of this Transaction Related Compensation Proposal is not a condition to the Closing, and approval of this Transaction Related Compensation Proposal is separate and apart from the vote to adopt the Merger Agreement. Accordingly, you may vote to approve the Transaction Related Compensation Proposal and vote not to adopt the Merger Agreement and vice versa.

Approval of the Transaction Related Compensation Proposal, on an advisory, non-binding basis, requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Transaction Related Compensation Proposal.

Matterport Board Recommendation

The Matterport Board unanimously recommends that the Matterport stockholders vote, on a non-binding, advisory basis, “FOR” approval of the Transaction Related Compensation Proposal.

 

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PROPOSAL 3: THE ADJOURNMENT PROPOSAL

At the Special Meeting, the Matterport stockholders will be asked to approve one or more adjournments to the Special Meeting to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the Merger Proposal.

If, at the Special Meeting, (i) there are insufficient shares of Matterport Common Stock represented (either present virtually or by proxy) to constitute a quorum necessary to conduct the business of such meeting, (ii) additional time is required for the filing and mailing of any supplemental or amended disclosure which Matterport has determined is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the Matterport stockholders prior to the Special Meeting or (iii) Matterport reasonably believes that the number of shares of Matterport Common Stock present or represented and voting in favor of the Merger Proposal is insufficient to approve such proposal, Matterport intends to move to adjourn the Special Meeting.

In accordance with the Matterport Bylaws, a vote to approve the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Proposal may be taken in the absence of a quorum.

Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the Special Meeting on the Adjournment Proposal, and the chairman of the Special Meeting also has the power to adjourn the Special Meeting from time to time.

Matterport Board Recommendation

The Matterport Board unanimously recommends that the Matterport stockholders vote “FOR” the Adjournment Proposal.

 

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COMPARATIVE STOCK PRICES AND DIVIDENDS

Shares of CoStar Group Common Stock are listed for trading on the Nasdaq Global Select Market under the symbol “CSGP.” Shares of Matterport Common Stock are listed for trading on the Nasdaq Global Market under the symbol “MTTR.” The following table presents trading information for CoStar Group Common Stock and Matterport Common Stock on April 19, 2024, the last trading day before public announcement of the Merger Agreement and June 6, 2024, the latest practicable trading day before the date of this proxy statement/prospectus. The table also shows the estimated equivalent per share value of the merger consideration for each share of Matterport Common Stock on the relevant date.

 

     Matterport
Closing
Price
     CoStar Group
Closing Price
     Exchange
Ratio(1)
     Estimated
Equivalent
Per Share
Value(2)
 

April 19, 2024

   $ 1.74      $ 84.26        0.03264      $ 5.50  

June 6, 2024

   $ 4.26      $ 77.05        0.03552      $ 5.49  

 

 

(1)

The actual Exchange Ratio at Closing will be determined based on the Average CoStar Group Share Price, which will be the average of the daily volume weighted averages of the trading prices of CoStar Group Common Stock on the Nasdaq Global Select Market on each of the 20 consecutive trading days ending on and including the trading day that is three trading days prior to the date of the First Effective Time of the Mergers. If the Average CoStar Group Share Price is greater than or equal to $94.62 per share, then the Exchange Ratio will be 0.02906. If the Average CoStar Group Share Price is less than or equal to $77.42 per share, then the Exchange Ratio will be 0.03552. If the Average CoStar Group Share Price is greater than $77.42 and less than $94.62 per share, then the Exchange Ratio shall be the quotient of (a) $2.75 divided by (b) the Average CoStar Group Share Price.

(2)

The actual estimated equivalent per share value at the Closing of the Mergers will be determined based on the sum of the Per Share Cash Consideration and the Per Share Stock Consideration Value, which will be the value of shares of CoStar Group Common Stock equal to the product of (x) the Exchange Ratio and (y) the Average CoStar Group Share Price.

The above table shows only historical comparisons. These comparisons may not provide meaningful information to Matterport stockholders in determining whether to adopt the Merger Agreement. Matterport stockholders are urged to obtain current market quotations for CoStar Group Common Stock and Matterport Common Stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus in considering whether to adopt the Merger Agreement. See the section titled “Where You Can Find More Information.

Dividends

CoStar Group has never paid any cash dividends on CoStar Group Common Stock. The CoStar Group Board currently intends to retain any future earnings to finance the operation and expansion of CoStar Group’s business, and CoStar Group does not expect to declare or pay any dividends in the foreseeable future. Any future determination related to CoStar Group’s dividend policy will be made at the discretion of the CoStar Group Board.

