Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On July 24, 2022, Zymergen Inc., a Delaware public benefit corporation (the
"Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Ginkgo Bioworks Holdings, Inc., a Delaware corporation
("Parent"), and Pepper Merger Subsidiary Inc., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("Merger Sub"), providing for the
merger of Merger Sub with and into the Company (the "Merger"), with the Company
surviving the Merger as a wholly owned subsidiary of Parent. Capitalized terms
used herein but not otherwise defined have the meaning set forth in the Merger
Agreement.
Merger Consideration
At the effective time of the Merger (the "Effective Time"), each share of common
stock, par value $0.001 per share, of the Company ("Company Common Shares") that
is issued and outstanding as of immediately prior to the Effective Time (other
than certain excluded shares specified in the Merger Agreement) will be
automatically cancelled, extinguished and converted into the right to receive
0.9179 of a share of Class A Common Stock, par value $0.0001 per share, of
Parent ("Parent Class A Shares," and such consideration, the "Merger
Consideration") and cash in lieu of any fractional Parent Class A Shares,
without interest.
Treatment of Equity Awards
At the Effective Time, each option to purchase Company Common Shares (each, a
"Company Option") with an exercise price per share less than the Merger
Consideration Value that is outstanding immediately prior to the Effective Time,
whether vested or unvested, will be cancelled and converted into the right to
receive a number of Parent Class A Shares equal to the Option Consideration
Value with respect such Company Option divided by the Parent Class A Share
Price, and each Company Option with an exercise price per share that is equal to
or greater than the Merger Consideration Value will be cancelled for no
consideration. "Option Consideration Value" means an amount, without interest,
equal to the product of (i) the excess of (A) the Merger Consideration Value
over (B) the exercise price per share of such Company Option, and (ii) the total
number of Company Common Shares issuable upon exercise in full of such Company
Option. "Merger Consideration Value" means an amount (rounded down to the
nearest whole cent) equal to the product of (x) the Merger Consideration and (y)
the Parent Class A Share Price. "Parent Class A Share Price" means the
volume-weighted average price of Parent Class A Shares on the New York Stock
Exchange ("NYSE") for the period of five consecutive trading days ending on and
including the second full trading day prior to the Effective Time.
At the Effective Time, each vested Company restricted stock unit (each, a
"Company RSU") that is outstanding immediately prior to the Effective Time
(including after giving effect to any acceleration of vesting to which such
Company RSU is entitled as of immediately prior to the Effective Time) will be
cancelled and converted into a right to receive the Merger Consideration. each
unvested Company RSU that is outstanding immediately prior to the Effective Time
will be cancelled and converted into a Parent restricted stock unit award
("Parent RSU") with respect to the number of Parent Class A Shares that is equal
to the product of (A) the number of Company Common Shares subject to such
unvested Company RSU as of immediately prior to the Effective Time and (B) the
Merger Consideration, rounded down to the nearest whole share, which such Parent
RSU award will be subject to the same vesting terms and conditions applicable to
the Company RSU to which it relates as of immediately prior to the Effective
Time, including any applicable vesting acceleration provisions in connection
with such holder's termination of employment or service but otherwise will be
subject to the terms and conditions of Parent's 2021 stock incentive award plan.
Conditions to Closing
The parties' obligation to consummate the Merger is subject to the satisfaction
or waiver of certain conditions set forth in the Merger Agreement, including,
among others: (i) the adoption of the Merger Agreement by the holders of a
majority of the Company Common Shares outstanding, (ii) the expiration or
termination of the waiting periods applicable to the consummation of the Merger
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and,
if a merger control inquiry is initiated or commenced by a governmental
authority outside of the United States, approval in that jurisdiction, (iii) the
absence of any law or order restraining, enjoining or otherwise prohibiting the
Merger, (iv) Parent's registration statement on Form S-4 having been declared
effective in accordance with the provisions of the Securities Act of 1933, as
amended, (v) authorization and approval of the shares of Parent Class A Common
Stock for listing on NYSE (or any successor inter-dealer quotation system or
stock exchange thereto), (vi) no material adverse effect has occurred on the
other party since the signing of the Merger Agreement that is continuing and
(vii) certain other customary conditions relating to the other party's
representations and warranties in the Merger Agreement and the performance of
its respective obligations.
