MEMORANDUM
PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
TO: Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc. Theodore "Ted" Langford, SVP, Corporate Development, Cascade Retail Holdings Inc.
FROM: Howard Bellamy, Partner, Antitrust & Competition, Calderwood & Harkness LLP Gabriela Montoya, Partner, Whitfield & Crane LLP
CC: Harrison Wexford, Responsible Partner, M&A, Calderwood & Harkness LLP Derek Okonkwo, Lead Associate, M&A, Calderwood & Harkness LLP
DATE: May 22, 2025
RE: State Antitrust and Regulatory Clearance Checklist — Acquisition of NovaMart Global Inc. by Cascade Retail Holdings Inc.
MATTER: Cascade Retail Holdings Inc. — Acquisition of NovaMart Global Inc.
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I. Executive Summary
This memorandum identifies and analyzes all state-level antitrust, competition, and regulatory filings or approvals that may be required in connection with Cascade Retail Holdings Inc. ("Cascade" or the "Buyer") proposed acquisition of 100 percent of the outstanding capital stock of NovaMart Global Inc. ("NovaMart" or the "Company") for an aggregate purchase price of $1,200,000,000 (the "Transaction"). This memorandum is intended to serve as a comprehensive checklist and action guide for the Cascade deal team and should be read in conjunction with the separate federal antitrust memoranda and the Closing Conditions Status Tracker maintained by Calderwood & Harkness LLP.
Transaction Structure. The Transaction is structured as a stock purchase governed by Delaware law, pursuant to a Stock Purchase Agreement (the "SPA") executed on May 20, 2025, between Cascade, NovaMart, and Ridgeline Equity Partners, LP, in its capacity as the Stockholder Representative. The SPA provides for a targeted closing date of October 15, 2025, with an Outside Date of December 31, 2025, beyond which either party may terminate the SPA if closing has not occurred and the terminating party is not in material breach of its obligations.
Federal Antitrust Status. The parties filed a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Antitrust Division of the U.S. Department of Justice ("DOJ") and the Federal Trade Commission ("FTC") on April 11, 2025. Early termination of the initial waiting period was not granted. On May 8, 2025, the DOJ issued a Request for Additional Information and Documentary Material (a "Second Request") to both Cascade and NovaMart. The parties are currently in the process of responding to the Second Request, and substantial compliance is expected by August 2025. Based on ongoing discussions with DOJ staff and an analysis of the competitive landscape prepared by Dr. Henrik Johansson of Apex Economics LLC, clearance is expected in the September–October 2025 timeframe. Federal HSR clearance remains the principal outstanding condition to closing under the SPA.
State-Level Conclusions. Based on a comprehensive review of the antitrust, competition, and related regulatory laws of all 50 states and the District of Columbia, we have concluded that no mandatory state-level antitrust pre-merger notification filings are required in connection with this Transaction. However, several important caveats and supplemental considerations warrant attention:
• Certain state Attorneys General retain independent investigatory and enforcement authority to review and challenge mergers under state antitrust statutes and, as parens patriae, under the federal Clayton Act. Given the DOJ Second Request, there is a possibility — assessed as low — that one or more state AGs may coordinate with the DOJ or conduct parallel inquiries.
• Several state regulatory considerations arise from NovaMart's operations across multiple states, including fulfillment center operations in nine states, marketplace facilitator tax obligations, and consumer data privacy compliance, although none of these constitute merger-specific approval requirements.
• Proactive engagement with select state AGs — particularly in Texas, Washington, California, and New York — is recommended as a precautionary measure.
Recommendation. No affirmative state-level antitrust filings are required. We recommend, however, that the deal team adopt a proactive engagement strategy with select state Attorneys General, prepare a contingency briefing package for potential AG inquiries, and monitor state AG activity through closing. In addition, certain post-closing corporate and tax registration updates will be required in states where NovaMart has nexus. The detailed analysis supporting these conclusions is set forth below.
II. Overview of State Antitrust Filing Requirements
A. General Framework — State Pre-Merger Notification Statutes
The federal Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a, is the primary and, for practical purposes, the exclusive pre-merger notification regime in the United States. The HSR Act requires parties to certain transactions meeting specified size-of-person and size-of-transaction thresholds to file notifications with the DOJ and the FTC and to observe a waiting period before consummating the acquisition. The parties have complied with the HSR Act by filing their respective Premerger Notification and Report Forms on April 11, 2025. As noted above, the DOJ has issued a Second Request, and the parties are in the process of complying with that request.
Unlike certain international jurisdictions — notably the European Union, where member states may maintain independent merger control regimes alongside the EU Merger Regulation, or Canada, where provincial competition authorities do not maintain separate merger review processes — no U.S. state currently maintains a mandatory pre-merger notification statute that would impose an independent filing obligation applicable to this Transaction.
This conclusion reflects both the current state of the law and the historical evolution of state antitrust enforcement. A small number of states have, at various times, considered or maintained provisions that could be interpreted as imposing notification or registration requirements in connection with certain types of mergers or acquisitions. For example, New York has periodically considered legislative proposals that would require pre-merger notification to the state Attorney General for transactions meeting certain thresholds, although no such legislation has been enacted. Certain provisions of New York's General Business Law and Executive Law grant broad investigatory authority to the Attorney General, but these are enforcement powers rather than affirmative filing obligations. Similarly, various states have adopted statutes modeled on the federal antitrust laws that confer investigatory and enforcement powers on the state AG but do not create pre-merger notification requirements. In no case does an operative state statute currently impose a mandatory pre-merger filing obligation that would apply to the Transaction.
We note that the regulatory landscape continues to evolve. Several state legislatures have in recent sessions considered legislation that would expand state-level merger review authority, particularly for transactions involving technology companies and digital platforms. However, as of the date of this memorandum, no such legislation has been enacted in any jurisdiction relevant to the Transaction. We will continue to monitor legislative developments through closing and will promptly advise the deal team of any changes.
