Item 8.01. Other Events.
On September 8, 2021, JMP Group LLC, a Delaware limited liability company
("JMP", or the "Company"), Citizens Financial Group, Inc., a Delaware
corporation ("Citizens"), and Jolt Acquisition LLC, a Delaware limited liability
company and direct, wholly owned subsidiary of Citizens ("Merger Subsidiary")
entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant
to the Merger Agreement, Merger Subsidiary will merge with and into JMP,
whereupon the separate existence of Merger Subsidiary will cease, and the
Company will be the surviving company as a direct, wholly owned subsidiary of
Citizens (the "Merger").
Pursuant to the Merger Agreement, each outstanding common share of JMP (other
than (i) shares owned by JMP or any direct or indirect wholly-owned subsidiary
of JMP, (ii) shares owned by Citizens or any direct or indirect wholly-owned
subsidiary of Citizens, in each case, excluding shares held on behalf of third
parties, and, (iii) shares for which appraisal rights have been properly
exercised and perfected under the General Corporation Law of the State of
Delaware and the JMP LLC Agreement) will be automatically converted into the
right to receive cash consideration of $7.50 (the "Merger Consideration"). The
Merger is expected to close during the fourth quarter of 2021, subject to
receipt of JMP shareholder approval, governmental and regulatory approvals, and
other usual and customary closing conditions. However, no assurance can be given
as to when, or if, the merger will occur.
Following the filing of JMP's preliminary proxy statement associated with the
Merger with the SEC on October 5, 2021, six (6) complaints have been filed
against JMP and certain officers and directors thereof in connection with the
Merger, each filed in a United States District Court, as follows: Shiva Stein v.
JMP Group LLC, et al., Case No. 3:21-cv-07877 (N.D. Cal.) (filed Oct. 7, 2021);
Claude Carrick v. JMP Group, LLC, et al., Case No. 1:21-cv-08415 (S.D.N.Y.)
(filed Oct. 12, 2021); Kevin Anderson v. JMP Group LLC, et al., Case No.
3:21-cv-05911 (E.D.N.Y.) (filed Oct. 25, 2021); Stephen Bushansky v. JMP Group,
LLC, et al., Case No. 1:21-cv-08318 (N.D. Cal.) (filed Oct. 26, 2021) (N.D.
Cal.); Jack Wolf v. JMP Group, LLC, et al., Case No. 1:21-cv-01510 (D. Del.)
(filed Oct. 26, 2021); and Jordan Wilson v. JMP Group, LLC, et al., Case No.
1:21-cv-08916 (S.D.N.Y.) (filed Oct. 31, 2021). The complaints (collectively,
the "Merger Complaints") allege that the preliminary proxy statement or the
Proxy Statement (as defined below) misstates or omits material information with
respect to the Merger in violation of Sections 14(a) and/or 20(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"). The Merger Complaints
seek, among other things, injunctive and declaratory relief preventing the
consummation of the Merger pending dissemination of a proxy statement that does
not contain any untrue statements of material fact, rescission of the Merger if
consummated or an award of rescissory damages, an award of compensatory damages,
and an award of plaintiffs' expenses and attorneys' fees. In addition, counsel
for two shareholders delivered demand letters to the Company, which threatened
the filing of similar lawsuits.
On October 15, 2021, JMP filed the definitive merger proxy statement (the "Proxy
Statement").
JMP and the individual defendants believe that JMP has previously disclosed all
information required to be disclosed to ensure that its shareholders can make an
informed vote at the Special Meeting (as defined below) and that the additional
disclosures requested by the plaintiffs are not required by the federal
securities laws or Delaware law, and are otherwise immaterial. Accordingly, JMP
and the individual defendants believe the claims asserted in the Merger
Complaints are without merit. However, in order to reduce the costs, risks and
uncertainties inherent in litigation, JMP has determined voluntarily to
supplement the Proxy Statement as described in this Current Report on Form 8-K
(the "Report"). Nothing in this Report shall be deemed an admission of the legal
necessity or materiality under applicable laws of any of the disclosures set
forth herein. To the contrary, JMP and the JMP board of directors specifically
deny all allegations in the Merger Complaints that any additional disclosure was
or is required.