Parent's obligation to consummate the Merger is also subject to the satisfaction
or waiver of the condition that (i) the Company has not incurred or otherwise
become liable for additional costs, expenses or liabilities to the Company or
its subsidiaries with respect to its leased real property not contemplated under
a specified schedule outlining its real estate plans and (ii) certain specified
. . .
Item 2.05 Costs Associated with Exit or Disposal Activities.
On July 25, 2022, the Company also announced a reduction in force as part of its
efforts to continue to execute on its previously announced strategic plan,
including managing costs and conserving cash resources. The initial phase of
this reduction in force is expected to result in the termination of
approximately 80 employees. The Company currently estimates that it will incur
severance costs of approximately $4.0 million related to the initial phase of
this reduction in force, as well as stock-based compensation and employee
restructuring costs, the amount of which has not yet been estimated. The Company
also announced that, together with its partner Sumitomo Chemical Co. Ltd.
("Sumitomo"), it has determined to pause work on its Z-1 program. The Company's
collaboration agreement with Sumitomo remains in effect and the Company is
exploring opportunities for the biomolecules created under the collaboration and
other potential opportunities.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On July 24, 2022, the Compensation Committee of the Company Board approved the
payment of annual bonuses to each Company employee who is eligible to
participate in the Company's annual bonus program for the fiscal year ended
December 31, 2022, including each executive officer other than the Company's
Acting Chief Executive Officer, at target levels and otherwise in accordance
with the Company's standard practices after the fiscal year end. In the event
that the Effective Time occurs prior to the end of the Company's current fiscal
year, such bonuses will be paid at target levels, pro-rated for the portion of
the year elapsed prior to the Effective Time. The target bonus percentage for
each of the Company's named executive officers (other than the Company's Acting
Chief Executive Officer) is 50% of such officer's base salary.
Item 8.01 Other Events.
On July 25, 2022, the Company and Parent issued a joint press release announcing
the entry into the Merger Agreement. A copy of the joint press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Additional Information and Where to Find It
In connection with the Merger, Parent intends to file with the SEC a
registration statement on Form S-4 that will include a proxy statement of the
Company and that also constitutes a prospectus of Parent. Each of the Company
and Parent may also file other relevant documents with the SEC regarding the
Merger. This document is not a substitute for the proxy statement/prospectus or
registration statement or any other document that the Company or Parent may file
with the SEC. The definitive proxy statement/prospectus (if and when available)
will be mailed to stockholders of the Company. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF
AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE MERGER. Investors and security holders will be able to
obtain free copies of the registration statement and proxy statement/prospectus
(if and when available) and other documents containing important information
about the Company, Parent and the Merger, once such documents are filed with the
SEC through the website maintained by the SEC at http://www.sec.gov. Copies of
the documents filed with the SEC by the Company will be available free of charge
on the Company's website at https://investors.zymergen.com or by contacting the
Company's Investor Relations department by email at investors@zymergen.com.
Copies of the documents filed with the SEC by Parent will be available free of
charge on Parent's website at https://investors.ginkgobioworks.com or by
contacting Parent's Investor Relations department by email at
investors@ginkgobioworks.com.