B. States Analyzed
To ensure comprehensiveness, we have analyzed the antitrust and competition laws, as well as related regulatory frameworks, of all 50 states and the District of Columbia. However, our analysis has focused particular attention on those jurisdictions in which Cascade and NovaMart have material operations, substantial employee populations, or other significant connections. The specific operational footprints of the two parties are as follows:
Cascade Retail Holdings Inc.
• Headquarters: 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119.
• State of Incorporation: Delaware.
• Retail Operations: Approximately 380 retail locations across North America, with stores in more than 40 states. Cascade's retail operations focus on specialty consumer goods, home furnishings, and related lifestyle products.
• Ecommerce Operations: CascadeDirect.com, an ecommerce platform serving approximately 28 million active customers nationwide. CascadeDirect.com accounts for approximately 31% of Cascade's total revenue.
• Public Company Status: Cascade is listed on the Nasdaq Stock Market under the ticker symbol CRHI.
• Key Stakeholders: Publicly traded; institutional holders include various mutual funds, pension funds, and indexed portfolios.
NovaMart Global Inc.
• Headquarters: 1100 Congress Avenue, Suite 800, Austin, TX 78701.
• State of Incorporation: Delaware.
• Marketplace Operations: NovaMart operates an online marketplace platform connecting approximately 62,400 active sellers with approximately 9.1 million registered buyers. Fiscal year 2024 gross merchandise value ("GMV") was approximately $6.2 billion.
• Logistics Network: NovaMart's proprietary logistics network, branded "NovaShip," operates 14 fulfillment centers across 9 states, specifically: 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).
• Employees: Approximately 2,400 employees across all locations.
• Key Stockholders: Ridgeline Equity Partners, LP (approximately 41.2% of outstanding shares, serving as Stockholder Representative), Brindoval Ventures Fund III, LP (approximately 18.7%), and various other institutional and individual holders.
States Specifically Analyzed. In addition to a general review of all 50 states and the District of Columbia, the following states have received detailed analysis due to their relevance to the Transaction:
• Delaware — State of incorporation for both Cascade and NovaMart, as well as for key transaction participants Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP.
• Texas — NovaMart headquarters; significant employee population.
• Washington — Cascade headquarters; NovaMart fulfillment center.
• California — NovaMart operates 3 fulfillment centers; location of Brindoval Ventures Fund III, LP (San Francisco) and Caluvori Capital Partners, Inc. (San Francisco).
• New Jersey — NovaMart operates 2 fulfillment centers.
• Georgia — NovaMart operates 2 fulfillment centers; home state of Redline Freight Corp. (NovaMart logistics partner).
• Ohio — NovaMart operates 1 fulfillment center; home state of Ridgecrest Title Group Inc.
• Illinois — NovaMart operates 1 fulfillment center; location of Cornerstone National Bank, N.A. (Chicago).
• Pennsylvania — NovaMart operates 1 fulfillment center; location of Marlowe Asset Management Trust Company, N.A. (Philadelphia).
• Tennessee — NovaMart operates 1 fulfillment center.
• Florida — NovaMart operates 2 fulfillment centers.
• New York — Headquarters of Ridgeline Equity Partners, LP; Calderwood & Harkness LLP; Hargrove Mead & Co.; Pemberton Strauss Advisory LLC; Continental Stocktransfer & Trust, Inc.; and Stratton Digital Media Inc.
• All Other States — States in which Cascade operates retail locations (approximately 40+ additional states).
C. Conclusion — No Mandatory State Antitrust Filings Required
Based on our comprehensive review of the antitrust and competition laws of all 50 states and the District of Columbia, we can confirm that no mandatory state-level pre-merger notification or antitrust filing is required in connection with this Transaction. No state has enacted a currently operative statute that would require Cascade, NovaMart, or any other party to the Transaction to file a notification, obtain approval, or observe a waiting period with any state antitrust authority prior to the consummation of the acquisition.
This conclusion applies regardless of the size of the Transaction, the market shares of the parties, or the number of states in which the parties operate. The only mandatory pre-merger notification obligation applicable to this Transaction under U.S. law is the federal HSR Act filing, which has already been made.
Notwithstanding the absence of mandatory filing requirements, state Attorneys General retain significant independent authority to investigate and, if warranted, challenge the Transaction under applicable state and federal antitrust laws, as discussed in detail in Section III below.
III. State Attorney General Notification and Engagement Strategy
A. State AG Independent Investigatory Authority
Although no state maintains a mandatory pre-merger notification statute applicable to this Transaction, state Attorneys General retain broad and independent authority to investigate and challenge mergers and acquisitions under both state and federal law. This authority derives from two principal sources:
State Antitrust Statutes. Every state has enacted one or more statutes prohibiting anticompetitive conduct, including monopolization, restraints of trade, and, in many cases, acquisitions that may tend to lessen competition or create a monopoly within the state. These statutes are generally modeled on the federal Sherman Act and Clayton Act and are typically enforced by the state Attorney General. While these statutes do not impose pre-merger notification requirements, they authorize the AG to investigate transactions and, where appropriate, to seek injunctive relief to block or unwind consummated transactions, as well as to seek damages or other remedies on behalf of the state and its residents.
Federal Clayton Act — Parens Patriae Authority. Under 15 U.S.C. § 15c, state Attorneys General are authorized to bring suit as parens patriae on behalf of natural persons residing in the state to recover treble damages for violations of the federal antitrust laws, including Section 7 of the Clayton Act, which prohibits acquisitions the effect of which may be substantially to lessen competition or tend to create a monopoly. Additionally, state AGs may intervene in federal enforcement actions or bring independent challenges under Section 16 of the Clayton Act, 15 U.S.C. § 26, to obtain injunctive relief.
