Stne Participacoes S.A. agreed to acquire Linx S.A. (BOVESPA:LINX3) on August 10, 2020. Stne Participacoes S.A. signed a definitive agreement to acquire Linx S.A. for BRL 6 billion on August 11, 2020. 100% of Linx will be merged into Stne in exchange for cash and newly issued Class A shares of StoneCo Ltd. (Nasdaq:STNE) parent of Stne. The transaction will be implemented through a Brazilian merger of shares, whereby each Linx common share will be contributed to STNE in exchange for 1 (one) newly issued STNE Class A preferred share and 1 (one) STNE newly issued Class B preferred share. Immediately after the merger, each STNE Class A preferred share will be redeemed for a cash payment of BRL 30.39, and each STNE Class B preferred share will be redeemed for 0.0126774 Stone Class A share. Total consideration is equivalent to BRL 33.7625 per Linx share, being 90% in cash (BRL 30.39 per Linx share) and 10% in Stone Class A shares (0.0126774 Stone Class A shares per 1 Linx share). As per the disclosure of September 1, 2020, the bid price was increased to BRL 35.1 and Stne said each Linx’s shareholder will get BRL 31.56 in cash and 0.0126774 of a StoneCo Class A common share. As of October 29, 2020, deal terms were revised leading an increase in cash price by BRL 32.06 per share. In total the consideration price was increased to BRL 35.96. As of November 17, 2020, Stone increased the cash portion of the consideration to be paid to Linx shareholders by BRL 1.5 per share. As a result, each Linx share will receive cash consideration of BRL 33.56 plus 0.0126774 Stone Class A common shares, increasing the total consideration to BRL 38.06 per share. Post the completion of the transaction, Linx will become a wholly owned subsidiary of STNE. In case a concurrent transaction with a third party is completed, Linx S.A. will be responsible to pay a compensatory fine to STNE of BRL 605 million. In case of a breach by any of the parties of its respective obligations that results in the termination of the Joint Venture Agreement, Linx or STNE will pay a compensatory fine to the innocent party in an amount equivalent to BRL 605 million. As per disclosure of September 1, 2020, StoneCo’s also revised some provisions of its initial proposal that have drawn regulatory scrutiny, cutting the break-up fee to BRL 453.75 million, equivalent to 7.2% of the transaction value. As long as certain conditions are fulfilled, Linx will be obligated to pay StoneCo an amount equal to BRL 112.5 million if the Linx Special Meeting is not held or if any item is not approved and such non-approval prevents the consummation of the transaction; provided that in such case, if a competing transaction is announced or contracted into by Linx prior to the date of the Linx Special Meeting, and such competing transaction is approved or entered into by Linx during the 12 month period after the Linx Special Meeting, Linx shall pay to StoneCo an additional amount equal to the remainder of the fine BRL 341.25 million. As of October 28, 2020, Stone has agreed to waive of BRL 112.5 million of break-up fee in the case if any of the matters being voted upon are rejected at the Linx shareholders meeting. As per the disclosure of September 1, 2020, if the transaction is not approved by the shareholders of Linx in the general shareholders’ meeting to be held on November 17, 2020, Linx will be required to pay to STNE a compensatory fine equivalent to 25% of the compensatory fine of BRL 605 million. In a competing bid, TOTVS S.A. (BOVESPA:TOTS3) made a proposal to acquire Linx S.A. for BRL 6 billion on August 14, 2020. If a concurrent transaction is accepted, approved or entered into by Linx or its shareholders with a third party and announced or disclosed up until the date of the above mentioned general shareholders’ meeting and such a concurrent transaction is concluded in up to 12 months counted as of the date of such a shareholders meeting, Linx shall pay an additional compensatory fine to STNE equivalent to 75% of the compensatory fine. In case the Brazilian Administrative Council for Economic Defense - CADE approval for the transaction is not obtained, STNE shall be obligated to pay a compensatory fine to Linx in an amount equivalent to BRL 605 million. Post-merger, a new business unit will be created and managed by Stone’s leadership and Linx management team. An Advisory Board will be created to guide and monitor the key strategic priorities, the integration process and the capturing of synergies. Alberto Menache, current Linx Chief Executive Officer, will be Chairman of the Advisory Board, which will also include Stone leadership. Transaction is subject to approval by the STNE shareholder of the redemption of the mandatorily redeemable preferred shares granted to Linx’s shareholders in exchange for cash and/or Stone Class A shares, registration statement being effective, Linx shareholders, third party approval, regulatory approval and CADE approval, waiver of the application of Article 43 of the bylaws of Linx, related to the occasional obligation of STNE to perform a public offer of Linx as a result of the Transaction; (b) waiver of the adhesion of STNE to the Novo Mercado listing level of B3, the approval, by the shareholders of STNE of the (a) Merger of Shares, including, but not limited to the Protocol and the respective appraisal report; and (b) Redemption of Shares, as a subsequent and interdependent act of the Merger of Shares. STONECO does not expect the Transaction to generate antitrust concerns. On October 19, 2020, Securities and Exchange Commission of Brazil concluded that the founders of retail software maker Linx, who hold 14.32% of the company, are not allowed to vote in a shareholders meeting scheduled for November to exam a merger proposal with financial technology solutions firm Stone. Linx shareholders meeting will be held on November 17, 2020. As of November 6, 2020, proxy adviser Glass, Lewis & Co. asked the shareholders of Linx to vote in favor of the transaction. The execution of the Joint Venture Agreement was approved by the Board of Directors of Linx in a meeting held on August 10, 2020. The amended agreements were approved by Linx Independent Board Members. As of October 6, 2020, Registration Statement on Form F-4 with the Securities and Exchange Commission in the US has been declared effective by the SEC. The Independent Committee of Linx S.A. unanimously resolved to express itself as favor to the STNE transaction and recommend its submission to the shareholders. As of November 17, 2020, Linx shareholders have approved the transaction. As of March 24, 2021, Cade approved the transaction, deal still requires final approval from Cade. As of June 4, 2021, the transaction is still pending regulatory approval by the Brazilian Antitrust Authority. As announced on June 16, 2021, Brazilian Antitrust Authority (CADE) Unanimously Approves the transaction. The transaction is expected to close in the fourth quarter of 2020. Deal is expected to be accretive in 2021. Banco Morgan Stanley S.A. and Banco J.P. Morgan S.A. acted as financial advisors to Stone. Proton Partners LLC is serving as Strategic Advisor to Stone. Spinelli Advogados, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados and Daniel Brass, Meyer C. Dworkin and Byron B. Rooney of Davis Polk & Wardwell LLP acted as legal advisors to Stone. Goldman Sachs do Brasil Banco Múltiplo S.A. acted as financial advisor and fairness opinion provider to Linx S.A. Pinheiro Neto Advogados and White & Case LLP acted as legal advisors to Linx S.A. As of September 5, 2020, BR Partners Assessoria Financeira Ltda. acted as fairness opinion provider for the benefit of the Independent Committee established to analyze the business combination proposals publicly presented by TOTVS and Stne Participacoes. Citigroup Inc. acted as financial advisor to StoneCo Ltd., parent of Stne Participacoes S.A. Stne Participacoes S.A. completed the acquisition of Linx S.A. (BOVESPA:LINX3) on July 1, 2021.