SCHEDULE: Deutsche Boerse Backs Forge Global Merger with Schwab

Deutsche Boerse AG has entered into a support agreement to vote its 11.9% stake in Forge Global Holdings, Inc. in favor of its merger with The Charles Schwab Corporation.

Summary

• Deutsche Boerse AG, holding 1,614,146 shares representing 11.9% of Forge Global Holdings, Inc.'s common stock, has signed a Support Agreement.
• This agreement commits Deutsche Boerse AG to vote all its shares in favor of the proposed merger between Forge Global Holdings, Inc. and The Charles Schwab Corporation's wholly-owned subsidiary, Ember-Falcon Merger Sub, Inc.
• The merger will result in Forge Global Holdings, Inc. becoming a wholly-owned subsidiary of The Charles Schwab Corporation.
• The Support Agreement also requires Deutsche Boerse AG to vote against any other acquisition proposals involving Forge Global Holdings, Inc.
• Concurrently, Forge Global Holdings, Inc. has exercised its right to acquire all equity securities of Forge Europe GmbH held by Deutsche Boerse AG, a transaction expected to close simultaneously with the merger.
• The Forge Global Holdings, Inc. Board, acting upon the unanimous recommendation of an independent Special Committee, has approved the merger and recommended its adoption by shareholders.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the announcement of a definitive merger agreement with a major financial institution and the strong support from a significant shareholder. The unanimous board approval also adds to the positive outlook for the transaction's completion. However, the lack of specific financial terms of the merger prevents a higher score.

Positives

• A major shareholder, Deutsche Boerse AG, holding an 11.9% stake, has committed to supporting the merger, significantly increasing the likelihood of its approval.
• The Forge Global Holdings, Inc. Board and an independent Special Committee unanimously approved the merger, deeming it advisable, fair, and in the best interests of the company and its shareholders.
• The merger provides a clear strategic path for Forge Global Holdings, Inc. as it integrates into a larger, established financial institution, The Charles Schwab Corporation.
• The concurrent Forge Europe GmbH transaction simplifies Forge Global Holdings, Inc.'s corporate structure by consolidating full ownership of its European entity.

Negatives

• The filing does not disclose the specific financial consideration shareholders will receive in the merger, preventing a full assessment of its financial attractiveness.
• The Support Agreement restricts Deutsche Boerse AG from transferring its shares, limiting its liquidity until the merger's completion or termination of the agreement.
• Deutsche Boerse AG has waived its right to demand appraisal or dissenters' rights in connection with the merger.

Risks

• The merger is subject to various terms and conditions outlined in the Merger Agreement, which are not fully detailed in this filing.
• The Support Agreement can terminate under specific conditions, including the termination of the Merger Agreement or if the Merger Agreement is amended in a way that is adverse to Deutsche Boerse AG.
• A 'Change of Recommendation' by the Forge Global Holdings, Inc. Board could impact the effectiveness or reinstatement of the Support Agreement.

Future Outlook

The merger of Forge Global Holdings, Inc. with Ember-Falcon Merger Sub, Inc., a wholly-owned subsidiary of The Charles Schwab Corporation, is expected to close, making Forge a private entity under Schwab. The acquisition of Deutsche Boerse AG's interest in Forge Europe GmbH is also expected to close simultaneously with the merger.

Management Comments

• The independent and disinterested Special Committee of the Company Board has unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement are advisable, fair to, and in the best interests of, the Company and the holders of Shares.
• The Company Board, acting upon the recommendation of the Special Committee, has unanimously approved and declared advisable the Merger Agreement and the transactions contemplated by the Merger Agreement.
• Stockholder (Deutsche Boerse AG) is supportive of the Merger Agreement and the transactions contemplated thereby, including the Merger, and has determined that it is in its best interests to enter into this Agreement to provide for its support.

Industry Context

This filing indicates a consolidation within the financial services sector, with a major brokerage firm, The Charles Schwab Corporation, acquiring a company focused on private market access. This aligns with a broader trend of established financial institutions seeking to expand their offerings into alternative assets and private markets.

Corporate Governance

Related Party Transactions

• The Issuer's entry into the Merger Agreement triggered a put/call right under the shareholders' agreement governing Forge Europe GmbH, an entity in which the Issuer has a majority interest and the remaining interest is held by the Reporting Person (Deutsche Boerse AG).
• The Issuer has exercised its right to acquire all equity securities of Forge Europe GmbH held by Deutsche Boerse AG, with the transaction expected to close simultaneously with the Merger.

Stakeholder Impact

• Shareholders: Will vote on the merger. Those holding common stock will receive consideration (not specified in this filing) if the merger closes. Deutsche Boerse AG, as a significant shareholder, has committed its support.
• Employees: Forge Global Holdings, Inc. will become a wholly-owned subsidiary of The Charles Schwab Corporation, potentially leading to integration and organizational changes.
• Customers: Forge Global Holdings, Inc.'s services will be integrated into The Charles Schwab Corporation's ecosystem, potentially expanding offerings or changing service delivery.
• Deutsche Boerse AG: Will divest its stake in Forge Global Holdings, Inc. and its remaining interest in Forge Europe GmbH, streamlining its portfolio.

Next Steps

• Forge Global Holdings, Inc. stockholders will vote on the adoption of the Merger Agreement.
• The Merger will be consummated, with Forge Global Holdings, Inc. becoming a wholly-owned subsidiary of The Charles Schwab Corporation.
• The Forge Europe GmbH Transaction is expected to close simultaneously with the Merger.

Key Dates

Recommendation

The announcement of a definitive merger agreement with The Charles Schwab Corporation, coupled with a significant shareholder (Deutsche Boerse AG) committing its 11.9% stake in support, substantially increases the likelihood of the transaction's completion. While the specific financial terms of the merger are not disclosed in this filing, the unanimous board approval suggests a fair valuation. Investors should hold their shares pending further details on the merger consideration, as the stock price will likely reflect the agreed-upon acquisition price, with limited upside beyond that unless a superior offer emerges (which is less likely given the support agreement).

Keywords

Forge Global Holdings, The Charles Schwab Corporation, Deutsche Boerse AG, Merger Agreement, Support Agreement, Acquisition, Common Stock, SEC Filing, Schedule 13D, Corporate Governance, Shareholder Vote, Forge Europe GmbH