PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of potential litigation and regulatory proceedings. It contains confidential legal analysis and strategic recommendations. This memorandum and its contents should not be disclosed, distributed, or disseminated to any person or entity without the prior written authorization of Calderwood & Harkness LLP and Whitfield & Crane LLP. Any unauthorized disclosure may result in a waiver of applicable privileges.
April 8, 2025
MEMORANDUM
TO:
Elena Vasquez-Bright, Esq., General Counsel, Cascade Retail Holdings Inc. Theodore "Ted" Langford, SVP, Corporate Development, Cascade Retail Holdings Inc. Harrison Wexford, Esq., Responsible Partner, Calderwood & Harkness LLP
FROM:
Howard Bellamy, Esq., Specialist Partner, Antitrust & Competition Practice Group, Calderwood & Harkness LLP Gabriela Montoya, Esq., Partner, Whitfield & Crane LLP
RE:
Hart-Scott-Rodino Pre-Filing Analysis — Proposed Acquisition of NovaMart Global Inc. by Cascade Retail Holdings Inc.
INTERNAL TRACKING NUMBER: 1038-00009
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I. Executive Summary
This memorandum sets forth our analysis of the pre-merger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. § 18a) (the "HSR Act"), and the implementing regulations promulgated thereunder (16 C.F.R. Parts 801–803), as applied to the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade" or "CRH") of one hundred percent (100%) of the outstanding capital stock of NovaMart Global Inc. ("NovaMart" or "NMG") for aggregate consideration of $1,200,000,000 in an all-cash stock purchase transaction (the "Transaction"). This memorandum also addresses filing logistics, timing considerations, competitive overlap risks, and our recommended strategic approach to the pre-merger notification process.
Reportability. Based on our analysis, the Transaction is clearly reportable under the HSR Act. The Transaction satisfies all applicable jurisdictional thresholds, including the Commerce Test, the Size-of-Transaction Test, and, to the extent applicable, the Size-of-Person Test. No exemption under 16 C.F.R. Part 802 applies to the Transaction. Accordingly, both Cascade (as the "acquiring person") and NovaMart (as the "acquired person," filing on behalf of the selling stockholders holding equity interests valued in excess of $50 million) must file Notification and Report Forms with the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") and observe the applicable statutory waiting period prior to consummation of the Transaction.
Filing Fee. The applicable filing fee under the HSR Act, as amended by the Merger Filing Fee Modernization Act of 2022, is $2,390,000, based on a transaction value of $1,200,000,000. The filing fee is payable by Cascade as the acquiring person at the time of filing.
Recommended Filing Date and Waiting Period. We recommend that both parties file their respective Notification and Report Forms on April 11, 2025. Assuming both filings are accepted as complete on that date, the initial thirty (30) calendar day waiting period under 15 U.S.C. § 18a(b)(1)(B) would expire on May 11, 2025, subject to the possibility of early termination or extension through the issuance of a request for additional information and documentary material (a "Second Request") under 15 U.S.C. § 18a(e)(1).
Key Risk. The principal antitrust risk identified in connection with the Transaction is the potential competitive overlap between Cascade's proprietary ecommerce platform, CascadeDirect.com, and NovaMart's online marketplace platform in the segment that may be characterized by the reviewing agency as the "online marketplace for specialty consumer goods." Although the combined market share of Cascade and NovaMart in this segment is moderate (approximately 14.0% of U.S. online specialty consumer goods gross merchandise value), the combination of two significant participants in a segment of ongoing regulatory interest warrants careful preparation of Item 4(c) and Item 4(d) document productions and the supporting narrative submitted with the HSR filing. We assess the probability that the reviewing agency (likely the DOJ Antitrust Division) will issue a Second Request at approximately 50–65%, and we recommend that the deal team prepare for Second Request compliance in parallel with the initial filing.
Transaction Timeline. The recommended filing date of April 11, 2025 precedes the anticipated execution date of the Stock Purchase Agreement ("SPA"), which is expected on or about May 20, 2025. Filing prior to signing is permissible under the HSR Act and is strategically recommended in order to begin running the statutory waiting period as early as practicable, thereby maximizing the pre-closing runway for antitrust review. The targeted Closing Date is October 15, 2025, with an Outside Date (SPA termination right) of December 31, 2025, providing approximately 2.5 months of additional buffer in the event that antitrust review extends beyond the targeted closing timeline.
This memorandum is organized as follows: Section II provides an overview of the Transaction and the parties; Section III sets forth the detailed HSR reportability analysis; Section IV addresses the filing parties and ultimate parent entity determinations; Section V discusses the filing fee calculation; Section VI addresses preparation considerations for the Notification and Report Form; Section VII analyzes timing strategy and waiting period considerations; Section VIII sets forth our strategic recommendations for the filing; Section IX covers filing logistics and action items; Section X addresses the impact of HSR risk on the signing and closing timeline; and Section XI presents our conclusions and recommended next steps.
II. Transaction Overview
A. Parties to the Transaction
1. Buyer / Acquiring Person
The acquiring person in the Transaction is Cascade Retail Holdings Inc., a corporation organized under the laws of the State of Delaware. Cascade is publicly traded on the Nasdaq Stock Market under the ticker symbol "CRHI." Cascade's principal executive offices are located at 4500 Elliott Avenue West, Suite 3200, Seattle, Washington 98119. Cascade's Employer Identification Number (EIN) is 91-2847653.
Cascade's Chief Executive Officer is Margaret "Meg" Alderton, and its Chief Financial Officer is Rajiv Sundaram. For the fiscal year ended December 31, 2024 ("FY2024"), Cascade reported consolidated revenues of approximately $14.7 billion and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $1.83 billion. As of the approximate date of this memorandum, Cascade's market capitalization is approximately $22.4 billion.
