EIGI Endurance International Group Holdings Inc

SUPPLEMENT TO PROXY STATEMENT

In connection with the settlement of the shareholder suits as described in this Form 8-K, the Company has agreed to make the following supplemental disclosures to the 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 herein have the meanings set forth in the Proxy Statement.

1.     The section of the Proxy Statement titled “The Merger—Background of the Merger” is hereby supplemented as follows:

Management reviewed with the board of directors a draft of the Company’s three-year financial plan, and the board of directors proposed certain modifications to the three-year financial plan, including changes to reflect the increase in product demand being experienced by the Company and the acquisition of Retention Science, which would be announced the following day. After discussion regarding the Company’s strategic alternatives, including whether to initiate a sale process or to explore raising additional capital, the board of directors determined that management should instruct Centerview and Goldman Sachs to initiate outreach to the potential buyers identified by the financial advisors and reviewed with the board of directors. The board of directors agreed that this outreach would include sharing the three-year financial plan after it had been revised to include the updates discussed at the meeting.

On August 11, 2020, the Company’s management sent a revised three-year financial plan to the board of directors by email, which reflected the updates discussed during the meeting of the board of directors on July 29, 2020.

Each of the 12 parties that executed a non-disclosure agreement with the Company received a telephonic management presentation regarding the business of the Company and access to a limited virtual data room containing financial and organizational information regarding the Company, including the three-year financial plan, which had been provided to the board of directors on August 11, 2020.

The Company’s management next presented to the board of directors projections for 2020 through 2025 proposed for use by Centerview and Goldman Sachs in their financial analyses. Management noted that these projections consisted of the three-year financial plan previously provided to the board of directors, with two additional years added to facilitate discounted cash flow analyses by Centerview and Goldman Sachs, and described the assumptions underlying the two additional years. Thereafter, the board of directors approved the projections for 2020 through 2025, including their use by Centerview and Goldman Sachs for purposes of their financial analyses.

Party A stated that its decision to increase its price to the price in its last proposal had been difficult and that, while it might be able to offer a few additional cents, it was essentially out of room to increase its price.

2.    The section of the Proxy Statement entitled “The Merger—Opinion of Centerview Partners LLC” is hereby supplemented as follows.

In performing this analysis, Centerview calculated a range of implied equity values for the Company’s shares by (a) discounting to present value, as of September 30, 2020, using discount rates ranging from 9.0% to 10.0% (reflecting Centerview’s analysis of the Company’s weighted average cost of capital, which was calculated using the capital asset pricing model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies) and the mid-year convention: (i) the forecasted unlevered free cash flows of the Company over the period beginning October 1, 2020 and ending December 31, 2025 as set forth in the Forecasts, (ii) a range of implied terminal values of the Company, calculated by Centerview applying an illustrative range of equity values to forward Adjusted EBITDA multiples of 7.0x-8.5x to the terminal year, which Centerview selected utilizing its professional judgment and experience and which implied perpetuity growth rates ranging from 0.6% to 2.9% to the terminal year estimate of unlevered free cash flow set forth in the Forecasts and (iii) the Company Tax Assets, and (b) subtracting from the foregoing results the Company’s net debt of approximately $1.5 billion as of September 30, 2020, as set forth in the Internal Data.

3.    The section of the Proxy Statement entitled “The Merger— Opinion of Goldman Sachs & Co. LLC” is hereby supplemented as follows.

Goldman Sachs then subtracted net debt of approximately $1.5 billion, as provided by management of the Company, from the range of EVs to determine a range of implied equity values for the Company.

To derive illustrative implied equity values per Company common stock, Goldman Sachs then subtracted the amount of the Company’s projected net debt as of December 31, 2020, 2021, 2022, and 2023 (which was approximately $1.5 billion, $1.4 billion, $1.2 billion, and $1.0 billion, respectively), as provided by management of the Company and both excluding and including adjustments (the “Equity Issuance Adjustments”) by management of the Company to reflect the illustrative impact of a $100,000,000 issuance of shares of the Company’s common stock for $5.00 per share and the use of the proceeds and $75,000,000 of balance sheet cash to pay down senior notes of the Company, from the range of implied EVs.

The numbers of fully diluted shares of the Company’s common stock that were used in the calculation described in the preceding sentence were approximately 158 million, 164 million, 169 million, and 173 million shares as of December 31, 2020, 2021, 2022, and 2023, respectively when excluding the Equity Issuance Adjustments, and approximately 178 million, 184 million, 189 million, and 193 million shares as of December 31, 2020, 2021, 2022, and 2023, respectively when including the Equity Issuance Adjustments.