Coordination with Federal Agencies. State AGs frequently coordinate with the DOJ and the FTC in reviewing significant mergers and acquisitions. This coordination is facilitated by the National Association of Attorneys General ("NAAG") and by informal relationships between state and federal enforcement personnel. In the context of this Transaction, the issuance of the DOJ Second Request on May 8, 2025, signals that the DOJ is conducting an in-depth review of the competitive effects of the acquisition. It is common practice for state AGs to monitor DOJ investigations and, in some cases, to conduct parallel inquiries or to communicate directly with DOJ staff regarding competitive conditions within their states. AGs are most likely to take an active interest in transactions that they perceive as affecting consumers and competitive conditions within their jurisdictions, particularly where the merging parties have significant operations, employee bases, or customer populations within the state.
We emphasize that state AG action is discretionary and need not be triggered by any particular filing or notification. An AG may open an investigation at any time, based on its own assessment of the competitive implications of the Transaction, complaints from market participants, media attention, legislative interest, or coordination with federal enforcers.
B. States of Particular Interest
Based on the operational footprints of Cascade and NovaMart, the location of key transaction participants, and our assessment of the enforcement priorities and historical activity levels of relevant state Attorneys General, we have identified the following states as warranting heightened monitoring and, in certain cases, proactive engagement:
Texas. NovaMart is headquartered at 1100 Congress Avenue, Suite 800, Austin, TX 78701, and maintains a significant employee population in the state. The Texas Attorney General has been increasingly active in consumer protection and technology-company oversight in recent years, with a particular focus on digital platforms, data privacy, and marketplace competition. The Texas Antitrust Act, codified at Chapter 15 of the Texas Business and Commerce Code, grants the AG broad authority to investigate and enjoin anticompetitive transactions. While no affirmative filing is required under Texas law, the AG's office may take notice of a $1.2 billion acquisition of a Texas-headquartered company, particularly given the ongoing DOJ Second Request. We recommend that the deal team maintain awareness of any Texas AG inquiries and that a briefing package be prepared for contingency use. No proactive outreach is recommended at this time, but the situation should be monitored.
Washington. Cascade is headquartered at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119, and NovaMart operates a fulfillment center in the state. Washington's Consumer Protection Act, codified at RCW 19.86, provides the AG with broad authority to investigate and challenge anticompetitive conduct, including acquisitions that may substantially lessen competition within Washington. The Washington AG's office has historically been active in reviewing mergers involving companies headquartered in the state and has participated in multistate AG coalitions in several high-profile technology and retail transactions. Given the dual presence of both parties in Washington, we recommend proactive engagement with the Washington AG's office at an appropriate time, coordinated with the broader DOJ advocacy strategy. No filing is required.
California. NovaMart operates three fulfillment centers in California, and the state is home to Brindoval Ventures Fund III, LP (555 Mission Street, Suite 2900, San Francisco, CA 94105) and Caluvori Capital Partners, Inc. (also San Francisco), both of which are significant transaction participants. The California Cartwright Act, codified at Business and Professions Code § 16700 et seq., and the broader Unfair Competition Law, Business and Professions Code § 17200 et seq., provide the California AG with extensive investigative and enforcement authority. The California AG has historically been among the most active state enforcers in reviewing major technology and ecommerce mergers, and has participated in or led numerous multistate investigations. No filing is required under California law, but we recommend monitoring the California AG's posture and preparing for potential inquiries. Given California's prominence in technology enforcement, we consider this a state requiring heightened vigilance.
New York. While neither Cascade nor NovaMart is headquartered in New York, the state is home to several key transaction participants, including Ridgeline Equity Partners, LP (200 Park Avenue South, 14th Floor, New York, NY 10003), which holds approximately 41.2% of NovaMart's outstanding shares and serves as the Stockholder Representative; Calderwood & Harkness LLP (599 Lexington Avenue, 38th Floor, New York, NY 10022); Hargrove Mead & Co. (383 Madison Avenue, 22nd Floor, New York, NY 10179), NovaMart's financial advisor; Pemberton Strauss Advisory LLC (1345 Avenue of the Americas, 30th Floor, New York, NY 10105); Continental Stocktransfer & Trust, Inc. (17 Battery Place, Suite 930, New York, NY 10004); and Stratton Digital Media Inc. The New York Attorney General has broad authority under the Donnelly Act (General Business Law § 340) and Executive Law § 63(12) to investigate and challenge anticompetitive conduct and fraudulent or deceptive business practices, including those arising from mergers and acquisitions. The New York AG has been a frequent participant in multistate antitrust investigations and has independently challenged transactions in the technology and retail sectors. No filing is required under the Donnelly Act or any other New York statute. We recommend monitoring the New York AG's posture and preparing for potential inquiries.
Illinois, Pennsylvania, New Jersey, Georgia, Florida, Ohio, and Tennessee. These are the remaining states in which NovaMart operates fulfillment centers. In each case, the state's antitrust statute provides the AG with investigatory and enforcement authority, but no pre-merger notification or approval is required. Our general assessment is that the likelihood of independent AG action in these states is lower than in the four states identified above, absent specific consumer harm identified within the state or a coordinated multistate effort. We do not recommend proactive engagement in these states at this time, but the deal team should be prepared to respond promptly to any inquiry received. If any state AG in this group initiates contact or requests information, we recommend immediately notifying the lead counsel teams at Calderwood & Harkness LLP and Whitfield & Crane LLP.
C. Proactive Engagement Recommendations
Based on the foregoing analysis, we recommend the following proactive engagement measures:
Briefing Package Preparation. We recommend that the deal team prepare a concise briefing package for potential use if contacted by any state Attorney General. The briefing package should summarize the Transaction, describe the competitive landscape in the relevant product and geographic markets, and articulate the procompetitive justifications for the merger. The briefing package should be consistent with, and draw upon, the White Paper on market definition and competitive effects that is currently being prepared for submission to the DOJ, as well as Dr. Henrik Johansson's (Apex Economics LLC) economic analysis of market concentration and competitive effects. The briefing package should be reviewed and approved by both Calderwood & Harkness LLP and Whitfield & Crane LLP before use.