Cascade is a leading omnichannel retail company operating approximately 380 brick-and-mortar retail locations across North America. In addition to its physical retail footprint, Cascade operates a proprietary ecommerce platform, CascadeDirect.com, which serves approximately 28 million active customers and offers a broad assortment of consumer goods, including specialty consumer goods, home furnishings, sporting equipment, electronics, apparel, and related product categories. Cascade's business spans the retail trade, ecommerce, and consumer goods distribution industries.
2. Target / Acquired Entity
The acquired entity is NovaMart Global Inc., a corporation organized under the laws of the State of Delaware. NovaMart is privately held and is not listed on any public securities exchange. NovaMart's principal executive offices are located at 1100 Congress Avenue, Suite 800, Austin, Texas 78701. NovaMart's Employer Identification Number (EIN) is 84-3291547.
NovaMart was founded by Julian Reeves, who currently serves as the company's Chief Executive Officer. NovaMart's Chief Financial Officer is Doug Whitfield. For FY2024, NovaMart reported revenues of approximately $891 million, EBITDA of approximately $134 million, and gross merchandise value ("GMV") transacted through its platform of approximately $6.2 billion. NovaMart's platform hosts approximately 62,400 active sellers and approximately 9.1 million registered buyers.
NovaMart employs approximately 2,400 individuals and operates fourteen (14) fulfillment centers across nine (9) states, constituting its proprietary fulfillment and logistics network branded as "NovaShip." The fulfillment centers are located as follows: California (3 facilities), New Jersey (2 facilities), Georgia (2 facilities), Florida (2 facilities), Ohio (1 facility), Illinois (1 facility), Pennsylvania (1 facility), Tennessee (1 facility), and Washington (1 facility). NovaMart operates in the online marketplace platform, ecommerce technology, and logistics software-as-a-service (SaaS) industries.
3. Selling Stockholders (Principal)
NovaMart's outstanding capital stock is held by the following principal stockholders (collectively, the "Selling Stockholders"):
(a) Ridgeline Equity Partners, LP — Holds approximately 41.2% of NovaMart's outstanding common stock. Ridgeline is a private equity fund with its principal offices located at 200 Park Avenue South, 14th Floor, New York, New York 10003. Ridgeline's Managing Partner is Franklin Osei. Ridgeline's EIN is 83-4127896.
(b) Brindoval Ventures Fund III, LP — Holds approximately 22.8% of NovaMart's outstanding common stock. Brindoval is a venture capital fund with its principal offices located at 555 Mission Street, Suite 2900, San Francisco, California 94105. Brindoval's General Partner is Naomi Katzenbach. Brindoval's EIN is 94-6238154.
(c) Julian Reeves — Founder and CEO of NovaMart. Holds approximately 18.5% of NovaMart's outstanding common stock.
(d) Priya Narasimhan — Co-Founder of NovaMart. Holds approximately 8.3% of NovaMart's outstanding common stock.
(e) Other management and employee stockholders — Hold approximately 9.2% of NovaMart's outstanding common stock in the aggregate, including vested stock options exercisable prior to or in connection with the closing of the Transaction.
B. Deal Structure and Consideration
The Transaction is structured as a stock purchase. Cascade will acquire 100% of the issued and outstanding capital stock of NovaMart from the Selling Stockholders. The Transaction is not structured as a merger, tender offer, or asset acquisition.
The aggregate purchase price for all of NovaMart's outstanding capital stock is $1,200,000,000 (the "Purchase Price"), payable entirely in cash at closing. There is no stock component, contingent consideration, earnout, or other deferred payment mechanism. The Purchase Price has been determined on the basis of arm's-length negotiations between the parties and their respective financial advisors.
Of the $1,200,000,000 Purchase Price, $96,000,000 (representing 8% of the Purchase Price) will be deposited into an escrow account maintained by Marlowe Asset Management Trust Company, N.A. (the "Escrow Agent") to secure the Selling Stockholders' indemnification obligations under the SPA. The escrow funds will be held for a period of eighteen (18) months following the Closing Date, subject to the terms and conditions of the Escrow Agreement to be executed at closing.
Accordingly, the net cash payable to the Selling Stockholders at closing is $1,104,000,000, subject to customary closing adjustments, including a working capital adjustment measured against a target of $78,500,000 with a ± $5,000,000 collar (i.e., no adjustment is made if closing working capital falls within the range of $73,500,000 to $83,500,000).
The Transaction and the SPA will be governed by the laws of the State of Delaware without regard to conflict of laws principles. The Transaction constitutes a change of control under approximately thirty-four (34) of NovaMart's material contracts, including certain commercial agreements, technology licenses, and vendor arrangements, which will require notice or consent in connection with the closing.
C. Deal Timeline (Relevant Milestones)
The following table summarizes the key milestones in the Transaction timeline that are relevant to the HSR filing analysis:
The Clean Team / Antitrust Protocol Agreement governing the exchange of competitively sensitive information between the parties during the pre-signing due diligence period was drafted jointly by Howard Bellamy of Calderwood & Harkness LLP and Gabriela Montoya of Whitfield & Crane LLP, and was executed by both parties on February 18, 2025, concurrently with the commencement of due diligence.
D. Financing
Cascade intends to finance the Transaction through the following sources:
(a) Senior Secured Term Loan B: $750,000,000 to be provided under a Senior Secured Term Loan B facility, with Cornerstone National Bank, N.A. serving as Administrative Agent and Caluvori Capital Partners, Inc. serving as Co-Lead Arranger. Commitment letters have been executed and the financing is fully committed, subject to customary closing conditions.
