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Filed by Ziff-Davis Inc.
Pursuant to Rule 425 Under the
Securities Act of 1933
Subject Company: Ziff-Davis Inc.
Commission File No: 001-14055
Following is the complete text of Item 5 of the Current Report on Form 8-K of
Ziff-Davis Inc., which was filed today with the Securities and Exchange
Commission.
ITEM 5. OTHER EVENTS.
MERGER WITH CNET
On July 19, 2000, Ziff-Davis Inc. and CNET Networks, Inc. jointly
announced that they had entered into a definitive merger agreement.
Under that agreement, Ziff-Davis will merge with a subsidiary of
CNET.
As a result of the merger, each share of our ZD common stock (NYSE: ZD) will
convert into 0.3397 shares of CNET common stock (NASDAQ: CNET) and each share of
our ZDNet common stock (NYSE: ZDZ) will convert into 0.5932 shares of CNET
common stock. The merger supersedes the alternative transaction we described in
our February 7, 2000 proxy statement for eliminating our tracking stock
structure. We expect to close the merger in the fourth quarter of 2000.
The merger is subject to termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval from the
stockholders of both companies and other customary closing conditions. Softbank,
which owns a majority of the voting stock in Ziff-Davis, and members of CNET
management owning about 20% of CNET's voting stock, have agreed to vote for the
transaction. The merger does not require the consent of Ziff Davis Media (the
entity that bought our publishing division earlier this year) or any other
material third party consent.
We include as exhibits to this Form 8-K copies of the merger agreement, a voting
agreement and a stockholders agreement between Softbank and CNET, a voting
agreement between the chairman of CNET and Ziff-Davis, a voting agreement
between the CEO of CNET and Ziff-Davis and a July 19, 2000 press release we and
CNET jointly released, and we incorporate those documents by reference into this
Form 8-K.
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KEY3MEDIA SPIN-OFF AND CASH DIVIDEND
Before completing the CNET merger, we will complete the previously announced
recapitalization and spin-off of our trade show and conference business (now
known as Key3Media Group) to our holders of ZD common stock and simultaneously
pay those holders a cash dividend of up to $2.50 per share. The exact amount of
the cash dividend will depend on the amount of cash Key3Media is able to
transfer to Ziff-Davis as a result of its recapitalization. If Key3Media
transfers $275 million to Ziff-Davis as currently planned, we will pay a cash
dividend of $2.50 per share. If, however, Key3Media transfers less than $275
million, Ziff-Davis will pay a cash dividend equal in the aggregate to the
amount actually received from Key3Media.
Key3Media has a signed commitment letter from Morgan Stanley Senior Funding,
Inc. for a $330 million bank term loan facility and a $50 million bank revolving
credit facility. This commitment letter is subject to a variety of conditions
and terminates on July 31, 2000, although we expect that we will be able to
extend the term through the middle of August. In addition, Key3Media is
negotiating with a large institutional investor for a private placement of $75
million of debt with warrants. Key3Media also expects to raise approximately $60
million through the sale of common stock.
These Key3Media transactions, on the terms currently planned, are described in
greater detail in Key3Media's current version of its Form S-1 filed on July 13,
2000. Assuming all of these transactions close as planned, Key3Media will repay
its existing $150 million in external debt, pay $275 million to Ziff-Davis (to
enable it to pay the dividend of $2.50 per share of ZD common stock described
above) and retain the remainder of the proceeds for its own uses. We expect to
complete the Key3Media transactions, spin off Key3Media and pay the planned cash
dividend to the holders of ZD common stock in mid-August 2000.
Each of the Key3Media transactions described above is subject to successful
completion of the other Key3Media transactions. We cannot assure you that we
will be able to complete these transactions or, if we do, that we will be able
to complete them on the terms or on the timetable we currently contemplate.
CAUTIONARY LEGEND REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this Form 8-K, particularly the information regarding
the timing of the CNET merger, the financing plans for Key3Media, the possible
amount of the planned cash dividend on the ZD common stock and the timing of the
various Key3Media transactions, constitute forward-looking statements. These
statements are subject to various risks and uncertainties, including the
possibility that the CNET merger will not close due to failure to obtain
regulatory or stockholder approval or for some
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other reason or that one or more of the Key3Media financings is delayed,
materially changed or abandoned as a result of a material adverse change in
Key3Media's business or financial position or in the markets generally.
Important cautionary statements and risk factors that could affect the Key3Media
transactions are discussed in Key3Media's Form S-1 and prospectus filed with the
SEC, including under the caption "Risk Factors" appearing in that prospectus.
FURTHER INFORMATION ABOUT PROXY MATERIALS
Ziff-Davis and CNET will be filing with the SEC a proxy statement and other
relevant documents concerning the merger. We urge you to read the proxy
statement/prospectus and any other relevant documents to be filed with the SEC,
because they contain important information. You will be able to obtain these
documents free of charge at the SEC's website, www.sec.gov. You may also inspect
documents filed with the SEC by Ziff-Davis at the offices of the NYSE, 20 Broad
Street, New York, New York 10005. The joint press release relating to the merger
filed with the SEC on July 19, 2000 contains information regarding the
participants in the proxy solicitation and their ownership of Ziff-Davis and
CNET stock.