Matterport has never paid any dividends on its common stock. Pursuant to the terms of the Merger Agreement, prior to the First Effective Time, Matterport is not permitted to authorize, declare, set aside, pay or make any dividend or other distribution without the consent of CoStar Group.

 

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DESCRIPTION OF CAPITAL STOCK

The following description of some of the terms of CoStar Group Common Stock, the CoStar Group Certificate of Incorporation, the CoStar Group By-laws, and the DGCL does not purport to be complete and is subject to and qualified in its entirety by reference to the CoStar Group Certificate of Incorporation, the CoStar Group By-laws and the DGCL. Copies of the CoStar Group Certificate of Incorporation and CoStar Group By-laws have been filed or incorporated by reference as exhibits to the most recent CoStar Group Annual Report on Form 10-K or a subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by CoStar Group with the SEC. You may obtain copies of any of those documents by visiting the SEC’s website at http://www.sec.gov.

General

CoStar Group has authority under the CoStar Group Certificate of Incorporation to issue up to 1,200,000,000 shares of CoStar Group Common Stock and 2,000,000 shares of CoStar Group preferred stock, par value $0.01 per share (“CoStar Group Preferred Stock”). Shares of CoStar Group Common Stock that are currently outstanding are fully paid and non-assessable. No shares of CoStar Group Preferred Stock are currently outstanding.

The rights of holders of CoStar Group Common Stock may be modified from time to time by the CoStar Group Board pursuant to amendments to the CoStar Group Certificate of Incorporation or the CoStar Group By-laws.

Voting Rights

Holders of shares of CoStar Group Common Stock have one vote per share in all elections of directors and on all other matters submitted to a vote of stockholders of CoStar Group. Except as otherwise required by law, the CoStar Group Certificate of Incorporation or the CoStar Group By-laws, matters submitted to a vote of stockholders (other than director elections) will be decided by the affirmative vote of a majority of the shares of CoStar Group Common Stock present or represented by proxy and entitled to vote on the matter. Holders of shares of CoStar Group Common Stock do not have cumulative voting rights.

Directors will be elected if the number of votes properly cast “for” a nominee’s election exceeds the number of votes properly cast “against” such nominee’s election, unless the number of nominees exceeds the number of directors to be elected, in which case the directors shall be elected by the vote of a plurality of the votes cast. There is no provision for cumulative voting with regard to the election of directors.

Dividend Rights

Subject to the preferences applicable to any then-outstanding shares of CoStar Group Preferred Stock, the holders of CoStar Group Common Stock are entitled to receive dividends, if any, as and when declared, from time to time, by the CoStar Group Board out of funds legally available therefor.

Liquidation, Dissolution or Similar Rights

Upon dissolution, after satisfaction of the claims of creditors and the payment to any holders of CoStar Group Preferred Stock of the full preferential amounts to which such holders may be entitled, the remaining assets of CoStar Group would be distributed to the holders of CoStar Group Common Stock ratably in proportion to the number of shares of CoStar Group Common Stock held by them.

Other Rights

CoStar Group Common Stock is not redeemable, is not subject to redemption or sinking fund provisions, does not have any conversion rights and is not subject to call. Holders of shares of CoStar Group Common Stock do not have preemptive rights to acquire newly issued shares.

 

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Anti-Takeover Effects of Provisions of the CoStar Group Certificate of Incorporation, CoStar Group By-laws, and Delaware Law

Various provisions contained in the CoStar Group Certificate of Incorporation, the CoStar Group By-laws, and the DGCL could delay or discourage some transactions involving an actual or potential change in control of CoStar Group or its management.

For example, provisions in the CoStar Group Certificate of Incorporation and the CoStar Group By-laws:

 

   

authorize the CoStar Group Board to establish one or more series of undesignated preferred stock, the terms of which can be determined by the CoStar Group Board at the time of issuance;

 

   

do not authorize cumulative voting;

 

   

authorize the CoStar Group Board to alter, amend or repeal any bylaw;

 

   

provide that, except as otherwise provided in the CoStar Group Certificate of Incorporation or by the DGCL, special meetings of CoStar Group stockholders may be called only by the CoStar Group Board in a resolution approved by a majority of the CoStar Group Board or by the Chairman of the CoStar Group Board or the President of CoStar Group;

 

   

provide that CoStar Group stockholders may take action only at a duly called meeting and not by written consent;

 

   

in connection with stockholder meetings, provide an advanced written notice procedure with respect to stockholder nominations for directors and bringing other business; and

 

   

provide that CoStar Group directors may fill any vacancies on the CoStar Group Board, including newly created board seats resulting from an increase in the authorized number of directors and vacancies resulting from death, resignation, or other cause.