Market Share and Concentration Data. The combined Cascade/NovaMart market share in the relevant market — which we define for these purposes as "online marketplace for specialty consumer goods" — is approximately 14.0% (Cascade approximately 8.3%, NovaMart approximately 5.7%). The next largest competitor, BrightBazaar Inc., holds approximately 6.1% of the market, followed by numerous other national and niche platforms. These market share figures support a low-concentration argument and are well below the thresholds that would typically trigger competitive concerns under either federal or state merger guidelines. The post-merger Herfindahl-Hirschman Index ("HHI") in this market would remain well below 1,500, which is the threshold for a "moderately concentrated" market under the DOJ/FTC Merger Guidelines. We expect that these figures would be persuasive to any state AG evaluating the Transaction.
Coordination with Federal Advocacy. All state AG engagement should be carefully coordinated with the ongoing DOJ advocacy efforts. It is essential that the messaging to state AGs be consistent with the positions taken before the DOJ, including the market definition, competitive effects analysis, and procompetitive efficiencies arguments. Any communication with a state AG should be reviewed in advance by both Howard Bellamy (Calderwood & Harkness LLP) and Gabriela Montoya (Whitfield & Crane LLP).
Points of Contact. For any state AG inquiry, the designated points of contact are:
• Howard Bellamy, Partner, Antitrust & Competition, Calderwood & Harkness LLP, 599 Lexington Avenue, 38th Floor, New York, NY 10022.
• Gabriela Montoya, Partner, Whitfield & Crane LLP, 1200 New Hampshire Avenue NW, Suite 500, Washington, DC 20036.
No member of the Cascade or NovaMart management team should communicate directly with any state AG or AG staff regarding the Transaction without first consulting with outside counsel.
IV. State-by-State Regulatory Checklist
The following section provides a state-by-state analysis of antitrust filing requirements, industry-specific regulatory approvals, and post-closing corporate and tax update obligations for each jurisdiction in which Cascade or NovaMart has material operations or in which key transaction participants are located.
A. Delaware. Relevance. Both Cascade and NovaMart are incorporated in the State of Delaware. Additionally, key transaction participants — including Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP — are organized as Delaware limited partnerships. Delaware's role in this Transaction is principally as the state of incorporation rather than a state of significant business operations, although both entities maintain registered agents in Delaware as required by law.
Antitrust Filing. No mandatory antitrust filing is required under Delaware law. The Delaware Antitrust Act, 6 Del. C. § 2101 et seq., does not impose a pre-merger notification requirement.
Corporate Filings. The Transaction is structured as a stock purchase and does not involve a merger of the two entities at the entity level. Accordingly, no certificate of merger or similar filing is required with the Delaware Secretary of State in connection with closing. If any post-closing restructuring requires amendments to the certificates of incorporation of either Cascade or NovaMart (e.g., changes to authorized share capital, name changes, or conversion of NovaMart from a stock corporation to a different entity type), such amendments would be filed with the Delaware Secretary of State in the ordinary course. Additionally, both Cascade and NovaMart are required to file annual franchise tax reports with the Delaware Division of Corporations and to maintain registered agents in Delaware. No merger-specific corporate filing is required for a stock purchase.
Registered Agents.
• Cascade Retail Holdings Inc. — Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801.
• NovaMart Global Inc. — Pinnacle Corporate Services Inc., 850 New Burton Road, Suite 201, Dover, DE 19904.
Status: No pre-closing or closing action required. Post-closing, standard annual franchise tax filings will continue for both entities.
B. Texas. Relevance. NovaMart is headquartered at 1100 Congress Avenue, Suite 800, Austin, TX 78701. NovaMart maintains a significant employee presence in Texas, including its executive offices. The headquarters lease is with Congress Tower Partners LP. Texas is a critical operational state for NovaMart.
Antitrust Filing. No mandatory antitrust filing is required under the Texas Antitrust Act, Tex. Bus. & Com. Code Chapter 15, or any other provision of Texas law.
Texas Franchise Tax. NovaMart is a taxpayer subject to the Texas franchise tax (also known as the Texas margin tax) based on its operations in the state. Post-closing, the change in ownership of NovaMart should be reflected in franchise tax filings as appropriate. Specifically, if NovaMart becomes a member of a combined group with Cascade for Texas franchise tax purposes, a combined group report may be required. Coordination with Sylvia Hartwell (Calderwood & Harkness LLP, Tax) and Sandra Chiu (Whitmore & Paige LLP) on the transition of tax filings is recommended.
Business Entity Update. If any officer or director changes occur at NovaMart following closing — which is expected given the change of control — NovaMart's public filings with the Texas Secretary of State should be updated to reflect the new officers and directors. The registered agent information on file with the Texas Secretary of State should also be reviewed for accuracy and updated if necessary.
Industry-Specific Approvals. No specific Texas regulatory approval is required for the acquisition of an ecommerce or marketplace platform operator. Texas does not require retail or ecommerce-specific licenses or permits in connection with a change-of-control transaction of this type. NovaMart does not hold any Texas-specific professional or industry licenses that would be affected by the change in ownership at the parent level.
Status: No pre-closing action required. Post-closing, franchise tax filings, officer/director updates, and registered agent information should be reviewed and updated as appropriate.
C. Washington. Relevance. Cascade is headquartered at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119, and Washington is Cascade's principal state of operations. NovaMart also operates one fulfillment center in Washington. Accordingly, both parties to the Transaction have a significant presence in the state.
Antitrust Filing. No mandatory antitrust filing is required under the Washington Consumer Protection Act, RCW 19.86, or any other provision of Washington law. The Washington Consumer Protection Act authorizes the AG to investigate and challenge anticompetitive conduct but does not impose a pre-merger notification requirement.
Business and Occupation (B&O) Tax. Both Cascade and NovaMart are subject to Washington's business and occupation tax on their activities within the state. The B&O tax is imposed on gross receipts from business activities conducted in Washington and applies to both retail sales and wholesale activities, among other classifications. Post-closing, the parties should evaluate whether consolidated reporting is appropriate or required and should ensure that NovaMart's B&O tax registrations and filings are updated to reflect the new ownership structure. No pre-closing action is required.
