1041-00003 · Solara Digital Infrastructure LP · Antitrust & Regulatory

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

FROM: Elaine Forsythe, Specialist Partner, Antitrust & Competition, Calderwood & Harkness LLP

TO: Harrison Wexford, Responsible Partner, M&A; Tiffany Rosenthal, Lead Associate, M&A

CC: Fiona McAllister, Lead Partner, UK Competition, Albright & Kerr LLP (for information)

DATE: December 3, 2023

RE: Foreign Subsidies Regulation (EU) — Notification Analysis for the Proposed Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP

MATTER NO.: 1041-00003

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I. Executive Summary

The purpose of this memorandum is to analyze whether the proposed acquisition of Cloudium Technologies plc ("Cloudium" or the "Target") by Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Acquirer"), an investment fund managed by Solara Digital Infrastructure LP ("Solara"), triggers a mandatory pre-closing notification obligation under the European Union's Foreign Subsidies Regulation (Regulation (EU) 2023/1315 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market, the "FSR"). The FSR entered into force on January 12, 2023, and the mandatory notification obligations for concentrations became applicable as of October 12, 2023, for any concentration closing after July 12, 2023. Given the anticipated signing and closing timeline for the proposed transaction, the FSR's notification regime is potentially relevant and warrants careful analysis.

Our conclusion is that the FSR concentration notification is not triggered for this transaction. While the aggregate deal value of approximately $6,800,000,000 is substantial, and while the combined EU-wide turnover of the parties may approach or marginally exceed the FSR's first jurisdictional threshold of €500 million in aggregate EU-wide turnover, the second cumulative threshold — requiring that the combined aggregate financial contributions received from third countries (i.e., non-EU states) by all undertakings concerned exceed €50 million over the prior three fiscal years — is not met. Based on our detailed analysis of the financial contributions received by both the Solara group (including its controlled portfolio companies) and Cloudium group from non-EU governments during the relevant three-year look-back period, we estimate the combined aggregate third-country financial contributions at approximately €35 million on a refined basis. This figure falls comfortably below the €50 million threshold. Because both thresholds must be satisfied simultaneously for the mandatory notification obligation to arise, the failure to meet Threshold 2 is dispositive.

Accordingly, we recommend that no FSR notification filing be made in connection with the proposed transaction, and no further action is needed on this workstream. The risk of the European Commission initiating an ex officio investigation under Article 9 of the FSR is assessed as low, given the nature of the parties and the character of the identified financial contributions.

II. Background

A. Transaction Overview

Solara Digital Infrastructure LP, a Delaware limited partnership with its principal office at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801 (the "Sponsor"), is a technology-focused private equity firm that invests through a series of limited partnership investment vehicles. Through its current investing fund, Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership with a 2022 vintage and approximately $12.4 billion in committed capital from institutional investors (the "Fund" or "Fund VI"), Solara proposes to acquire all of the outstanding shares of common stock of Cloudium Technologies plc.

Cloudium is a public limited company incorporated under the laws of England and Wales (Company No. 09734521), with its registered office at 45 Broadwick Street, London W1F 0DB, United Kingdom, and its principal United States headquarters at 600 Townsend Street, Suite 800, San Francisco, California 94103. Cloudium's shares of common stock are listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." Cloudium is a provider of cloud-native enterprise resource planning ("ERP"), customer relationship management ("CRM"), and business-intelligence software-as-a-service ("SaaS") solutions, serving both mid-market and enterprise customers across a range of industries globally.

The proposed transaction is structured as a reverse triangular merger under the Delaware General Corporation Law ("DGCL"). Stratos Merger Sub Inc., a Delaware corporation incorporated on January 8, 2024, and a wholly owned subsidiary of Fund VI formed solely for the purpose of effecting the proposed transaction ("Merger Sub"), will merge with and into Cloudium, with Cloudium surviving the merger as a wholly owned subsidiary of Fund VI (the "Transaction" or the "Merger"). The aggregate deal value is approximately $6,800,000,000, with per-share merger consideration of approximately $36.92 per share, based on approximately 184,200,000 shares of common stock outstanding as of the record date.

The key financial metrics for Cloudium for the last twelve months ending September 30, 2023 (Cloudium's fiscal year end) are as follows:

Cloudium's operations span four principal jurisdictions — the United States, the United Kingdom, India, and Germany — through the following key subsidiaries:

(a) Cloudium Technologies UK Ltd. (England and Wales, Company No. 11287456): Approximately 1,200 employees; revenue of approximately £312,000,000 (approximately $390,000,000 at an exchange rate of $1.25/£1.00). This subsidiary serves as the operational hub for Cloudium's European, Middle Eastern, and African customer base, as well as a significant portion of the company's product engineering workforce.