In addition, CoStar Group is subject to Section 203 of the DGCL, which regulates, subject to some exceptions, acquisitions of publicly held Delaware corporations. In general, Section 203 prohibits CoStar Group from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person becomes an interested stockholder, unless:

 

   

the CoStar Group Board approved the business combination or the transaction in which the person became an interested stockholder prior to the date the person attained this status;

 

   

upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owned at least 85% of CoStar Group voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and issued under employee stock plans under which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

   

on or subsequent to the date the person became an interested stockholder, the CoStar Group Board approved the business combination and the stockholders other than the interested stockholder authorized the transaction at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding stock not owned by the interested stockholder.

Section 203 defines a “business combination” to include:

 

   

any merger or consolidation involving CoStar Group and the interested stockholder;

 

   

any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of CoStar Group assets;

 

   

in general, any transaction that results in the issuance or transfer by us of any of CoStar Group stock to the interested stockholder;

 

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any transaction involving us that has the effect of increasing the proportionate share of CoStar Group stock owned by the interested stockholders; and

 

   

the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges, or other financial benefits provided by or through CoStar Group.

In general, Section 203 defines an “interested stockholder” as any person who, together with the person’s affiliates and associates, owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of a corporation’s voting stock.

Transfer Agent

The registrar and transfer agent for CoStar Group Common Stock is Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company).

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF MATTERPORT

The following table sets forth information regarding the beneficial ownership of Matterport’s voting shares by:

 

   

each person, or group of affiliated persons, who is known to Matterport to be the beneficial owner of more than 5% of our voting shares;

 

   

each of Matterport’s named executive officers and directors; and

 

   

all of Matterport’s executive officers and directors as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days of May 14, 2024.

Percentage ownership of Matterport voting securities is based on 314,619,027 shares of Matterport’s Common Stock issued and outstanding as of May 14, 2024.

Unless otherwise indicated, Matterport believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them. All references in the table and in the footnotes are to Matterport Common Stock.

 

Name and Address of Beneficial Owners

   Number of Shares of
Common Stock
Beneficially Owned
     % of Outstanding
Common Stock
 

Directors and Named Executive Officers

     

R.J. Pittman(1)(2)

     17,367,597        5.5

Japjit Tulsi(1)(3)

     3,508,975        1.1

Jay Remley (1)(4)

     3,364,129        1.1

James D. Fay(1)(5)

     2,963,285        *  

Matthew Zinn(1)(6)

     662,297        *  

Mike (Gus) Gustafson(1)(7)

     751,193        *  

Peter Hébert(8)

     26,418,802        8.4

Jason Krikorian(1)(9)

     198,889        *  

Susan Repo(1)(10)

     112,962        *  

All Directors and Executive Officers of Matterport as a Group (9 individuals)

     55,348,129        17.6

Five Percent Holders

     

Entities affiliated with Lux Capital Management(8)

     26,418,802        8.4

BlackRock, Inc.(11)

     23,798,764        7.6

The Vanguard Group(12)

     23,886,410        7.6

 

*

Less than one percent.

(1)

The principal business address is c/o Matterport, Inc., 352 East Java Drive, Sunnyvale, California 94089.

(2)

Consists of (a) 3,696,483 shares of Matterport Common Stock and (b) 13,671,114 options and RSUs exercisable for shares of Matterport Common Stock.

 

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(3)

Consists of (a) 465,107 shares of Matterport Common Stock and (b) 3,043,868 options and RSUs exercisable for shares of Matterport Common Stock.

(4)

Consists of (a) 1,168,654 shares of Matterport Common Stock and (b) 2,195,475 options and RSUs exercisable for shares of Matterport Common Stock.

(5)

Consists of (a) 1,507,482 shares of Matterport Common Stock and (b) 1,455,803 options and RSUs exercisable for shares of Matterport Common Stock.

(6)

Consists of (a) 391,211 shares of Matterport Common Stock and (b) 271,086 RSUs exercisable for shares of Matterport Common Stock.

(7)

Consists of (a) 181,761 shares of Matterport Common Stock, (b) 16,512 Matterport Common Stock held by Brock M. Gustafson Trust, (c) 16,512 Matterport Common Stock held by Ashley E. Gustafson Trust, and (d) 536,408 options and RSUs exercisable for shares of Matterport Common Stock.