Industry-Specific Approvals. Washington does not require pre-closing regulatory approval for acquisitions in the retail or ecommerce sector. NovaMart's fulfillment center in Washington is subject to standard local business licensing, fire safety, and building code requirements, all of which are held at the entity level and will transfer automatically in a stock purchase. Washington consumer protection registration requirements, to the extent applicable to NovaMart's marketplace operations, should be verified for continuity post-closing as part of the integration planning process.
Status: No pre-closing action required. Post-closing, B&O tax reporting and business registrations should be reviewed.
D. California. Relevance. NovaMart operates three fulfillment centers in California, making it the state with the largest number of NovaMart facilities. Additionally, Brindoval Ventures Fund III, LP, which holds approximately 18.7% of NovaMart's outstanding shares, is based at 555 Mission Street, Suite 2900, San Francisco, CA 94105. Caluvori Capital Partners, Inc. (co-lead arranger for the Transaction financing) is also located in San Francisco. California's significance is both operational and transactional.
Antitrust Filing. No mandatory antitrust filing is required under the Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., or under the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., or under any other provision of California law. While the California AG has broad investigatory authority under these statutes, no pre-merger notification obligation exists.
California Franchise Tax Board. NovaMart has nexus in California by virtue of its fulfillment center operations and employee presence in the state. NovaMart is subject to the California corporate franchise tax and files annual returns with the California Franchise Tax Board. Post-closing, ownership changes may need to be reflected in NovaMart's tax filings, and the parties should evaluate whether NovaMart becomes part of a combined reporting group with Cascade for California franchise tax purposes. Coordination with Sylvia Hartwell is recommended.
Industry-Specific Approvals. No specific regulatory approval is required for the acquisition of an ecommerce or marketplace platform in California. NovaMart's California fulfillment centers are subject to standard local business licensing, environmental permits (including warehouse emissions and stormwater management requirements applicable in certain California jurisdictions), and employment-related registrations, all of which are held at the entity level and transfer automatically in a stock purchase.
California Consumer Privacy Act (CCPA) / California Privacy Rights Act (CPRA). NovaMart's operations in California are subject to the CCPA and its successor, the CPRA. While compliance with these privacy laws is not a "clearance" requirement for the Transaction, the change of control may require updated privacy notices to NovaMart's California consumers if there is a material change in data handling practices post-closing. This issue is addressed separately in the data privacy due diligence memorandum prepared by the privacy team. No pre-closing regulatory action is required.
Status: No pre-closing action required. Post-closing, franchise tax filings, combined reporting analysis, and privacy compliance updates should be addressed.
E. New Jersey
Relevance. NovaMart operates two fulfillment centers in New Jersey, making it one of the states with a significant NovaMart operational footprint. New Jersey is a key node in NovaMart's NovaShip logistics network, serving the densely populated Northeast corridor.
Antitrust Filing. No mandatory antitrust filing is required under the New Jersey Antitrust Act, N.J.S.A. 56:9-1 et seq., or any other provision of New Jersey law.
Corporate/Tax Updates. NovaMart is subject to the New Jersey Corporation Business Tax by virtue of its operations in the state. Post-closing, NovaMart's tax filings should be updated to reflect the change in ownership, and registered agent information on file with the New Jersey Division of Revenue and Enterprise Services should be reviewed and updated if applicable.
Status: No pre-closing action required. Post-closing, corporate and tax registrations should be updated.
F. Georgia. Relevance. NovaMart operates two fulfillment centers in Georgia. Additionally, Redline Freight Corp., NovaMart's logistics partner for certain regional distribution operations, is a Georgia corporation. Georgia represents an important southeastern hub for NovaMart's fulfillment network.
Antitrust Filing. No mandatory antitrust filing is required under the Georgia Fair Business Practices Act, O.C.G.A. § 10-1-390 et seq., or any other provision of Georgia law. Georgia does not maintain a separate antitrust statute comparable to the federal Clayton Act; the AG's enforcement authority derives from the Georgia Fair Business Practices Act and general consumer protection statutes.
Industry-Specific Approvals. No specific regulatory approval is required for the change of ownership of a company operating fulfillment centers in Georgia. Existing business licenses, permits, and registrations held by NovaMart at the entity level transfer automatically in a stock purchase.
Status: No pre-closing action required. Post-closing, standard corporate and tax updates should be addressed.
G. Ohio. Relevance. NovaMart operates one fulfillment center in Ohio. Additionally, Ridgecrest Title Group Inc., the parent of the title insurance company involved in certain real estate aspects of the Transaction, is an Ohio corporation headquartered in Ohio.
Antitrust Filing. No mandatory antitrust filing is required under the Ohio Valentine Act, Ohio Rev. Code § 1331.01 et seq., or any other provision of Ohio law.
Status: No pre-closing action required. Post-closing, NovaMart's Ohio business registration and tax filings should be reviewed and updated as needed.
H. Illinois. Relevance. NovaMart operates one fulfillment center in Illinois. Additionally, Cornerstone National Bank, N.A., a significant institution in the Transaction financing, is headquartered at 227 West Monroe Street, Chicago, IL 60606. Illinois serves as an important midwestern logistics hub for NovaMart's NovaShip network.
Antitrust Filing. No mandatory antitrust filing is required under the Illinois Antitrust Act, 740 ILCS 10/1 et seq., or any other provision of Illinois law. The Illinois Antitrust Act, while broadly prohibiting anticompetitive conduct, does not impose a pre-merger notification requirement.
Status: No pre-closing action required. Post-closing, NovaMart's Illinois business registration and tax filings should be reviewed and updated.
I. Pennsylvania. Relevance. NovaMart operates one fulfillment center in Pennsylvania. Additionally, Marlowe Asset Management Trust Company, N.A., which serves as the escrow agent for the Transaction, is located at One Liberty Place, 1650 Market Street, Suite 3600, Philadelphia, PA 19103. Pennsylvania provides a key eastern seaboard fulfillment node for NovaMart.