(b) Revolving Credit Facility: $200,000,000 draw on Cascade's existing $500,000,000 revolving credit facility. The revolving credit facility is currently undrawn and has approximately $487,000,000 of available capacity as of the date of this memorandum.
(c) Cash on Hand: $250,000,000 from Cascade's available cash and cash equivalents. As of December 31, 2024, Cascade had approximately $1.12 billion of unrestricted cash and cash equivalents on its consolidated balance sheet.
The total committed financing of $1,200,000,000 is sufficient to fund the full Purchase Price. In addition, Cascade anticipates incurring approximately $47,300,000 in estimated buyer-side transaction costs (including the HSR filing fee, legal fees, investment banking fees, accounting fees, and other advisory costs), which will be funded from working capital.
Importantly, the SPA will not contain a financing condition. Cascade has represented to NovaMart and the Selling Stockholders that it has sufficient committed financing to consummate the Transaction. The absence of a financing condition is relevant to the overall deal certainty analysis, as it eliminates one potential source of closing risk.
III. HSR Act Reportability Analysis
A. Statutory Framework
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. § 18a) (the "HSR Act"), requires that parties to certain mergers, acquisitions, joint ventures, and other transactions that meet specified jurisdictional thresholds file pre-merger notification with the FTC and the Antitrust Division of the DOJ and observe a statutory waiting period before the transaction may be consummated. The pre-merger notification program is jointly administered by the FTC and DOJ, and the implementing regulations are set forth at 16 C.F.R. Parts 801 through 803.
The purpose of the HSR Act is to provide the federal antitrust enforcement agencies with advance notice of transactions that may have significant competitive implications, thereby affording the agencies an opportunity to investigate and, if appropriate, challenge transactions that may substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act (15 U.S.C. § 18).
For a transaction to be reportable under the HSR Act, three jurisdictional tests must be satisfied: (1) the Commerce Test; (2) the Size-of-Transaction Test; and (3) the Size-of-Person Test (which is applicable only if the transaction value falls below the higher size-of-transaction threshold). Each of these tests is analyzed below as applied to the proposed Transaction.
B. Commerce Test
The HSR Act applies to acquisitions of voting securities or assets of persons engaged in commerce or in any activity affecting commerce. This jurisdictional requirement is broadly construed and is intended to extend the reach of the HSR Act to the full extent of Congress's Commerce Clause power under the United States Constitution.
Both Cascade and NovaMart are clearly engaged in interstate commerce or activities affecting commerce within the meaning of the HSR Act. Cascade operates approximately 380 retail locations across multiple states in the United States and Canada and maintains a nationwide ecommerce platform (CascadeDirect.com) that ships products to customers in all fifty states and the District of Columbia. Cascade's FY2024 consolidated revenues of $14.7 billion are derived from commercial activities conducted across state lines and throughout the stream of interstate commerce.
NovaMart operates an online marketplace platform accessible to consumers and sellers nationwide, with approximately 9.1 million registered buyers and approximately 62,400 active sellers located throughout the United States. NovaMart's fourteen fulfillment centers are spread across nine states, and its logistics operations involve the interstate transportation and delivery of goods. NovaMart's FY2024 revenues of $891 million are derived from marketplace transaction fees, seller subscription services, fulfillment and logistics services, and advertising revenues, all of which involve activities in or affecting interstate commerce.
Conclusion: The Commerce Test is clearly satisfied.
C. Size-of-Transaction Test
Under the HSR Act, as annually adjusted by the FTC pursuant to Section 18a(a)(2), a transaction is reportable if, as a result of the acquisition, the acquiring person would hold an aggregate total amount of voting securities and assets of the acquired person valued in excess of the applicable size-of-transaction threshold. For transactions valued in excess of $478 million (the higher adjusted threshold for 2025), the transaction is reportable regardless of the size of the parties (i.e., the Size-of-Person Test does not apply).
The lower size-of-transaction threshold for 2025 filings, as adjusted, is $119.5 million. The higher size-of-transaction threshold is $478 million. These thresholds are subject to annual adjustment by the FTC based on changes in the gross national product, as published in the Federal Register. We have confirmed these thresholds against the FTC's published schedule for fiscal year 2025 and recommend re-confirming the exact thresholds as of the filing date of April 11, 2025, as the annual adjustment typically takes effect in late February of each year.
In the present Transaction, Cascade is acquiring 100% of NovaMart's outstanding capital stock for an aggregate Purchase Price of $1,200,000,000. The transaction value of $1,200,000,000 far exceeds both the lower ($119.5 million) and higher ($478 million) size-of-transaction thresholds. There is no question that the Size-of-Transaction Test is satisfied.
For purposes of valuation, the relevant measure is the "aggregate total amount of voting securities" to be held by Cascade as a result of the Transaction. Because Cascade is acquiring 100% of NovaMart's voting securities, the transaction value is equal to the full Purchase Price of $1,200,000,000. There are no existing holdings by Cascade in NovaMart that need to be aggregated.
Conclusion: The Size-of-Transaction Test is satisfied. The transaction value of $1,200,000,000 exceeds the applicable size-of-transaction threshold by a substantial margin.
D. Size-of-Person Test
For transactions valued in excess of $478 million (the 2025 adjusted threshold), the Size-of-Person Test does not apply. Because the Transaction is valued at $1,200,000,000, which exceeds $478 million, the Transaction is reportable solely on the basis of the Size-of-Transaction Test, without regard to the size of the parties.