(8)

Based on a Schedule 13D/A filed on March 17, 2022. Consists of (a) 279,793 shares of Matterport Common Stock held by Peter Hébert (b) 38,126 shares of Matterport Common Stock held by Lux Capital Management, LLC, (c) 60,763 RSUs exercisable for shares of Matterport Common Stock, (d) 15,174,620 shares of Matterport Common Stock held by Lux Ventures III, L.P., (e) 5,806,341 shares of Matterport Common Stock held by Lux Co-Invest Opportunities, L.P., (f) 719,947 shares of Matterport Common Stock held by Lux Ventures Cayman III, L.P., (g) 7,466 shares of Matterport Common Stock held by Lux Ventures III Special Founders Fund, L.P. and (h) 4,331,746 shares of Matterport Common Stock held by Lux Total Opportunities, L.P. Lux Venture Partners III, LLC is the general partner of each of Lux Ventures III L.P. and Lux Ventures III Special Founders Fund, L.P. and exercises voting and dispositive power over the shares noted herein held thereby. Lux Co-Invest Partners, LLC is the general partner of Lux Co-Invest Opportunities, L.P. and exercises voting and dispositive power over the shares noted herein held by Lux Co-Invest Opportunities, L.P. Lux Ventures Cayman III General Partner Limited is the general partner of Lux Ventures Cayman III, L.P. and exercises voting and dispositive power over the shares noted herein held by Lux Ventures Cayman III, L.P. Lux Total Opportunities Partners, LLC is the general partner of Lux Total Opportunities, L.P. and exercises voting and dispositive power over the shares noted herein held by Lux Total Opportunities, L.P. Peter Hébert and Josh Wolfe are the individual managing members of Lux Venture Partners III, LLC, Lux Co-Invest Partners, LLC, Lux Ventures Cayman III General Partner Limited and Lux Total Opportunities Partners, LLC. The individual managers, as the sole managers of Lux Venture Partners III, LLC, Lux Co-Invest Partners, LLC, Lux Ventures Cayman III General Partner Limited and Lux Total Opportunities Partners, LLC, may be deemed to share voting and dispositive power for the shares noted herein held by Lux Ventures III, L.P., Lux Co-Invest Opportunities, L.P., Lux Ventures Cayman III, L.P., Lux Ventures III Special Founders Fund, L.P. and Lux Total Opportunities, L.P. Each of Lux Venture Partners III, LLC, Lux Co-Invest Partners, LLC, Lux Ventures Cayman III General Partner Limited, and Lux Total Opportunities Partners, LLC and the individual managers separately disclaim beneficial ownership over the shares noted herein except to the extent of their pecuniary interest therein. The address for these entities and individuals is c/o Lux Capital Management, 920 Broadway, 11th Floor, New York, NY 10010.

(9)

Consists of (a) 138,126 shares of Matterport Common Stock and (b) 60,763 RSUs exercisable for shares of Matterport Common Stock.

(10)

Consists of 26, 099 shares of Matterport Common Stock and (b) 86,863 RSUs exercisable for shares of Matterport Common Stock.

(11)

Based on a Schedule 13G filed on January 26, 2024. BlackRock, Inc. has sole voting power with respect to 23,306,560 shares of Common Stock. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. BlackRock, Inc. reported beneficial ownership of 23,798,764 shares and had sole voting power over 23,306,560 shares, shared voting power over no shares, sole investment power over 23,798,764 shares and shared investment power over no shares.

(12)

Based on a Schedule 13G filed on February 13, 2024. The Vanguard Group has sole voting power with respect to zero shares of Common Stock. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group reported beneficial ownership of 23,886,410 shares and had sole voting power over no shares, shared voting power over 156,143 shares, sole investment power over 23,471,394 shares and shared investment power over 415,016 shares.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF COSTAR GROUP

The following table provides certain information regarding the beneficial ownership of CoStar Group Common Stock as of May 10, 2024, unless otherwise noted, by:

 

   

Each of CoStar Group’s current directors;

 

   

Each person CoStar Group knows to be the beneficial owner of more than 5% of outstanding CoStar Group Common Stock (based upon Schedule 13D and Schedule 13G filings with the SEC, which can be reviewed for further information on each such beneficial owner’s holdings); and

 

   

All of Costar Group’s current executive officers and current directors as a group.

 

Name and Address(1)

   Shares
Beneficially
Owned(1)
     Percentage of
Outstanding
Shares(1)
 

Michael R. Klein(2)

     1,932,525        *  

Andrew C. Florance(3)

     2,451,439        *  

Scott T. Wheeler(4)

     242,022        *  

Lisa C. Ruggles(5)

     290,216        *