Antitrust Filing. No mandatory antitrust filing is required under Pennsylvania law. Pennsylvania does not have a standalone state antitrust statute; the AG's authority to challenge anticompetitive conduct derives from the Commonwealth Attorneys Act, 71 P.S. § 732-101 et seq., and the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. Neither statute imposes a pre-merger notification requirement.
Status: No pre-closing action required. Post-closing, NovaMart's Pennsylvania business registration and tax filings should be reviewed and updated.
J. Tennessee. Relevance. NovaMart operates one fulfillment center in Tennessee, which serves as part of the NovaShip distribution network for the southeastern United States.
Antitrust Filing. No mandatory antitrust filing is required under the Tennessee Trade Practices Act, Tenn. Code § 47-25-101 et seq., or any other provision of Tennessee law.
Status: No pre-closing action required. Post-closing, NovaMart's Tennessee business registration and tax filings should be reviewed and updated.
K. Florida. Relevance. NovaMart operates two fulfillment centers in Florida, serving the Southeast and Caribbean-corridor customer base. Florida is one of NovaMart's more significant fulfillment states by facility count.
Antitrust Filing. No mandatory antitrust filing is required under the Florida Antitrust Act of 1980, Fla. Stat. § 542.15 et seq., or any other provision of Florida law. The Florida Antitrust Act prohibits anticompetitive conduct and authorizes the AG to investigate and challenge mergers, but it does not impose a pre-merger notification requirement.
Status: No pre-closing action required. Post-closing, NovaMart's Florida business registration and tax filings should be reviewed and updated.
L. New York
Relevance. While neither Cascade nor NovaMart is headquartered or incorporated in New York, a significant number of key transaction participants are located in the state, including:
• Ridgeline Equity Partners, LP — 200 Park Avenue South, 14th Floor, New York, NY 10003 (approximately 41.2% stockholder; Stockholder Representative).
• Calderwood & Harkness LLP — 599 Lexington Avenue, 38th Floor, New York, NY 10022 (outside counsel to Cascade).
• Hargrove Mead & Co. — 383 Madison Avenue, 22nd Floor, New York, NY 10179 (financial advisor to NovaMart).
• Pemberton Strauss Advisory LLC — 1345 Avenue of the Americas, 30th Floor, New York, NY 10105 (fairness opinion provider).
• Continental Stocktransfer & Trust, Inc. — 17 Battery Place, Suite 930, New York, NY 10004 (transfer agent).
• Stratton Digital Media Inc. — New York, NY (media and communications consultant).
Antitrust Filing. No mandatory antitrust filing is required under the Donnelly Act, N.Y. Gen. Bus. Law § 340, or under Executive Law § 63(12), or under any other provision of New York law. The Donnelly Act is New York's principal antitrust statute, modeled on the Sherman Act, and does not impose a pre-merger notification obligation. Executive Law § 63(12) grants the AG broad authority to investigate and prosecute fraudulent or deceptive business practices but does not create a pre-merger filing requirement.
Status: No pre-closing action required. As noted in Section III.B above, the New York AG's posture should be monitored given the prominence of New York-based participants in the Transaction.
M. Other States
Cascade operates approximately 380 retail locations across North America, with stores located in more than 40 states. For each state in which Cascade operates retail locations but in which NovaMart does not have fulfillment operations (i.e., states other than the twelve specifically analyzed above), we have conducted a general review of the applicable state antitrust and competition laws.
General Assessment. No state-level antitrust filing is required in any U.S. jurisdiction in connection with this Transaction. The antitrust and competition laws of the remaining states — including, without limitation, Arizona, Colorado, Connecticut, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, Wisconsin, and the District of Columbia — do not impose mandatory pre-merger notification requirements applicable to this Transaction.
Post-Closing Corporate and Tax Updates. In each state where NovaMart is qualified to do business as a foreign corporation or has nexus for tax purposes, routine post-closing updates will be required to reflect the change in ownership, any changes in officers or directors, and any changes to registered agent information. These updates are administrative in nature and do not constitute regulatory approvals or clearances. A comprehensive list of NovaMart's state foreign qualification registrations will be compiled as part of the post-closing integration checklist.
V. Industry-Specific State Regulatory Considerations
In addition to the antitrust and competition analysis set forth above, we have evaluated whether any industry-specific state regulatory approvals or licenses are required in connection with the Transaction. The following sections address the principal regulatory areas relevant to NovaMart's and Cascade's operations.
A. Ecommerce and Online Marketplace Regulation
No U.S. state currently requires specific regulatory approval or licensure for the acquisition of an online marketplace platform operator. NovaMart's marketplace operations — which connect approximately 62,400 active sellers with approximately 9.1 million registered buyers and generated approximately $6.2 billion in gross merchandise value during fiscal year 2024 — are subject to general consumer protection and ecommerce regulations in the various states where NovaMart has operations or customers. However, these consumer protection and ecommerce regulations do not impose merger-specific approval requirements.
Several states have enacted or are considering legislation to regulate online marketplaces, including requirements related to seller transparency, counterfeit goods, and consumer disclosure. These regulatory developments are relevant to NovaMart's ongoing compliance obligations but do not create pre-closing clearance requirements for the Transaction. Post-closing, the integration team should ensure that NovaMart's marketplace operations continue to comply with all applicable state ecommerce regulations, including any new or pending legislation.
B. Logistics and Fulfillment Operations
NovaMart's proprietary logistics network, branded "NovaShip," operates 14 fulfillment centers across 9 states, as detailed in Appendix B to this memorandum. The NovaShip network is a core component of NovaMart's value proposition and a significant driver of the strategic rationale for the Transaction.