Participants in the Solicitation
The Company, Parent, their respective directors and certain of their executive
officers and other employees may be deemed to be participants in the
solicitation of proxies from the Company's stockholders in connection with the
Merger. Information regarding the persons who may, under the rules of the SEC,
be deemed participants in the solicitation of the Company's stockholders in
connection with the Merger, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in the proxy
statement/prospectus when it is filed with the SEC. Information about the
directors and executive officers of the Company, including a description of
their direct or indirect interests, by security holdings or otherwise, is set
forth in the Company's proxy statement for its 2022 annual meeting of
shareholders, which was filed with the SEC on April 20, 2022, and the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which
was filed with the SEC on March 30, 2022. Information about the directors and
executive officers of Parent, including a description of their direct or
indirect interests, by security holdings or otherwise, is set forth in Parent's
proxy statement for its 2022 annual meeting of shareholders, which was filed
with the SEC on April 26, 2022, and Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 2021, which was filed with the SEC on March 29,
2022. Other information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the Merger when such
materials become available. Investors should read the proxy
statement/prospectus carefully when it becomes available before making any
voting or investment decisions. You may obtain free copies of these documents
from the Company or Parent using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy
or sell or the solicitation of an offer to buy or sell any securities, or a
solicitation of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
Forward Looking Statements
This communication contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can generally identify
forward-looking statements by the use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "explore,"
"evaluate," "intend," "may," "might," "plan," "potential," "predict," "project,"
"seek," "should," or "will," or the negative thereof or other variations thereon
or comparable terminology. These forward-looking statements are only
predictions and involve known and unknown risks and uncertainties, many of which
are beyond the Company's and Parent's control. Statements in this communication
regarding the Company, Parent and the combined company that are forward-looking,
including projections as to the anticipated benefits of the Merger, the impact
of the Merger on the Company's and Parent's businesses and future financial and
operating results, the amount and timing of synergies from the Merger, and the
aggregate amount of indebtedness of the combined company following the closing
of the Merger are based on management's estimates, assumptions and projections,
and are subject to significant uncertainties and other factors, many of which
are beyond the Company's and Parent's control. These factors include, among
other things, general economic and business conditions; changes in global,
political, economic, business, competitive, market and regulatory forces;
judicial decisions; changes in tax laws, regulations, rates and policies; future
business acquisitions or disposals; litigation and the ability of the combined
company to protect its intellectual property rights; and the timing and
occurrence (or non-occurrence) of other events or circumstances that may be
beyond the Company's and Parent's control. Additional information concerning
these risks, uncertainties and assumptions can be found in the Company's and
Parent's respective filings with the SEC, including the risk factors discussed
in the Company's most recent Annual Report on Form 10-K, as updated by its
Quarterly Reports on Form 10-Q, in Parent's most recent Annual Report on Form
10-K, as updated by its Quarterly Reports on Form 10-Q and in each company's
future filings with the SEC. Important risk factors could cause actual future
results and other future events to differ materially from those currently
estimated by management, including, but not limited to, the risks that: a
condition to the closing the proposed acquisition may not be satisfied; a
regulatory approval that may be required for the proposed acquisition is
delayed, is not obtained or is obtained subject to conditions that are not
anticipated; Parent is unable to achieve the synergies and value creation
contemplated by the proposed acquisition; Parent is unable to promptly and
effectively integrate the Company's businesses; management's time and attention
is diverted on transaction related issues; disruption from the transaction makes
it more difficult to maintain business, contractual and operational
relationships; legal proceedings are instituted against the Company, Parent or
the combined company; the Company, Parent or the combined company is unable to
retain key personnel; and the announcement or the consummation of the proposed
acquisition has a negative effect on the market price of the capital stock of
the Company or Parent or on the Company's or Parent's operating results. No
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do occur,
what impact they will have on the results of operations, financial condition or
cash flows of the Company or Parent. Should any risks and uncertainties develop
into actual events, these developments could have a material adverse effect on
the Merger and/or the Company or Parent, Parent's ability to successfully
complete the Merger and/or realize the expected benefits from the Merger. You
are cautioned not to rely on the Company's and Parent's forward-looking
statements. These forward-looking statements are and will be based upon
management's then-current views and assumptions regarding future events and
operating performance, and are applicable only as of the dates of such
statements. Neither the Company nor Parent assumes any duty to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise, as of any future date.
Item 9.01. Financial Statements and Exhibits.
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated as of July 24, 2022, by and
among Ginkgo Bioworks Holdings, Inc., a Delaware corporation, Pepper
Merger Subsidiary Inc., a Delaware corporation and indirect wholly
owned subsidiary of Ginkgo Bioworks Holdings, Inc., and Zymergen
Inc., a Delaware public benefit corporation.*
99.1 Joint Press Release, dated as of July 25, 2022.
99.2 Voting Agreement, dated as of July 24, 2022, entered into by SVF
Excalibur (Cayman) Limited.
99.3 Voting Agreement, dated as of July 24, 2022, entered into by Data
Collective II, L.P. and certain of its affiliates.
99.4 Voting Agreement, dated as of July 24, 2022, entered into by True
Ventures IV, L.P. and certain of its affiliates.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The
Company agrees to furnish supplementally to the Securities and Exchange
Commission a copy of any omitted schedule upon request.
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ZYMERGEN INC. 