Nevertheless, even if the Size-of-Person Test were applicable (i.e., for transactions valued between $119.5 million and $478 million), both parties to the Transaction would satisfy the relevant thresholds. Under the Size-of-Person Test, one party must have total assets or annual net sales of at least $23.9 million (2025 adjusted) and the other must have total assets or annual net sales of at least $239 million (2025 adjusted). Cascade's FY2024 consolidated revenues of $14.7 billion and approximate market capitalization of $22.4 billion far exceed the higher threshold. NovaMart's FY2024 revenues of $891 million likewise far exceed the higher threshold.
Conclusion: The Size-of-Person Test is not required for this Transaction because the transaction value exceeds $478 million. However, even if the test were applicable, both Cascade and NovaMart would satisfy all relevant size-of-person thresholds.
E. Exemptions Analysis
The HSR Act and its implementing regulations provide a number of exemptions from the filing requirement under 16 C.F.R. Part 802. We have reviewed the potentially applicable exemptions and have determined that no exemption applies to the proposed Transaction. Specifically:
(a) Ordinary Course of Business (16 C.F.R. § 802.1). The Transaction is not an acquisition of goods or assets in the ordinary course of business. It is a strategic acquisition of 100% of the capital stock of NovaMart. This exemption does not apply.
(b) Real Property (16 C.F.R. § 802.2). The Transaction is not an acquisition solely of real property. While NovaMart operates fourteen fulfillment centers, the Transaction involves the acquisition of all of NovaMart's voting securities, not solely its real property holdings. This exemption does not apply.
(c) Goods and Inventory (16 C.F.R. § 802.3). The Transaction is not an acquisition of goods or inventory only. The Transaction involves the acquisition of all of NovaMart's voting securities and the entirety of its business, including intellectual property, technology, customer relationships, and going-concern value. This exemption does not apply.
(d) Intra-Person Transaction (16 C.F.R. § 802.30). The Transaction is not an intra-person transaction. Cascade and NovaMart are separate and unrelated corporate entities, and there is no existing parent-subsidiary or common ownership relationship between them. This exemption does not apply.
(e) Other Exemptions. We have also reviewed the exemptions for acquisitions of foreign assets and voting securities (16 C.F.R. § 802.50 et seq.), acquisitions of investment rental property (16 C.F.R. § 802.5), acquisitions of carbon-based mineral reserves (16 C.F.R. § 802.6), and other specialized exemptions. None of these exemptions is relevant to the proposed Transaction.
Conclusion: No exemption under 16 C.F.R. Part 802 applies to the Transaction. The filing requirement is not excused.
F. Conclusion on Reportability
Based on the foregoing analysis, we conclude that the proposed acquisition of 100% of NovaMart's outstanding capital stock by Cascade for an aggregate Purchase Price of $1,200,000,000 is reportable under the HSR Act. The Transaction satisfies the Commerce Test, the Size-of-Transaction Test, and (to the extent applicable) the Size-of-Person Test. No exemption applies. Both the acquiring person (Cascade) and the acquired person (NovaMart, filing on behalf of selling stockholders holding equity valued in excess of applicable thresholds) are required to file Notification and Report Forms with the FTC and DOJ and to observe the statutory waiting period before the Transaction may be consummated.
IV. Filing Parties and Ultimate Parent Entities
A. Acquiring Person
The acquiring person for purposes of the HSR filing is Cascade Retail Holdings Inc. Because Cascade is a publicly traded corporation with no controlling stockholder, parent entity, or other entity that holds 50% or more of its outstanding voting securities, Cascade is its own Ultimate Parent Entity ("UPE") under 16 C.F.R. § 801.1(a)(3). Cascade has approximately 412 million shares of common stock outstanding, which are broadly held by institutional and individual investors. No single stockholder or group of stockholders holds a controlling interest in Cascade.
Cascade will file the HSR Notification and Report Form in its capacity as the "acquiring person" under the HSR Act. The form will identify Cascade Retail Holdings Inc. as both the filing entity and the Ultimate Parent Entity of the acquiring person.
B. Acquired Person
The acquired entity in the Transaction is NovaMart Global Inc. Under the HSR Act and implementing regulations, the "acquired person" is the person whose voting securities or assets are being acquired. In a stock purchase transaction involving multiple selling stockholders, the filing obligation falls on each "person" (as defined in the HSR Act) whose voting securities are being acquired, or the acquired entity may file on behalf of such selling stockholders. The latter approach is the established and accepted practice of the FTC and DOJ.
In this Transaction, NovaMart Global Inc. will file one Notification and Report Form as the acquired entity, filing on behalf of all Selling Stockholders. This approach simplifies the filing process and is consistent with FTC/DOJ guidance and standard practice in transactions involving multiple sellers.
UPE Determination for Selling Stockholders
Although NovaMart will file on behalf of the Selling Stockholders, the Ultimate Parent Entity of each selling stockholder holding voting securities valued in excess of the applicable reporting threshold must be identified. The following analysis applies:
(a) Ridgeline Equity Partners, LP — Ridgeline holds approximately 41.2% of NovaMart's outstanding common stock. Based on the $1,200,000,000 transaction value, Ridgeline's pro rata share is approximately $494,400,000, which exceeds all applicable thresholds. The UPE of Ridgeline must be determined by examining the fund's governance and ownership structure. Based on information provided to us, Ridgeline Equity Partners, LP is controlled by its general partner, Ridgeline Equity GP LLC, which in turn is controlled by Franklin Osei. We will need to confirm the UPE determination with NovaMart's counsel. If Ridgeline's general partner entity or Mr. Osei controls other investment entities, those entities must be identified and reported as part of the acquired person's filing.