(b) Cloudium Technologies India Pvt. Ltd. (Bangalore, Karnataka, India): Approximately 2,400 employees, principally engaged in software engineering, product development, quality assurance, and customer support functions. This subsidiary does not generate material third-party revenue directly.

(c) Cloudium Solutions GmbH (Berlin, Germany): Approximately 400 employees focused on sales and customer success operations in the DACH region (Germany, Austria, and Switzerland). This subsidiary generates revenue primarily from German, Austrian, and other EU-based enterprise customers.

The Transaction contemplates certain rollover equity arrangements. Jonathan Hargrove, Cloudium's Chief Executive Officer, currently holds approximately 4.2% of Cloudium's outstanding shares and will roll over approximately 50% of his equity position, representing a rollover value of approximately $142,814,544. In addition, Pinnacle Growth Ventures LLC ("Pinnacle"), a growth equity fund that currently holds approximately 11.6% of Cloudium's outstanding shares, will roll over approximately 60% of its equity position, representing a rollover value of approximately $473,241,408.

The Transaction will be financed through a combination of debt and equity. The debt financing package consists of a $3,740,000,000 Term Loan B facility and a $500,000,000 Revolving Credit Facility, with Meridian Atlantic Bank, N.A. serving as lead arranger and administrative agent and Ironclad Capital Markets LLC serving as co-arranger. Fund VI will contribute approximately $2,832,888,096 in equity, bringing the total funding requirement (inclusive of estimated transaction costs, debt refinancing, and other closing adjustments) to approximately $7,188,944,048.

B. Relationship to Other Regulatory Filings

This memorandum addresses solely the notification analysis under the FSR. The proposed Transaction is subject to a number of additional regulatory filings and assessments, which are being handled through separate workstreams. For completeness, we note the following cross-references:

(a) HSR Act (United States). A separate pre-filing memorandum under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is being prepared, with an anticipated HSR filing date of February 9, 2024.

(b) UK Competition and Markets Authority. A separate UK merger notice analysis is being prepared in connection with CMA Case No. ME/7184/24. The CMA filing is expected on approximately February 12, 2024. This workstream is being handled by Elaine Forsythe at Calderwood & Harkness in coordination with Fiona McAllister at Albright & Kerr LLP (5 New Street Square, London EC4A 3TW), who is acting as local UK competition counsel.

(c) EU Merger Regulation. A separate jurisdictional analysis memorandum under the EU Merger Regulation (Regulation (EC) No 139/2004, the "EUMR"), also dated December 3, 2023, has concluded that the EUMR turnover thresholds are not met and that no EUMR notification is required for this Transaction. We address the interaction between the EUMR analysis and the FSR analysis in Section VI.B below.

(d) German Foreign Direct Investment Screening. An analysis under the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, "AWV") is being prepared, with a target completion date of December 8, 2023.

(e) Indian FDI/CCI Analysis. An analysis of Indian foreign direct investment regulations and Competition Commission of India filing requirements is being prepared, with a target completion date of December 10, 2023.

(f) CFIUS (United States). A voluntary notice assessment under the Committee on Foreign Investment in the United States framework was completed on November 30, 2023, and concluded that no voluntary CFIUS filing is recommended for this Transaction.

III. Overview of the Foreign Subsidies Regulation

A. Legislative Background

Regulation (EU) 2023/1315 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market — commonly referred to as the Foreign Subsidies Regulation or the "FSR" — represents a significant expansion of the European Union's regulatory toolkit for addressing competitive distortions within the EU internal market. Prior to the FSR's enactment, the EU's existing state aid rules under Articles 107–109 of the Treaty on the Functioning of the European Union ("TFEU") applied only to subsidies granted by EU Member States. Subsidies granted by non-EU governments — so-called "third country" subsidies — fell outside the scope of EU state aid control, even where such subsidies benefited undertakings active in the EU and potentially distorted competition within the internal market.

The FSR was designed to fill this regulatory gap. It provides the European Commission with broad investigative and enforcement powers to scrutinize financial contributions granted by non-EU governments to undertakings active in the EU, across three principal channels: (i) a mandatory pre-closing notification regime for concentrations (mergers and acquisitions) meeting specified thresholds; (ii) a mandatory notification regime for participants in EU public procurement procedures meeting specified thresholds; and (iii) a general ex officio investigative power allowing the Commission to examine any market situation involving potential foreign subsidies.

