DEFA14A: PROS Holdings Supplements Merger Proxy Amid Lawsuits

PROS Holdings, Inc. has filed supplemental disclosures to its definitive proxy statement for its upcoming merger with Portofino Parent, LLC, addressing shareholder litigation and demand letters.

Summary

• PROS Holdings, Inc. (the Company) entered into an Agreement and Plan of Merger (the Merger Agreement) with Portofino Parent, LLC and Portofino Merger Sub, Inc. on September 22, 2025.
• A special meeting of stockholders to vote on the Merger is scheduled for December 4, 2025, at 2:00 p.m. Central Time via the Internet.
• Two putative stockholder lawsuits (Weiss v. PROS Holdings, Inc., et al., and Moore v. PROS Holdings, Inc., et al.) were filed on November 11 and November 12, 2025, respectively, in the Supreme Court of New York, New York County.
• Fourteen separate demand letters and one associated draft complaint were also sent to the Company between October 28, 2025, and November 25, 2025, alleging deficiencies in disclosures.
• The lawsuits and letters claim the Definitive Proxy Statement failed to disclose material information and seek to enjoin the Merger or recover damages.
• The Company believes the allegations are without merit and its disclosures comply with applicable law, but is voluntarily supplementing to avoid nuisance, risks, costs, uncertainties, and potential delays to the Merger.
• Supplemental disclosures clarify that Thoma Bravo's bid package did not include proposals or conditions regarding management participation/employment in the Surviving Corporation prior to signing the Merger Agreement.
• Updated financial advisor analysis details include cash and cash equivalents of approximately $187 million as of June 30, 2025, and debt of $315 million as of June 30, 2025.
• Estimated federal tax savings due to net operating losses for fiscal years 2034 and beyond are approximately $1 million to $2 million.
• Qatalyst Partners used a representative NTM Revenue Multiple range of 2.0x to 5.5x, applied to the Company's estimated next-twelve months revenue (ending June 30, 2026) of approximately $379 million.
• Unaudited prospective financial information projects revenue to grow from $362 million in 2025E to $1,003 million in 2034E, and Levered Free Cash Flow from $44 million in 2025E to $256 million in 2034E.

Sentiment

Score: 5

Explanation: The filing is neutral. While it addresses negative events (lawsuits), the company's response is a procedural step to ensure the merger proceeds, which is a positive for the transaction. It doesn't introduce new financial performance data that would significantly shift sentiment, but rather clarifies existing information.

Positives

• The Company is proactively addressing shareholder concerns by providing supplemental disclosures, aiming to facilitate the merger's approval and avoid potential delays.
• The supplemental disclosures provide additional clarity on the financial advisor's valuation methodologies and management projections, enhancing transparency for stockholders.

Negatives

• The Company is facing multiple shareholder lawsuits and demand letters alleging insufficient disclosures, which could create legal costs and reputational risk.
• The need for supplemental disclosures indicates that the initial proxy statement was perceived as lacking material information by some shareholders, potentially complicating the merger process.

Risks

• The risk that the Merger may not be completed in a timely manner or at all, which could adversely affect the Company's business and stock price.
• Failure to satisfy the conditions to the consummation of the Merger, including stockholder adoption of the Merger Agreement.
• The occurrence of any event, change, or circumstance that could lead to the termination of the Merger Agreement.
• The possibility that the Merger Agreement may be terminated in circumstances requiring the Company to pay a termination fee.
• The effect of the announcement or pendency of the Merger on the Company's business relationships, operating results, and general business.
• Risks that the proposed Merger disrupts current plans and operations.
• Risks related to diverting management's attention from ongoing business operations.
• The outcome of any legal proceedings instituted against the Company related to the Merger Agreement or the Merger.
• The Company's ability to retain, hire, and integrate skilled personnel, including senior management, and maintain relationships with key business partners and customers.
• Unexpected costs, charges, or expenses resulting from the proposed Merger.
• The impact of adverse general and industry-specific economic and market conditions.
• Risks caused by delays in upturns or downturns being reflected in the Company's financial position and results of operations.
• Risks that the benefits of the Merger are not realized when and as expected.
• Uncertainty as to the timing of completion of the proposed Merger.