ON THE UNANIMOUS RECOMMENDATION OF A SPECIAL COMMITTEE OF THE JMP BOARD
COMPRISED SOLELY OF CERTAIN INDEPENDENT DIRECTORS OF THE JMP BOARD, THE JMP
BOARD APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, AND RECOMMENDS THAT JMP SHAREHOLDERS VOTE "FOR" THE MERGER
PROPOSAL, "FOR" THE PROPOSAL TO APPROVE, BY NON-BINDING ADVISORY VOTE, CERTAIN
COMPENSATION ARRANGEMENTS FOR JMP'S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH
THE MERGER, AND, IF NECESSARY OR APPROPRIATE, "FOR" THE JMP ADJOURNMENT
PROPOSAL, EACH AS DESCRIBED IN THE PROXY STATEMENT.
These supplemental disclosures will not affect the merger consideration or the
timing of JMP's Special Meeting of Shareholders scheduled for November 12, 2021
at 9:00 a.m., Pacific Time (the "Special Meeting"), which will be held at 600
Montgomery Street, Suite 1100, San Francisco, CA 94111.
If you are an JMP shareholder, you can contact JMP with any questions regarding
the Special Meeting by calling Director of Investor Relations, Andrew Palmer, at
(415) 835-8978, by sending an email to Mr. Palmer at apalmer@jmpg.com or by
writing to JMP at 600 Montgomery Street, Suite 1100, San Francisco, CA 94111,
Attention: Corporate Secretary, or by visiting JMP's website at www.jmpg.com.
--------------------------------------------------------------------------------
Supplemental Disclosures to Proxy Statement
This supplemental information should be read in conjunction with the
Proxy Statement, which should be read in its entirety. Defined terms used but
not defined below have the meanings set forth in the Proxy Statement. All page
references in the information below are to pages in the Proxy Statement.
Paragraph references used herein refer to the Proxy Statement before any
additions or deletions resulting from the supplemental disclosures. Bolded text
shows text being added to a referenced disclosure in the Proxy Statement and
strikethrough text shows text being removed from the Proxy Statement. The
information contained herein speaks only as of November 9, 2021 unless the
information indicates another date applies.
1. The disclosure under the heading "PROPOSAL ONE: THE MERGER-Background of the
Merger" beginning on page 17, excluding the final 11 paragraphs thereof, is
hereby amended as follows:
Background of the Merger
The JMP board of directors, together with senior management of JMP regularly
reviews JMP's business strategies, opportunities and challenges as part of its
consideration and evaluation of JMP's prospects and ways to increase shareholder
value, taking into account, the state of the financial industry, participants
therein, the regulatory environment and the broader economy as a whole. As part
of these reviews, the board and management, together with external advisors,
including investment banks, from time to time, have considered, among other
strategies, internal organic growth strategies, potential divestitures,
commercial collaborations with third parties, potential strategic partnerships,
as well as the possibility of a business combination transaction and potential
acquisitions by or of JMP, considering the possibility of both financial and
strategic counterparties. In addition, in an effort to enhance preparedness in
the event of potential strategic opportunities or activity, members of JMP's
senior management and the board of directors have from time to time met have
discussed with representatives of various investment banks and financial
advisory firms to discuss involved in the foregoing, the possible engagement of
such firms for various banking and financial advisory services, including
mergers and acquisition advisory services.
Consistent with the foregoing, between January 14, 2021 and March 8, 2021, JMP
management met with or had calls with representatives of Keefe, Bruyette &
Woods, Inc. ("KBW") regarding KBW's financial advisory services, including to
discuss potential mergers and acquisition advisory services. KBW had previously
been engaged by JMP as its financial advisor in 2019 in connection with JMP's
prior consideration of a business combination transaction and the related
process, but such process did not result in a transaction or a fee payable to
KBW for its financial advisory services. In March 2021, the JMP board discussed
with KBW representatives the advisability of preliminarily considering a
strategic transaction and, in particular, a business combination or sale
transaction at such time. As part of these discussions, KBW noted possible
business combination counterparties on a preliminary basis that might have an
interest in a possible transaction. The board requested that KBW contact
potential counterparties, instructing KBW that the board had not yet made any
determination to sell the company, but did want to understand the range of
possible transactions.