The FSR entered into force on January 12, 2023. The provisions establishing the mandatory notification obligations for concentrations and public procurement became applicable on October 12, 2023. For concentrations, the notification obligation applies to any transaction closing on or after July 12, 2023, provided that the relevant thresholds are met. The European Commission is the sole enforcement authority under the FSR, and it has been designated as the competent authority for receiving and reviewing notifications, conducting investigations, and imposing remedies or, where appropriate, prohibiting transactions.

Given that the proposed Transaction is expected to close after October 12, 2023 (indeed, closing is currently anticipated in Q2 2024), the FSR notification regime is squarely applicable in terms of temporal scope, and it is therefore necessary to assess whether the substantive jurisdictional thresholds are met.

B. Concentration Notification Obligation (Article 21)

Article 21 of the FSR establishes a mandatory pre-closing notification obligation for "concentrations" where two cumulative jurisdictional thresholds are met. A "concentration" for purposes of the FSR is defined by reference to the concept of a concentration under the EUMR (Regulation (EC) No 139/2004, Article 3). This includes, among other things, the acquisition of sole or joint control over an undertaking through a merger, the acquisition of shares or assets, or other means. The proposed reverse triangular merger, whereby Merger Sub will merge with and into Cloudium and Cloudium will survive as a wholly owned subsidiary of Fund VI, constitutes an acquisition of sole control by Fund VI over Cloudium and therefore qualifies as a "concentration" within the meaning of the FSR.

The two cumulative jurisdictional thresholds under Article 21 are as follows:

Threshold 1 — Enterprise Turnover (Article 20(3)(a)): At least one of the merging parties, the acquired undertaking, or the joint venture is established in the EU and generates an aggregate EU-wide turnover of at least €500 million. For purposes of this threshold, the turnover of the entire group of the acquiring undertaking (including all entities controlled by the same ultimate parent or controlling entity) and the target undertaking and its subsidiaries must be taken into account. The concept of "turnover" under the FSR follows the methodology established under the EUMR and its implementing regulation (Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004).

Threshold 2 — Financial Contributions (Article 20(3)(b)): The combined aggregate financial contributions received from third countries (i.e., non-EU states, including their regional and local authorities, state-owned enterprises, and other entities whose actions can be attributed to a third country) by all undertakings concerned exceeds €50 million in the three fiscal years preceding the notification. This threshold requires the aggregation of all financial contributions received from any and all third countries by both the acquirer group and the target group during the relevant period, regardless of whether those contributions may ultimately be found to constitute distortive foreign subsidies.

Both thresholds must be met simultaneously for the mandatory notification obligation to arise. If either threshold is not met, no notification is required under Article 21 (without prejudice to the Commission's ex officio powers under Article 9, discussed in Section VI.A below).

Where both thresholds are met, the concentration is subject to a standstill obligation: it may not be implemented (i.e., closing may not occur) before the European Commission has either cleared the transaction or the applicable review period has expired without the Commission having taken a decision.

C. Definition of "Financial Contributions" (Article 3)

Article 3 of the FSR defines "financial contribution" in deliberately broad terms, encompassing a wide range of economic benefits conferred by or attributable to a third country. The definition includes, but is not limited to, the following categories:

(a) Direct transfers of funds or potential direct transfers of funds, including grants, loans, loan guarantees, capital injections, and debt forgiveness.

(b) Revenue foregone that is otherwise due, such as tax exemptions, tax holidays, fiscal incentives, accelerated depreciation allowances, and research and development tax credits, to the extent that such measures result in a reduction of the tax burden that would otherwise apply.

(c) The provision or purchase of goods or services by a third-country government, including through state-owned enterprises, other than at market terms. This could include, for example, below-market-rate infrastructure services, preferential access to government-controlled resources, or above-market-rate government procurement contracts.

(d) Government-directed purchases of goods or services, where a third country government directs a private entity to make purchases from the undertaking in question on terms that confer an advantage.

Importantly, the concept of "financial contribution" for purposes of the FSR thresholds is broader than the concept of a "foreign subsidy." A financial contribution becomes a foreign subsidy only where it confers a benefit on the recipient and is selective (i.e., limited to one or more undertakings or industries). However, for purposes of assessing whether the €50 million notification threshold is met, all financial contributions from third countries must be quantified and aggregated — regardless of whether they constitute foreign subsidies and regardless of whether they may be found to be distortive. This is a critically important distinction: the threshold captures the gross volume of third-country financial contributions, not merely those that are selective or that confer an undue advantage.