No state department of transportation or logistics-specific regulatory authority requires approval for a change of ownership of the parent company of a fulfillment network. The fulfillment centers are operated by NovaMart (or wholly owned subsidiaries) and hold various state and local permits and licenses, including business licenses, fire safety permits, building occupancy permits, and, where applicable, hazardous materials handling permits. In a stock purchase transaction, the entity holding these permits and licenses remains unchanged — NovaMart continues to exist as a separate legal entity with the same employer identification number (EIN 84-3291547) and the same state registrations. Accordingly, existing permits and licenses transfer with the entity and do not require separate approval, re-application, or novation.
We note, as a precautionary matter, that if any fulfillment center holds state-specific warehouse or distribution licenses that are conditioned on the identity or qualifications of the entity's owners or controlling persons, there could theoretically be a notification or re-qualification requirement triggered by the change of control. However, we have reviewed the licensing frameworks in each of the nine states in which NovaMart operates fulfillment centers and have not identified any such requirement. In a stock purchase, the licensed entity remains unchanged, and no state requires a new or updated warehouse or distribution license based solely on a change in the entity's ultimate parent or controlling stockholder.
C. Payment Processing
NovaMart's marketplace facilitates payment transactions between buyers and sellers through a Payment Processing Agreement with PayStream Financial Technologies Inc. ("PayStream"). Under this arrangement, PayStream — not NovaMart — serves as the payment processor and holds the requisite state money transmitter licenses and federal registrations. NovaMart itself is not a licensed money transmitter, payment processor, or money services business in any jurisdiction. NovaMart's role is limited to that of a marketplace platform operator that integrates PayStream's payment processing services into its platform.
Because NovaMart does not itself hold money transmitter licenses or other financial regulatory licenses, the acquisition does not trigger any state financial regulatory approvals, notifications, or change-of-control filings with state banking departments, departments of financial institutions, or similar regulators. The PayStream relationship is governed by a commercial agreement that will be reviewed separately for change-of-control provisions, but no state regulatory action is required.
D. Sales Tax and Marketplace Facilitator Laws
NovaMart, as a marketplace facilitator, is subject to state marketplace facilitator tax collection obligations in numerous states. Following the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), and the subsequent enactment of marketplace facilitator laws in virtually every state that imposes a sales tax, NovaMart is required to collect and remit sales tax on transactions facilitated through its platform in each state where it meets the applicable economic nexus thresholds.
The acquisition of NovaMart by Cascade does not trigger new marketplace facilitator registration requirements. NovaMart will continue to operate as a separate legal entity with the same EIN (84-3291547) and the same marketplace facilitator registrations in each applicable state. However, post-closing, certain state departments of revenue may require updates to the responsible party information, officer/director information, or ownership information associated with NovaMart's tax registrations. These updates are administrative in nature and do not constitute regulatory approvals.
Coordination with Sylvia Hartwell (Calderwood & Harkness LLP, Tax) and Sandra Chiu (Whitmore & Paige LLP) on post-closing tax compliance updates across all NovaMart nexus states is recommended. A comprehensive matrix of NovaMart's marketplace facilitator registrations by state should be prepared as part of the post-closing integration checklist.
E. Data Privacy and Consumer Protection
Certain states have enacted comprehensive consumer data privacy laws that may be implicated by the Transaction, not as "clearance" requirements but as ongoing compliance obligations that must be managed through the closing and integration process. The principal statutes of relevance include:
• California — California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), Cal. Civ. Code § 1798.100 et seq.
• Virginia — Virginia Consumer Data Protection Act (VCDPA), Va. Code § 59.1-575 et seq.
• Colorado — Colorado Privacy Act, Colo. Rev. Stat. § 6-1-1301 et seq.
• Connecticut — Connecticut Data Privacy Act, Conn. Gen. Stat. § 42-515 et seq.
• Additional states — Several additional states (including Texas, Oregon, Montana, Indiana, Iowa, and Tennessee) have enacted or are in the process of implementing consumer data privacy laws.
Under these statutes, if the Transaction results in a material change in data handling practices — such as a change in the purposes for which consumer data is collected, processed, or shared, or a change in the entities that have access to consumer data — updated privacy notices and, in some cases, revised data processing agreements may be required. The obligation to provide such notices and make such updates is a compliance obligation, not a pre-merger clearance requirement. No pre-closing regulatory action is required.
Post-closing integration planning should include a comprehensive privacy compliance review, including an assessment of whether and how consumer data currently collected and processed by NovaMart will be combined with or made accessible to Cascade, and whether updated privacy notices or consumer opt-out mechanisms are required. This analysis is being conducted separately by the privacy team and is addressed in the data privacy due diligence memorandum.
VI. Multistate AG Coordination Risk Assessment
A key risk factor for any significant merger or acquisition in the United States is the possibility that state Attorneys General may coordinate a multistate investigation or challenge, either independently or in parallel with federal enforcement action. Multistate AG coalitions have been a feature of antitrust enforcement for decades and have played a prominent role in several high-profile technology and retail mergers.
Historical Precedents. State AGs have formed multistate coalitions to investigate or challenge mergers in range industries, including telecommunications, healthcare, retail, and technology. These coalitions are typically coordinated through the National Association of Attorneys General ("NAAG") or through ad hoc arrangements among the AGs of affected states. In recent years, state AGs have been particularly active in the technology sector, with multistate investigations into the conduct of major technology platforms and digital marketplace operators. The involvement of state AGs can add significant complexity and delay to the merger review process, even where the federal antitrust agencies ultimately clear the transaction.
Risk Assessment for This Transaction. We assess the risk of a coordinated multistate AG investigation or challenge to this Transaction as low. This assessment is based on the following factors:
1. Low Market Concentration. The combined Cascade/NovaMart market share in the relevant market — "online marketplace for specialty consumer goods" — is approximately 14.0% (Cascade approximately 8.3%, NovaMart approximately 5.7%). This level of concentration is well below the thresholds that have historically triggered state AG intervention. The post-merger HHI remains below 1,500, placing the market in the "unconcentrated" category under the DOJ/FTC Merger Guidelines.