(b) Brindoval Ventures Fund III, LP — Brindoval holds approximately 22.8% of NovaMart's outstanding common stock. Based on the $1,200,000,000 transaction value, Brindoval's pro rata share is approximately $273,600,000, which exceeds all applicable thresholds. The UPE of Brindoval must be determined by examining the fund's governance and ownership structure. Based on preliminary information, Brindoval Ventures Fund III, LP is controlled by its general partner, Brindoval Ventures Management LLC, which in turn is controlled by Naomi Katzenbach. We will need to confirm the UPE determination with Brindoval's counsel.
(c) Julian Reeves — Mr. Reeves holds approximately 18.5% of NovaMart's outstanding common stock. Based on the $1,200,000,000 transaction value, Mr. Reeves's pro rata share is approximately $222,000,000, which exceeds all applicable thresholds. As an individual, Mr. Reeves is his own UPE, unless he controls other entities that should be included in the reporting analysis.
(d) Priya Narasimhan — Ms. Narasimhan holds approximately 8.3% of NovaMart's outstanding common stock. Based on the $1,200,000,000 transaction value, Ms. Narasimhan's pro rata share is approximately $99,600,000. This amount may exceed the lower size-of-transaction threshold depending on the exact adjusted threshold as of the filing date. As with Mr. Reeves, Ms. Narasimhan, as an individual, would be her own UPE. We will need to confirm whether her share exceeds the applicable threshold and, if so, ensure appropriate reporting.
(e) Other management and employee stockholders — These stockholders hold approximately 9.2% of NovaMart's outstanding common stock in the aggregate. The individual holdings of each of these stockholders are generally expected to fall below the applicable reporting threshold. A case-by-case analysis of each individual stockholder's holdings will be conducted to confirm that no individual stockholder's share exceeds the threshold, but based on the available capitalization information, it is unlikely that any individual in this group holds a reportable amount.
As noted above, NovaMart will file a single Notification and Report Form on behalf of all Selling Stockholders, which is the accepted and customary practice. The UPE information for each reportable selling stockholder will be included in the filing.
V. Filing Fee Calculation
Under the HSR Act, as amended by the Merger Filing Fee Modernization Act of 2022 (Pub. L. No. 117-328, Division GG), filing fees are assessed on a tiered basis corresponding to the aggregate total amount of voting securities, non-corporate interests, and/or assets to be held by the acquiring person as a result of the transaction. The fee schedule is subject to annual adjustment by the FTC.
The following fee tiers are applicable to transactions for which Notification and Report Forms are filed in 2025 (as published in the Federal Register):
The Transaction is valued at $1,200,000,000, which falls within the tier for transactions valued at $1.098 billion or greater but less than $2.195 billion. Accordingly, the applicable filing fee is $2,390,000.
The filing fee is payable by the acquiring person (Cascade) at the time of filing. Under FTC regulations, the filing fee must be received by the FTC before the filing will be deemed complete and the waiting period will begin to run. Payment will be made via electronic wire transfer to the FTC's premerger notification office.
We note that the $2,390,000 filing fee has been included in Cascade's estimated buyer-side transaction costs of $47,300,000. We recommend confirming the exact 2025 fee schedule against the FTC's published notice in the Federal Register as of the filing date, as the fee tiers are subject to annual adjustment, and the thresholds used herein are based on the most recently published schedule available as of the date of this memorandum.
VI. Notification and Report Form — Preparation Considerations
A. Item 4(c) Documents
Item 4(c) of the HSR Notification and Report Form requires the production of all documents that were prepared by or for any officer(s) or director(s) of the filing person for the purpose of evaluating or analyzing the Transaction with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. This requirement applies to both the acquiring person (Cascade) and the acquired person (NovaMart).
Item 4(c) documents are frequently the most scrutinized component of an HSR filing, as they provide the reviewing agency with the parties' own assessments of the competitive significance of the transaction. It is essential that the document collection and production process for Item 4(c) documents be thorough, well-organized, and completed well in advance of the filing date.
For Cascade, the following categories of documents are likely responsive to Item 4(c):
• Board of Directors materials and presentations relating to the proposed acquisition of NovaMart, including any presentations to or discussions with the full Board or committees thereof;
• Presentations, memoranda, and analyses prepared for or presented to Meg Alderton (CEO), Rajiv Sundaram (CFO), Ted Langford (SVP, Corporate Development), or other officers or directors of Cascade that discuss the competitive landscape, market shares, competitive positioning, or strategic rationale for the Transaction;
• Investment banking materials and presentations prepared by Hargrove Mead & Co. (Christopher Dunleavy, lead banker) for Cascade's officers or directors, to the extent such materials address market shares, competition, competitors, markets, or potential for sales growth or geographic expansion;
• Strategic planning documents or presentations referencing competitive dynamics between CascadeDirect.com and NovaMart's marketplace platform, including any benchmarking analyses or competitive assessments; and
• Any other documents prepared by or for Cascade's officers or directors that evaluate the Transaction in terms of its competitive implications.
For NovaMart, the following categories of documents are likely responsive to Item 4(c):
• Board of Directors materials and presentations relating to the proposed sale of NovaMart, including any presentations to or discussions with the NovaMart Board or its committees;
• Presentations, memoranda, and analyses prepared for or presented to Julian Reeves (CEO), Doug Whitfield (CFO), or other NovaMart officers or directors that discuss market shares, competition, competitors, markets, or strategic alternatives;
• Investment banking materials and presentations prepared by Pemberton Strauss Advisory LLC (Vivian Hong, lead banker) for NovaMart's officers or directors, to the extent such materials address the relevant competitive metrics;
• Materials prepared for the benefit of NovaMart's principal investors, Ridgeline Equity Partners and Brindoval Ventures Fund III, regarding the sale process, to the extent such materials were prepared for officers or directors and address competitive dynamics; and
• Any other documents prepared by or for NovaMart's officers or directors that evaluate the Transaction in terms of competitive considerations.