On March 15, 2021, a senior representative of a potential financial-firmsector
buyer, which we refer to as Company A in this proxy statement, was introduced
directly (and not through KBW) to a senior member of JMP's management by a
mutually-known third party, other than KBW. JMP was informed that Company A was
actively seeking business combination targets and had asked one of its contacts
to introduce Company A to JMP. On March 17, 2021, JMP management held an initial
call with Company A, during which Company A expressed its unsolicited potential
interest in exploring an acquisition of JMP.
Given the board's ongoing consideration of possible strategic transactions, and
the unsolicited communication of interest by Company A Given that the
unsolicited and direct-to-management communication by Company A potentially
indicated a marketplace interest in an acquisition of or business combination
with JMP and this indication of interest was made when the Company was already
considering exploring possible business combination transactions, on March 19,
2021, the board, by unanimous written consent, approved JMP engaging KBW to act
as financial advisor to JMP in connection with the consideration of a possible
sale or business combination transaction of JMP. KBW was selected because, among
other reasons, KBW was familiar with the Company as a result of the 2019 sale
process - which at that time, did not yield any counterparties interested in
engaging in a transaction. Company A, which had already expressed interest in a
transaction with JMP, was included in the process going forward.
--------------------------------------------------------------------------------
In connection with the engagement of KBW, the board reviewed and selected, with
KBW's assistance, and authorized and directed KBW to contact, 16 approved
potential business combination counterparties (including Citizens and Company A)
on behalf of JMP, and KBW proceeded to do so. The board also authorized and
directed KBW and management to continue discussions with Company A. On March 25,
2021, at a regularly scheduled meeting of the board of directors, Mr. Jolson
provided the board with an update on the potential sale process, including the
parties that KBW was contacting and the meeting held with representatives from
Company A. Representatives of Mintz Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., legal counsel to the Company ("Mintz"), reviewed a presentation on the
fiduciary duties of directors under Delaware law in connection with a potential
sale of control of JMP.
Between April 9, 2021 and April 226, 2021, JMP entered into a non-disclosure
agreement (an "NDA") with four five of the six companieson the list of potential
counterparties that indicated an interest in proceeding with discussions,
including Company A, Citizens and another, a company referred to as Company B,
and a company referred to as Company C and a company referred to as Company D.
The other potential counterparty interested in entering into an NDA with JMP,
referred to in this proxy statement as Company E, did not enter into an NDA
until May 20, 2021. As part of the process, upon entry into each NDA,
confidential materials on JMP were provided for the potential counterparty's
review.
Between April 21 and April 30, 2021, JMP conducted initial management
presentations to several of the companies. Company A, Citizens, Company B and
Company C.
On April 21, 2021, JMP management conducted a presentation to Company A.
On April 22, 2021, JMP management conducted a presentation to Company B.
On April 22, 2021, at a regularly scheduled meeting of the board, Mr. Jolson
provided the board with an update on the sale process including the parties that
KBW was contacting and the status of meetings management had held with
representatives of interested parties.
On April 23, 2021, JMP management conducted a presentation to Citizens.
On April 26, 2021, JMP entered into an NDA with Company C and on April 30, 2021,
JMP management conducted a presentation to Company C.
Between April 26, 2021 and May 6, 2021, JMP entered into a non-disclosure
agreement an NDA with another financial firm Company D, and JMP management
conducted management presentations to several of the interested companies,
including a follow-up management presentation to Citizens. Also on May 6, 2021,
at a regularly scheduled meeting of the board, Messrs. Jolson and Lehmann
provided the board with an update on the sale process including the parties that
KBW was contacting and the status of meetings management had held with
representatives of interested parties.
On May 10, 2021, JMP conducted an a follow-up in-person management meeting and
dinner in New York with Company B.
On May 20, 2021, JMP entered into a non-disclosure agreement with a financial
firm Company E, dated April 20, 2021.