2. Absence of a Federal Challenge. As of the date of this memorandum, the DOJ has not indicated an intent to challenge the Transaction. While the DOJ has issued a Second Request, the issuance of a Second Request is a routine step in the investigation of transactions above a certain size and does not, by itself, signal that a challenge is forthcoming. If the DOJ ultimately clears the Transaction, the likelihood of an independent state AG challenge is substantially reduced.
3. Highly Competitive Market. The ecommerce marketplace sector is characterized by intense competition among numerous national and niche platforms. The next largest competitor to the combined entity, BrightBazaar Inc., holds approximately 6.1% market share, and numerous other platforms compete vigorously for sellers and buyers. The low barriers to entry for online marketplaces further reduce the competitive concerns associated with the Transaction.
4. No Identified Consumer Harm. Our analysis has not identified any specific consumer harm that would result from the Transaction. To the contrary, the Transaction is expected to generate procompetitive efficiencies, including logistics integration synergies, an expanded seller base offering greater product range to consumers, and improved technology infrastructure.
Mitigating Factors. In addition to the factors supporting a low-risk assessment, the following mitigating factors further reduce the likelihood and potential impact of state AG action:
• Multiple Large Competitors. Post-transaction, multiple large competitors will remain in the market, including BrightBazaar Inc. (approximately 6.1% market share) and numerous other national and niche platforms. The continued presence of these competitors ensures that the Transaction does not create or enhance market power.
• Low Barriers to Entry. The barriers to entry for online marketplaces are relatively low compared to many other industries. New platforms can be launched with modest capital investment and can scale rapidly through digital marketing, seller recruitment, and technology partnerships. This ease of entry disciplines the pricing and conduct of existing platforms and provides a competitive check on the combined entity.
• Procompetitive Efficiencies. The Transaction is expected to generate significant procompetitive efficiencies, including the integration of NovaMart's NovaShip logistics network with Cascade's existing supply chain, the expansion of the seller base across both platforms, improved inventory management and order fulfillment capabilities, and enhanced technology infrastructure. These efficiencies are expected to benefit consumers through lower prices, faster delivery, and greater product selection.
• Potential Divestiture Contingency. If the DOJ ultimately requires a remedy as a condition to clearance, the NovaMart home furnishings vertical ("NovaHome"), which generated approximately $620 million in GMV during fiscal year 2024, has been identified as a potential divestiture package. Any state AG concerns would likely be addressed by a DOJ consent decree, if one were to be entered, as state AGs typically defer to a federal consent decree that adequately addresses competitive concerns.
Conclusion. Based on the foregoing analysis, we assess the risk of a coordinated multistate AG investigation or challenge as low. However, we recommend continued monitoring of state AG activity and the preparation of a briefing package for contingency use, as detailed in Section III.C above.
VII. Summary Checklist Table
The following table summarizes the state-level antitrust and regulatory clearance requirements for each jurisdiction analyzed in this memorandum.
VIII. Recommendations and Next Steps
Based on the foregoing analysis, we recommend the following actions:
1. No Pre-Closing State Antitrust Filings Required. We confirm that no mandatory state-level antitrust or pre-merger notification filing is required in any U.S. jurisdiction in connection with this Transaction. This conclusion should be communicated to the Cascade deal team, including Ted Langford (SVP, Corporate Development) and Elena Vasquez-Bright (General Counsel), and reflected in the Closing Conditions Status Tracker.
2. Prepare State AG Briefing Package. As a contingency measure, we recommend the preparation of a concise briefing package summarizing the Transaction, the competitive landscape, and the procompetitive justifications for the merger. The briefing package should be coordinated with the DOJ White Paper on market definition and competitive effects and with Dr. Henrik Johansson's (Apex Economics LLC) economic analysis. The briefing package should be finalized no later than June 30, 2025, and should be maintained in a form ready for immediate distribution in the event of an AG inquiry.
3. Monitor State AG Activity Through Closing. We recommend ongoing monitoring of state AG activity and public statements related to the Transaction, with particular attention to the Attorneys General of Texas, Washington, California, and New York. This monitoring should include review of AG press releases, public filings, and legislative testimony, as well as informal intelligence from industry contacts and the NAAG network. Any indication of state AG interest should be immediately communicated to the lead counsel teams.
4. Post-Closing Corporate and Tax Updates. Following closing, Cascade and NovaMart should coordinate with Sylvia Hartwell (Calderwood & Harkness LLP, Tax) and Sandra Chiu (Whitmore & Paige LLP) to update state corporate registrations, tax filings, responsible party information, and marketplace facilitator registrations across all states in which NovaMart has nexus. A comprehensive post-closing integration checklist for state regulatory and tax matters should be prepared in advance of closing and executed promptly following consummation of the Transaction.
5. Include in Closing Conditions Status Tracker. Although state antitrust clearance is not a condition precedent to closing under SPA Article VII, it remains a monitored item. The Closing Conditions Status Tracker and Update Memorandum should be updated to reflect the conclusions of this memorandum, specifically noting that no state antitrust filings are required and that the state AG engagement strategy is being implemented as a precautionary measure.
6. Coordinate with HSR Counsel. Whitfield & Crane LLP (Gabriela Montoya) will serve as the primary point of contact in the event that any state AG seeks to piggyback on the DOJ Second Request investigation or initiates independent contact with the parties. All state AG communications should be routed through Gabriela Montoya and Howard Bellamy, and no substantive communications with state AG staff should occur without the prior involvement of outside counsel.
IX. Contact Information
For questions regarding this memorandum or any state antitrust or regulatory matter arising in connection with the Transaction, please contact:
Howard Bellamy Partner, Antitrust & Competition Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 555-4100
Email: hbellamy@calderwoodharkness.com
Gabriela Montoya Partner Whitfield & Crane LLP 1200 New Hampshire Avenue NW, Suite 500 Washington, DC 20036 Telephone: (202) 555-7800
Email: gmontoya@whitfieldcrane.com