Key Sensitivity: We have identified a particular sensitivity with respect to documents referencing competitive overlap in the online marketplace for specialty consumer goods. Any documents that contain market share estimates, competitive positioning analyses, or assessments of competitive dynamics between Cascade's CascadeDirect.com platform and NovaMart's marketplace platform—including references to BrightBazaar Inc. and other competitors—must be carefully identified, reviewed for privilege and confidentiality treatment, and assessed for their potential impact on the reviewing agency's analysis.
We recommend that the document collection process for Item 4(c) begin immediately and be substantially completed by April 9, 2025, two days before the target filing date. The document collection should be coordinated between Calderwood & Harkness (for Cascade documents) and Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya, for NovaMart documents). All documents should be reviewed by antitrust counsel before inclusion in the filing to assess privilege, confidentiality, and substantive implications.
B. Item 4(d) Documents
Item 4(d) of the HSR Notification and Report Form requires the production of all studies, surveys, analyses, and reports prepared by or for any officer(s) or director(s) of the filing person for the purpose of evaluating or analyzing the Transaction with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets, where such documents were prepared by investment bankers, consultants, or other third-party advisors retained by the filing person.
The distinction between Item 4(c) and Item 4(d) documents is that Item 4(d) specifically targets documents prepared by third-party advisors (rather than internal personnel), while Item 4(c) covers all documents prepared by or for officers or directors regardless of the author. In practice, there is significant overlap between the two categories, as many documents prepared by investment bankers are also responsive to Item 4(c).
For Cascade, the following categories of documents are likely responsive to Item 4(d):
• Presentations, analyses, and reports prepared by Hargrove Mead & Co. (Christopher Dunleavy) for Cascade's officers or directors in connection with the Transaction, to the extent they address market shares, competition, competitors, markets, or competitive positioning;
• Financial and accounting analyses prepared by Whitmore & Paige LLP (Sandra Chiu) for Cascade's officers or directors, to the extent such analyses relate to competitive dynamics, market definition, or competitive effects;
• Preliminary materials prepared by Dr. Henrik Johansson of Apex Economics LLC, to the extent such materials were prepared for Cascade's officers or directors. We note that certain materials prepared by Dr. Johansson may be protected as attorney work product, to the extent they were prepared at the direction of counsel and in anticipation of antitrust review or potential litigation. A careful privilege analysis should be conducted for each such document, and we will provide guidance on the appropriate assertions of privilege; and
• Any other analyses or reports prepared by third-party consultants or advisors at the request of or for the benefit of Cascade's officers or directors in connection with the Transaction.
For NovaMart, the following categories of documents are likely responsive to Item 4(d):
• Presentations, analyses, and reports prepared by Pemberton Strauss Advisory LLC (Vivian Hong) for NovaMart's officers or directors in connection with the sale process or the Transaction;
• Any analyses or reports prepared by other third-party consultants or advisors retained by NovaMart in connection with the sale process, to the extent they address competitive metrics relevant to Item 4(d); and
• Materials prepared for NovaMart's financial sponsors (Ridgeline and Brindoval) by third-party advisors, to the extent such materials were prepared for officers or directors of NovaMart and address competitive dynamics.
Coordination with Hargrove Mead & Co. and Pemberton Strauss Advisory LLC regarding document identification and collection should be initiated promptly. We will work with Ted Langford and Amanda Trevino (NovaMart's General Counsel) to ensure that all responsive documents from third-party advisors are identified, collected, and reviewed in advance of the filing date.
C. Revenue and NAICS Code Reporting
The Notification and Report Form requires each filing person to report its revenues (and, for manufacturing entities, the value of shipments) by applicable North American Industry Classification System ("NAICS") codes. The NAICS code reporting is important because it provides the reviewing agency with a structured view of the parties' business activities and enables rapid identification of potential competitive overlaps.
For Cascade, the primary NAICS codes include codes within the following categories:
• Retail trade (NAICS 44-45 series, including department stores, general merchandise stores, and specialty retail);
• Electronic shopping and mail-order houses (NAICS 454110);
• Consumer goods distribution and warehousing; and
• Other categories relevant to Cascade's omnichannel retail operations.
Cascade's FY2024 revenues of $14.7 billion should be allocated among the applicable NAICS codes based on internal revenue breakdowns by business segment.
For NovaMart, the primary NAICS codes include codes within the following categories:
• Electronic shopping and mail-order houses (NAICS 454110);
• Internet publishing and broadcasting and web search portals (NAICS 519130);
• Custom computer programming services and software publishing (to the extent NovaMart licenses its logistics SaaS platform);
• Warehousing and storage (NAICS 493 series, relating to NovaMart's fulfillment center operations); and
• Other categories relevant to NovaMart's marketplace platform and logistics operations.
NovaMart's FY2024 revenues of $891 million should be allocated among the applicable NAICS codes based on NovaMart's internal revenue reporting by business line.
Overlap Analysis: The most critical NAICS code overlap is in the electronic shopping and mail-order houses category (NAICS 454110), which captures both Cascade's CascadeDirect.com ecommerce operations and NovaMart's online marketplace platform. Overlapping NAICS codes should be identified with precision and reported accurately, as they will be the primary basis on which reviewing agency staff identify potential competitive concerns. We will work with both companies' finance teams to ensure accurate revenue allocation by NAICS code.
D. Controlled Entities and Minority Holdings
The Notification and Report Form requires each filing person to identify all entities that it controls (within the meaning of the HSR Act and implementing regulations) and all minority holdings in entities that may be engaged in activities competitive with the other party to the Transaction.