Between May 10, 2021 and May 25, 2021, each of Company D and Company E indicated
to KBW that they were no longer interested in continuing discussions and dropped
out of the process without having a JMP management presentation. In addition,
during the same period, Company A (the company that had first approached JMP
about a potential business combination directly through JMP management) and
Company C, after their respective JMP management presentations, each indicated
to KBW that it would not be delivering an indication of interest and had
determined to drop out of the process.
On May 25, 2021, which was the deadline communicated by JMP (through KBW) to
potential counterparties for submission of an indication of interest, Citizens
and Company B submitted nonbinding indications of interest for the acquisition
of JMP. Company B's indication of interest was an all-cash offer equal to the 10
day average of JMP's stock (equal to $5.40/share as of Friday May 21, 2021).
Company B also offered to permit JMP to make a pre-close special dividend equal
to the excess of common equity at June 30, 2021 over common equity at March 31,
2021, which equaled approximately $1.45 per share. The Citizens indication of
interest proposed an all cash offer with a price range of $6.75 to $7.00 per
share. As previously communicated to KBW, none of Company A, Company C, Company
D or Company E submitted an indication of interest and each declined to proceed
further in the process. Accordingly, only Company B and Citizens remained in the
process.
--------------------------------------------------------------------------------
On May 27, 2021, at a special meeting of the board of directors, KBW reviewed
the only two preliminary indications of interest (from Citizens and Company B)
received to date. Representatives of Mintz discussed the fiduciary duties of the
board and the potential time commitment of directors that would be involved in
the consideration and pursuit of a strategic transaction. Mintz also discussed
the possibility that certain counterparties may desire to employ members of
management and the board but that all substantive discussions on that topic
would be deferred until after all material terms and the structure of the
transaction were agreed between JMP and the counterparty. Further, Mintz advised
the board to form a special transaction committee of non-management, independent
members of the board of directors. Board members proposed Messrs. Karmin,
Lunenburg and Tongue as potential members of the special transaction committee.
On June 1, 2021, the board, by unanimous written consent, formed the special
transaction committee, referred to herein as the Special Transaction Committee,
comprised of Messrs. Karmin, Lunenburg and Tongue. Upon formation of the Special
Transaction Committee, at the request of the Special Transaction Committee and
agreement of the board, KBW reported to and became subject to the sole direction
of the Special Transaction Committee as the Special Transaction Committee's
financial advisor. Also on June 1, 2021, the Special Transaction Committee
engaged Whiteford, Taylor & Preston L.L.P. ("WTP"), as legal counsel to the
Special Transaction Committee.
On June 8, 2021, at a meeting of the Special Transaction Committee at which
representatives of WTP were present, the Special Transaction Committee reviewed
a memorandum prepared by WTP as counsel to the Special Transaction Committee
regarding the duties of the Special Transaction Committee under Delaware law
when considering an acquisition offer. The members of the Special Transaction
Committee discussed the two preliminary indications of interest received from
Company B and Citizens. The members of the Special Transaction Committee agreed
it was advisable and in the best interests of JMP to explore transactions where
JMP is acquired with specific limitations on management's involvement in
negotiations unless directed by the Special Transaction Committee.
On June 16, 2021, the Special Transaction Committee delivered a memorandum to
the board setting forth the purpose of the Special Transaction Committee as
protecting shareholder interests, and the respective roles of the Special
Transaction Committee and the board in negotiating any acquisition transaction,
stating that all negotiations would be conducted by, in close cooperation with,
and under the supervision of, the Special Transaction Committee with KBW, acting
as financial advisor at the direction of the Special Transaction Committee. The
Special Transaction Committee also reiterated that any potentially substantive
employment discussions would be deferred until after all material terms and the
structure of the transaction were agreed between JMP and the counterparty.
On June 24, 2021, in order to progress discussions with Citizens at the Special
Transaction Committee's direction, members of JMP management and Citizens had a
call to discuss JMP's personnel, culture and the current compensation framework
at JMP. They did not, however, negotiate specific potential future employment or
compensation matters or terms.
On June 30, 2021, again at the Special Transaction Committee's direction,
members of JMP management and Citizens held a further call to provide a
financial update on JMP's business, and to discuss potential opportunities to
cross-sell between the two organizations.