Future Outlook

The Company's forward-looking statements indicate expectations for the timely completion of the proposed Merger. Management projections anticipate significant revenue growth from $362 million in 2025 to over $1 billion by 2034, alongside substantial increases in Adjusted EBITDA and Free Cash Flow over the same period. However, these projections are subject to various risks, including the merger's completion, market conditions, and operational challenges.

Management Comments

• The Company believes that the allegations in the complaints and letters described above are without merit.
• The Company also believes that the disclosures set forth in the Definitive Proxy Statement comply fully with all applicable law, and do not need to be supplemented.
• Nevertheless, solely to avoid the nuisance, risks, costs, and uncertainties inherent in disputes concerning these types of allegations, including the possibility that any such claim could delay or adversely affect the Merger, and allow the Company's stockholders to vote on the Merger at the Special Meeting, the Company has determined voluntarily to supplement certain disclosures.

Industry Context

This filing reflects a common challenge in large M&A transactions within the software industry, where shareholder activism and litigation often arise concerning disclosure adequacy. The detailed financial projections and comparable company/transaction analyses provided in the supplemental disclosures are standard practice for justifying deal valuations in a competitive and dynamic software market. The involvement of private equity firms like Thoma Bravo as acquirors is also a prevalent trend in the mature software sector, often leading to take-private transactions.

Comparison to Industry Standards

• The Selected Publicly Traded Companies Analysis includes a range of subscription, mature software, and travel software companies, providing a broad but relevant set of comparables for valuation metrics like CY2026E Revenue Multiple and LFCF Multiple.
• The Selected Transactions Analysis lists numerous M&A deals from 2015 to 2025, many involving prominent private equity firms (e.g., Thoma Bravo, Vista Equity Partners, Silver Lake) and strategic acquirors (e.g., Salesforce, IBM, Cisco), which is standard practice for benchmarking transaction multiples (NTM Revenue, EBITDA, LFCF).
• Qatalyst Partners' selected NTM Revenue Multiple range of 2.0x to 5.5x for PROS Holdings, applied to an estimated $379 million next-twelve months revenue, falls within the observed ranges of the selected transactions, suggesting a valuation approach consistent with industry M&A benchmarks.

Legal Proceedings

• Two putative stockholder lawsuits filed against the Company and its Board of Directors in the Supreme Court of New York, New York County: (i) Weiss v. PROS Holdings, Inc., et al., Index No. 659707/2025, filed on November 11, 2025, and (ii) Moore v. PROS Holdings, Inc., et al., Index No. 659694/2025, filed on November 12, 2025.
• Fourteen separate demand letters and one associated draft complaint sent to the Company by counsel for purported stockholders between October 28, 2025, and November 25, 2025.
• Allegations in the complaints and letters include that the Definitive Proxy Statement failed to disclose material information.
• The lawsuits seek to enjoin the Company from proceeding with or consummating the proposed Merger and seek to recover damages if the Merger is consummated.

Stakeholder Impact

• **Shareholders:** Will receive additional information to consider before voting on the merger. The litigation and supplemental disclosures aim to protect their interests by ensuring adequate information and preventing potential delays or adverse effects on the merger.
• **Management:** Attention may be diverted by legal proceedings, but the voluntary disclosures aim to mitigate further disruption and allow focus on the merger's completion.
• **Acquirer (Portofino Parent, LLC):** The supplemental disclosures and resolution of litigation risks help clear the path for the merger's completion, reducing uncertainty for the acquirer.

Next Steps

• The special meeting of the Company's stockholders is scheduled for December 4, 2025, to vote on the proposed Merger.
• The Company will continue to defend against the shareholder lawsuits and demand letters, although it has voluntarily provided supplemental disclosures.

Key Dates

Keywords

PROS Holdings, Merger, Proxy Statement, Shareholder Lawsuit, SEC Filing, Corporate Governance, M&A, Financial Projections, Software Industry, Thoma Bravo