For Cascade, this includes identification of all wholly-owned and majority-owned subsidiaries, including any entities operating under the CascadeDirect.com brand, any logistics or fulfillment subsidiaries, and any other controlled entities within Cascade's corporate family. Cascade's corporate structure should be confirmed with Elena Vasquez-Bright and Rajiv Sundaram.
For NovaMart, this includes identification of all wholly-owned and majority-owned subsidiaries, including the entities that operate NovaMart's fourteen fulfillment centers, the NovaShip logistics platform, and any other subsidiary or affiliate entities. A complete organizational chart for NovaMart should be obtained from Amanda Trevino and reviewed for accuracy.
Any minority holdings by either Cascade or NovaMart in companies that could be considered competitors, suppliers, or customers of the other party should also be identified and disclosed as appropriate.
E. Geographic Overlap
Both Cascade and NovaMart operate on a nationwide basis within the United States. Cascade's approximately 380 brick-and-mortar retail locations are distributed across North America, and its CascadeDirect.com platform serves customers in all fifty states. NovaMart's online marketplace is similarly available to buyers and sellers throughout the United States, and its fourteen fulfillment centers span nine states.
There is no specific geographic market limitation that would narrow the competitive overlap analysis. However, the geographic distribution of NovaMart's fulfillment centers and Cascade's retail locations may be relevant to the agency's analysis of logistics and delivery capabilities. We recommend compiling fulfillment center location data, customer concentration data by state or metropolitan statistical area, and any relevant delivery time or coverage analyses for inclusion in the filing or for use in responding to agency inquiries.
VII. Timing Strategy and Waiting Period Analysis
A. Filing Date and Waiting Period
We recommend that both parties file their respective HSR Notification and Report Forms on April 11, 2025. This date has been coordinated with Cascade's deal team and NovaMart's counsel, and all parties are aligned on this target.
Under the HSR Act, the initial statutory waiting period for a transaction involving the acquisition of voting securities (other than a cash tender offer) is thirty (30) calendar days following the date on which both the acquiring person's and the acquired person's Notification and Report Forms are received by the FTC and DOJ. See 15 U.S.C. § 18a(b)(1)(B). Both filings must be received before the waiting period begins to run; if the filings are received on different dates, the waiting period commences on the later date.
Assuming both filings are submitted and accepted as complete on April 11, 2025, the initial thirty-day waiting period would expire on May 11, 2025. This expiration date is subject to the possibility of (i) early termination of the waiting period at the discretion of the reviewing agency and the FTC, or (ii) extension of the waiting period through the issuance of a Second Request under 15 U.S.C. § 18a(e)(1).
It is important to note that the anticipated SPA execution date is May 20, 2025, which is approximately nine days after the expected expiration of the initial waiting period (absent a Second Request). Filing the HSR Notification and Report Forms prior to signing the definitive agreement is expressly permitted under the HSR Act and its implementing regulations, provided that the filing person has a good-faith intention to consummate the transaction. In the present case, the parties have executed a Letter of Intent and are actively negotiating the definitive SPA, which provides a sufficient basis for filing. Filing prior to signing is strategically recommended in order to begin the waiting period clock as early as possible, particularly in light of the potential for a Second Request.
B. Early Termination
The HSR Notification and Report Form provides the filing parties with an opportunity to request early termination of the initial waiting period. We recommend that both Cascade and NovaMart request early termination on their respective filing forms.
Early termination is granted at the sole discretion of the reviewing agency and the FTC. When granted, early termination is publicly noticed in the Federal Register and on the FTC's website. The decision to grant or deny early termination is not subject to judicial review and does not constitute a determination by the agency regarding the competitive effects of the transaction.
We note that the FTC suspended its practice of granting early termination in February 2021 and only resumed the practice in certain limited circumstances. As of the date of this memorandum, the FTC's current policy on early termination should be confirmed. Even if early termination is available, given the competitive overlap concerns identified in this memorandum (discussed in greater detail below), it is possible that the reviewing agency will decline to grant early termination if it determines that further review of the Transaction is warranted. Accordingly, the deal team should not rely on early termination and should plan based on the full thirty-day initial waiting period.
C. Second Request Risk Assessment
1. Key Competitive Overlap
The principal area of competitive overlap between Cascade and NovaMart is in the online marketplace for consumer goods, and more specifically, in the sub-segment that the reviewing agency may define as the "online marketplace for specialty consumer goods." Both Cascade (through its CascadeDirect.com platform) and NovaMart operate ecommerce platforms that facilitate the sale of specialty consumer goods—including home décor, artisanal goods, specialty foods, handmade products, and niche consumer items—to consumers throughout the United States.
While Cascade and NovaMart have different business models (Cascade operates primarily as a first-party retailer with a growing third-party marketplace component, whereas NovaMart operates primarily as a third-party marketplace facilitating transactions between independent sellers and buyers), the reviewing agency may examine whether the two platforms compete for the same consumers and sellers, and whether the Transaction would reduce the number of significant competitive alternatives available in this segment.
2. Estimated Market Shares
Based on our internal analysis of publicly available data and proprietary estimates, the approximate market shares of the principal participants in U.S. online specialty consumer goods (measured by gross merchandise value) are as follows:
The combined market share of approximately 14.0% is moderate by any standard and would not result in a presumptively anticompetitive level of market concentration under the DOJ/FTC Merger Guidelines (2023). Specifically, the post-merger Herfindahl-Hirschman Index ("HHI") in this market segment is unlikely to exceed the thresholds that give rise to a presumption of anticompetitive effects under the Guidelines. The pre-merger HHI in the online specialty consumer goods segment is estimated to be relatively low, reflecting the highly fragmented nature of this market, and the merger-induced increase in HHI is likely to be modest.