On July 1, 2021, KBW received a second indication of interest from Citizens
dated July 1, 2021 containing a, which included an increased proposed purchase
of $7.25 per share for JMP's common shares. The This second indication of
interest requested a sixty-day exclusivity period. Company B declined to deliver
a second indication of interest or affirm the continuing validity of its initial
bid, and unilaterally dropped out of the process. Accordingly, only Citizens was
left as a potential counterparty.
On the morning of July 14, 2021, at a meeting of the Special Transaction
Committee at which representatives of WTP, representatives of KBW, Mark Lehmann
and Walter Conroy (each of whom had been invited by the Special Transaction
Committee due to their detailed knowledge of Company data and personnel matters)
were present, the Special Transaction Committee and Mark Lehmann (who had been
invited by the Special Transaction Committee) discussed what Mr. Lehmann would
expect the size of an expected the retention pool for certain key JMP employees
and would need to be for JMP employees to be within the range of market
compensation practice. The persons present also discussed the sixty day
exclusivity period proposed by Citizens in its indication of interest. The size
of the retention pool was not addressed in the Citizens indications of interest
nor was it negotiated with Citizens. The Special Transaction Committee also
reviewed the roll-forward balance sheet prepared by JMP and delivered to
Citizens. The Special Transaction Committee also reviewed the assumptions upon
which Citizens' bid of $7.25 per share was based. Representatives of KBW
informed the Special Transaction Committee that Citizens indicated that it was
amenable to a special dividend if JMP were to realize a targeted valuation with
respect to certain marketable securities owned by JMP. The Special Transaction
Committee also reviewed the comments to the Citizens' indication of interest
that had been proposed by legal counsel and management.
--------------------------------------------------------------------------------
On the afternoon of July 14, 2021, at a meeting of the Special Transaction
Committee at which representatives of WTP and Walter Conroy were present, the
Special Transaction Committee approved a motion to recommend to the board that
upon a request from Citizens, JMP should agree to the exclusivity period
proposed by Citizens and JMP should move forward with further due diligence and
negotiation of the proposed transaction as outlined in the Citizens indication
of interest.
Later that afternoon, at a special meeting of the board, Mr. Karmin, as chair of
the Special Transaction Committee, provided the board with an update on matters
discussed at the Special Transaction Committee meetings earlier that day, in
particular the second indication of interest provided by Citizens and the
sixty-day exclusivity period. Representatives of KBW reviewed the indications of
interests provided by Citizens and Company B and the reason communicated by
Company B for not providing a second indication of interest and deciding to drop
out of the process. Representatives of KBW observed that over the course of
discussions, Citizens had increased its bid offer from a range of $6.75-$7.00
per share to $7.25 per share. Mr. Karmin discussed the retention pool, the need
for employee retention, and the likely requirement that Citizens may require key
employees would need to sign agreements in connection concurrently with the
signing of the merger agreement. None of these matters, however, had been
negotiated with or agreed to by Citizens as of that date. Mr. Karmin also
discussed potential purchase price adjustments to provide additional value to
shareholders. Given the continuing insistence on exclusivity by Citizens, the
Special Transaction Committee considered that if JMP did not agree to
exclusivity, the Company was at risk of losing the strongest offer it had
received during the entire process - and the only offer remaining - after a
thorough process (the second such process by JMP within 3 years) in which 16
potential counterparties were contacted, only 2 offers were received and the
other offer had already been unilaterally withdrawn by the other bidder, Company
B. Following a recommendation from the Special Transaction Committee, the Board
unanimously approved JMP entering into exclusivity with Citizens for 45 days.
On July 15, 2021, members of senior management at JMP met with a representative
of Citizens in New York.
On July 16, 2021, JMP countersigned the second indication of interest from
Citizens with a proposed purchase price of $7.25 per share thereby entering into
an exclusivity agreement with Citizens for 45 days from July 16, 2021 to allow
Citizens to conduct due diligence.
