On November 2, 2020, Twilio Inc. (“Twilio”) completed its previously announced acquisition of Segment.io, Inc., a Delaware corporation (the “Company”), pursuant to the terms of an Agreement and Plan of Reorganization, dated as of October 12, 2020 (the “Merger Agreement”), with the Company, Scorpio Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Twilio (“Merger Sub”), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of certain Company securityholders.
The acquisition was accomplished by the merger of Merger Sub with and into the Company (the “Merger”), and upon consummation of the Merger, Merger Sub ceased to exist and the Company became a wholly owned subsidiary of Twilio.
Upon consummation of the transactions contemplated by the Merger Agreement (the “Closing”), all outstanding shares of Company capital stock, restricted stock units representing the right to receive shares of Company capital stock, options to purchase shares of Company capital stock and warrants to purchase shares of Company capital stock, in each case other than as set forth in the following proviso, were cancelled in exchange for the right to receive an aggregate of 9,522,489 shares of Class A Common Stock of Twilio, par value $0.001 per share (“Twilio Class A Common Stock”) (the “Stock Consideration”); provided, that (a) shares of Company capital stock held by unaccredited stockholders, vested restricted stock units representing the right to receive shares of Company capital stock, and certain vested options to purchase shares of Company capital stock were cancelled in exchange for the right to receive an aggregate amount in cash equal to approximately $335,258,445 in lieu of shares of Twilio Class A Common Stock, (b) certain vested and unvested options to purchase shares of Company capital stock and unvested restricted stock units representing the right to receive shares of Company capital stock, in each case, held by employees of the Company who became, upon Closing, employees of Twilio or any of its subsidiaries have been assumed by Twilio and became vested and unvested options, as applicable, to purchase 1,030,638 shares of Twilio Class A Common Stock and unvested restricted stocks units representing the right to receive 158,748 shares of Twilio Class A Common Stock, as the case may be, and (c) all other outstanding unvested options to purchase shares of Company capital stock and all other outstanding unvested restricted stock units representing the right to receive shares of Company capital stock were cancelled for no consideration. A portion of the aggregate consideration payable to certain of the Company securityholders is being held in escrow (a) to secure certain indemnification obligations of such Company securityholders and (b) in connection with certain post-closing purchase price adjustment mechanisms. In addition, Twilio has established a retention pool in an aggregate amount of approximately $40,000,000 in the form of restricted stock units covering shares of Twilio Class A Common Stock that will be granted to certain Company employees in accordance with the terms of the Merger Agreement.
Twilio issued the Stock Consideration described herein in reliance upon the exemptions from registration afforded by Section 4(a)(2) and Rule 506 promulgated under the Securities Act of 1933, as amended.
The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which will be filed as an exhibit on the earlier to be filed of (i) Twilio’s Annual Report on Form 10-K for the year ending December 31, 2020 and (ii) the Resale Registration Statement on Form S-3 covering the resale of the Stock Consideration.
On November 2, 2020, Twilio issued a press release announcing the Closing. The press release is furnished herewith as Exhibit 99.1.