Goldman Sachs then subtracted net debt as of September 30, 2020 of approximately $1.5 billion, as provided by management of the Company, from the range of illustrative EVs it derived for the Company to calculate an illustrative range of implied equity values for the Company.

During the two-year period ended November 21, 2020, Goldman Sachs has not provided financial advisory and/or underwriting services to the Company or any of its subsidiaries for which its Investment Banking Division has received compensation.

4.     The section of the Proxy Statement titled “The Merger—Financial Forecasts” is hereby supplemented as follows:

The Unlevered Free Cash Flow forecasts calculated by Centerview and Goldman Sachs also included an amount for the fourth fiscal quarter of 2020 of $18 million. Unlevered free cash flow is calculated as (i) EBITA, which is calculated as Adjusted EBITDA less depreciation and stock-based compensation; less (ii) taxes, before the use of tax assets, at an assumed effective tax rate of 25% of EBITA; plus (iii) depreciation; plus (iv) changes in deferred revenue and changes in costs of goods sold for domain registration fees; less (v) an adjustment reflecting the impact of ASC 606 on sales and marketing expenses; less (vi) capital expenditures; less (vii) restructuring expenses; less (viii) payments associated with the Retention Science acquisition; less (ix) payments associated with the AppMachine and Ecomdash acquisitions; plus (x) the positive or negative impact of payroll tax deferrals under the CARES Act; plus (xi) proceeds from the sale of intangible assets.

Important Additional Information Filed with the SEC

The Company filed with the SEC a proxy statement (the “proxy statement”), including a form of proxy card, on December 14, 2020. The proxy statement and form of proxy card have been mailed to the Company’s stockholders. The proxy statement contains important information about Parent, the Company, the transaction and related matters. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT, AND OTHER RELEVANT DOCUMENTS, AND ANY RELATED AMENDMENTS OR SUPPLEMENTS, FILED WITH THE SEC CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders can obtain free copies of the proxy statement and other documents that the Company filed with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by the Company are available free of charge on the Company’s investor relations website at ir.endurance.com or by contacting the Company’s Investor Relations Department at ir@endurance.com.

The Company and certain of its directors, executive officers and employees may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of the Company in connection with the transaction, including a description of their respective direct or indirect interests, by security holdings or otherwise, are included in the proxy statement dated December 14, 2020, described above. Additional information regarding the Company’s directors and executive officers is also included in the Company’s proxy statement for its 2020 Annual Meeting of Stockholders, which was filed with the SEC on April 9, 2020. As of December 11, 2020, the record date for the special meeting, the Company’s directors and executive officers beneficially owned approximately 77,688,275 shares, or 53.2%, of the Company’s common stock. These documents are available free of charge as described above.

Safe Harbor for Forward-Looking Statements

This filing contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. The reader is cautioned not to rely on these forward-looking statements, such as statements regarding the proposed transaction between Parent and the Company, the expected timetable for completing the transaction, future financial and operating results, benefits and synergies of the transaction, future opportunities for the combined company and any other statements about the Parent’s and the Company’s managements’ future expectations, beliefs, goals, plans or prospects. These statements are based on current expectations of future events, and these include statements using the words such as “will,” “believes,” “plans,” “anticipates,” “expects,” estimates and similar expressions. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations of the Company. Risks and uncertainties include, but are not limited to: the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the Company’s business and the price of its common stock; the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the merger agreement by the stockholders of the Company, and the receipt of certain governmental and regulatory approvals; the failure of the purchaser to obtain the necessary financing pursuant to the arrangements set forth in the debt commitment letters delivered pursuant to the merger agreement or otherwise; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the effect of the announcement or pendency of the transaction on the Company’s business relationships, operating results, and business generally; risks that the proposed transaction disrupts current plans and operations of the Company and potential difficulties in the Company’s employee retention as a result of the transaction; risks related to diverting management’s attention from the Company’s ongoing business operations, and the outcome of any legal proceedings instituted against the Company or the purchaser related to the merger agreement or the transaction. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of the Company described in the “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019 and in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, and other reports the Company files with the SEC. The Company assumes no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contemplated in the forward-looking statements. Copies of these filings are available online at www.sec.gov and https://ir.endurance.com. The Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. The Company does not give any assurance that it will achieve its expectations.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.