On August 5, 2021, at a regularly scheduled meeting of the board, a
representative of KBW provided the board with an update on the sale process,
including the status of due diligence and the expectation that Citizens would
deliver a draft of the merger agreement the following week. Mr. Karmin, as chair
of the Special Transaction Committee, reported to the board on the currently
proposed price per share of $7.25 and the Special Transaction Committee's
efforts to increase the price per share and/or agree on a purchase price
adjustment to provide shareholders with additional value.
On August 9, 2021, counsel to the Special Transaction Committee and JMP received
an initial draft of a merger agreement from Sullivan & Cromwell LLP ("Sullivan &
Cromwell"), counsel to Citizens.
Over the next two weeks, members of the Special Transaction Committee and
members of management, as well as representatives from WTP and Mintz, held calls
to discuss the principal terms and issues in the draft merger agreement, and
representatives of WTP, Mintz and Sullivan & Cromwell, counsel to Citizens,
negotiated the terms of the merger agreement. Members of JMP management and
representatives from Citizens held telephonic meetings to discuss certain
diligence items on the current business outlook of JMP and other diligence
matters.
Continued employment terms were not contained in the draft Merger Agreement
delivered by Sullivan & Cromwell, counsel to Citizens, nor was entering into
employment agreements a condition to closing of the merger. In addition, the
voting agreements sought by Citizens were limited in the percentage of shares
covered, and, in any case, would automatically terminate upon termination of the
Merger Agreement. The Merger Agreement was negotiated such that it contained
customary limitations on the Company's ability to solicit competing offers and
customary exceptions. Although the NDAs entered into with the various
participants in the strategic process contained a customary prohibition on
publicly asking the Company to waive the standstill, the merger agreement was
negotiated to affirmatively preserve the Company's right to terminate, amend,
modify, waive or fail to enforce any provision of any such standstill if the
board determined in good faith, after consultation with its outside legal
counsel, that the failure to take such action would be inconsistent with the
directors' fiduciary duties under applicable law or in the event that such
provisions would prohibit any person from privately making an acquisition
proposal to, or from requesting a waiver of the applicable restriction from,
JMP. The board has not engaged in any such actions given that none of the other
potential counterparties had even made a preliminary offer and had dropped out
of the process, other than Company B which had made a preliminary offer and had
later unilaterally withdrawn its preliminary offer and declined to proceed
further. Moreover, a number of the NDAs, including the NDA of Company B,
expressly permitted the counterparty to communicate privately with JMP about
business combination proposals (or revisions to any earlier proposal)
or requests to waive or modify the standstill and a number of the NDA
standstills automatically terminated upon JMP's public announcement of the
transaction, including the NDA of Company A.
--------------------------------------------------------------------------------
On August 30, 2021, Citizens delivered a revised indication of interest dated
August 30, 2021 with a further increased price per share of $7.50 and a
provision for a pre-close special dividend up to $5.0 million, but only if JMP
were to realize a targeted valuation with respect to certain marketable
securities owned by JMP.
2. The disclosure under the heading "Opinion of the Special Transaction
Committee's Financial Advisor-Selected Companies Analysis" beginning on page
25 is hereby amended to add the following new paragraph below the table:
The low and high Market Cap / LTM Revenue multiples of the selected companies
were 0.2x and 1.6x, respectively, the low and high Market Cap / CY 2021E Revenue
multiples of the two selected companies for which there were publicly available
consensus "street estimates" were 0.6x and 1.5x, respectively and the low and
high Market Cap / CY 2022E Revenue multiples of the selected companies for which
there were publicly available consensus "street estimates" were 0.7x and 1.6x,
respectively. The low and high Price / LTM EPS multiples of the selected
companies were 1.3x and 13.6x, respectively, the low and high Price / CY 2021E
EPS multiples of the two selected companies for which there were publicly
available consensus "street estimates" were 4.1x and 8.2x, respectively and the
low and high Price/ CY 2022E EPS multiples of the two selected companies for
which there were publicly available consensus "street estimates" were 5.8x and
10.5x, respectively. The low and high Price / Book Value multiples of the
selected companies were 0.5x and 2.8x, respectively, and the low and high Price/
. . .
© Edgar Online, source Glimpses
JMP GROUP LLC 