3. Risk Assessment
Notwithstanding the moderate combined market share, we assess the probability that the reviewing agency will issue a Second Request at approximately 50–65% (moderate to high). This assessment is based on the following factors:
(a) Regulatory Scrutiny of Ecommerce and Marketplace Transactions. Both the FTC and DOJ have demonstrated heightened interest in transactions involving digital platforms, online marketplaces, and ecommerce businesses in recent years. The reviewing agency may view the combination of two significant online marketplace platforms as warranting closer scrutiny, even where the combined market share is moderate.
(b) Potential for Narrow Market Definition. While the broad market for online consumer goods is vast and highly fragmented, the reviewing agency may seek to define a narrower relevant market—for example, "online marketplace for specialty consumer goods" or "third-party marketplace platforms for specialty consumer goods"—in which the parties' combined share would be higher. The outcome of the market definition exercise will significantly affect the competitive analysis.
(c) Loss of Head-to-Head Competition. The reviewing agency may focus on evidence that Cascade and NovaMart compete directly for sellers, buyers, or both in the specialty consumer goods segment. Even in a fragmented market, the loss of head-to-head competition between two significant participants may be viewed as potentially anticompetitive.
(d) Item 4(c) and 4(d) Document Risk. If the parties' internal documents (including board presentations, strategic plans, and investment banking materials) contain references to NovaMart as a competitor to CascadeDirect.com, or vice versa, the reviewing agency may view such documents as evidence of direct competitive rivalry, increasing the likelihood of a Second Request.
(e) Recent Enforcement Trends. The current DOJ leadership has pursued an aggressive merger enforcement agenda, and transactions involving digital platforms and marketplaces have been a particular area of focus. Even transactions with moderate market shares have been subjected to extended review.
4. Impact of a Second Request
If a Second Request is issued, the initial thirty-day waiting period is extended, and the Transaction may not be consummated until thirty (30) days after both parties have substantially complied with the Second Request. See 15 U.S.C. § 18a(e)(1). Substantial compliance with a Second Request typically involves the production of voluminous documents (often millions of pages) and extensive data submissions, and can take several months to complete.
Based on the deal timeline, if a Second Request is issued on or around May 8–11, 2025 (i.e., shortly before or on the date of initial waiting period expiration), and substantial compliance is achieved by approximately August 2025, clearance could be expected in the September–October 2025 timeframe. This timeline is consistent with the targeted Closing Date of October 15, 2025. The Outside Date of December 31, 2025 provides an additional buffer of approximately 2.5 months in the event that the antitrust review extends beyond the targeted closing timeline.
We recommend preparing for a Second Request in parallel with the initial filing, as discussed in Section VIII.E below.
D. Agency Clearance Process
Following the submission of the HSR filings, the FTC and DOJ will engage in a clearance process to determine which agency will take the lead in conducting the substantive review of the Transaction. Both the FTC and DOJ have jurisdiction over pre-merger review, and the clearance process is an internal allocation mechanism by which the two agencies agree on which will handle a particular matter.
The clearance process is typically completed within seven to ten (7–10) business days from the date of filing, although it can sometimes take longer in cases where both agencies have an interest in the matter. During the clearance process, neither agency conducts a substantive review of the Transaction; the waiting period continues to run.
Given the retail and ecommerce nature of the Transaction, the matter could be reviewed by either the FTC or the DOJ. However, based on recent precedent in transactions involving online marketplace platforms and ecommerce businesses, we believe the DOJ Antitrust Division is the more likely reviewing agency. The DOJ has taken the lead on several recent investigations involving digital platforms and marketplace transactions, and it has developed institutional expertise in the competitive dynamics of online marketplaces. We will monitor the clearance process and advise the deal team as soon as the reviewing agency has been determined.
E. Pre-Filing Coordination
We recommend making informal pre-filing contact with the relevant agency staff prior to the April 11, 2025 filing date to discuss the Transaction and filing logistics. Pre-filing engagement is standard practice in significant transactions and can facilitate smoother processing of the filing, provide an opportunity to address any preliminary questions from agency staff, and establish a constructive working relationship with the reviewing team.
Howard Bellamy (Calderwood & Harkness LLP) and Gabriela Montoya (Whitfield & Crane LLP) will coordinate any pre-filing engagement with DOJ staff. Pre-filing contacts will be conducted on behalf of Cascade only and will be limited to non-substantive procedural matters unless the deal team determines that early substantive engagement is strategically appropriate. We will advise the deal team before initiating any substantive pre-filing discussions.
VIII. Strategic Recommendations for Filing
A. Voluntary Narrative Submission
We recommend including a voluntary narrative submission with the HSR filing. The voluntary narrative is not required by the HSR Act or its implementing regulations, but it is standard practice in significant transactions and is an effective tool for framing the competitive analysis for the reviewing agency. The narrative provides an opportunity to present the parties' view of the transaction rationale, the competitive landscape, and the procompetitive efficiencies of the Transaction before the reviewing agency forms its initial impressions based solely on the filing and Item 4(c)/4(d) documents.
The voluntary narrative should address the following topics:
(a) Transaction Rationale. The strategic rationale for the Transaction, emphasizing Cascade's objective to expand its omnichannel retail capabilities by integrating NovaMart's third-party marketplace platform and logistics infrastructure.
(b) Competitive Landscape. A description of the competitive landscape in online retail and the online marketplace for consumer goods, emphasizing the highly fragmented nature of the market, the large number of competitors, and the low barriers to entry and expansion. The narrative should highlight that the combined market share of approximately 14.0% in the online specialty consumer goods segment is moderate by any measure and would not give rise to competitive concerns under any plausible market definition.