The term "third country" encompasses any state that is not a member of the European Union, including — notably for purposes of this analysis — the United Kingdom (which ceased to be an EU Member State upon the completion of the Brexit transition period on December 31, 2020), the United States, India, and all other non-EU jurisdictions.

Financial contributions from entities at all levels of government are captured, including contributions from central government authorities, regional and local authorities, state-owned enterprises, public financial institutions, and any other entities whose actions can be attributed to a third country.

The look-back period for the financial contributions threshold is the three complete fiscal years preceding the date of notification. For purposes of our analysis, we have used Cloudium's fiscal year ending September 30 as the reference point, and have therefore assessed financial contributions received during the fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.

D. Procedural Aspects

For completeness, we briefly summarize the procedural aspects of an FSR concentration notification, although these are not directly relevant given our conclusion that no notification is required.

Where both jurisdictional thresholds are met, the notifying party must submit a completed Form FS-CO to the European Commission. Form FS-CO is a detailed notification form that requires, among other things, comprehensive identification and quantification of all financial contributions received from third countries by the acquirer group and the target group over the relevant three-year period. The form also requires a description of the transaction, the parties, the relevant markets, and the competitive conditions in those markets.

The review timeline proceeds in two phases. Phase I consists of a 25-working-day preliminary review period, which may be extended by 10 working days where the Commission identifies potential concerns. If the Commission opens an in-depth investigation, Phase II provides for a 90-working-day review period, which may be extended by 15 working days in appropriate circumstances. Throughout both phases, the transaction remains subject to a suspensory effect — that is, the concentration may not be implemented (and closing may not occur) until the Commission has issued a clearance decision or the applicable review period has expired without the Commission having taken a decision.

The FSR provides for a range of remedial outcomes, including clearance without conditions, clearance subject to commitments, and (in exceptional cases) prohibition of the concentration.

IV. Analysis of Threshold 1: EU Turnover ≥ €500 Million

A. Identification of Relevant Undertakings

In order to assess whether Threshold 1 is met, it is necessary first to identify the relevant undertakings whose EU turnover must be taken into account. Under the FSR, the relevant undertakings are those "concerned" by the concentration, which follows the same methodology as the EUMR. For an acquisition of sole control, the relevant undertakings are (i) the acquiring undertaking, together with all entities forming part of the same group (i.e., all entities over which the acquirer exercises, directly or indirectly, sole or joint control), and (ii) the target undertaking and its subsidiaries.

For the acquirer side, the relevant group is Solara Digital Infrastructure LP and its controlled entities. This includes Fund VI itself, but also extends to the portfolio companies across Solara's fund family — specifically, Funds IV, V, and VI — to the extent that these portfolio companies are controlled by the same ultimate controlling entity. In this case, Solara Digital GP LLC serves as the general partner or controlling entity of each fund in the Solara fund family, and Solara Fund VI GP LLC is the specific general partner of Fund VI. Under the EUMR group concepts (which the FSR incorporates by reference), portfolio companies controlled by the same GP entity are considered part of the same group for turnover aggregation purposes. Accordingly, we have assessed the aggregate EU turnover of Solara's 14 platform investments across Funds IV through VI.

For the target side, the relevant group is Cloudium Technologies plc and all of its subsidiaries, including Cloudium Technologies UK Ltd., Cloudium Technologies India Pvt. Ltd., and Cloudium Solutions GmbH.

B. Cloudium's EU Turnover

Cloudium's total LTM revenue for the fiscal year ended September 30, 2023 was approximately $1,620,000,000 on a consolidated basis. However, only that portion of Cloudium's revenue that is generated within the European Union counts toward the Threshold 1 assessment. Revenue generated outside the EU — including, critically, revenue generated in the United Kingdom — does not count toward EU turnover, as the UK is no longer a member of the European Union.

The geographic distribution of Cloudium's revenue is as follows:

(a) United Kingdom. Cloudium Technologies UK Ltd. generated revenue of approximately £312,000,000 (approximately $390,000,000 at an exchange rate of $1.25/£1.00) during the relevant period. However, as noted above, UK revenue does not count toward EU turnover for FSR purposes, because the United Kingdom is no longer an EU Member State. While a portion of the UK subsidiary's revenue may be attributable to EU-based customers, the majority of this revenue is generated from UK-domiciled customers and is therefore excluded from the EU turnover calculation.

(b) Germany and the EU (Cloudium Solutions GmbH). Cloudium Solutions GmbH, the company's Berlin-based subsidiary focused on DACH sales and customer success, is the primary generator of Cloudium's EU revenue. Based on our review of data room materials, publicly available financial information, and management representations, we estimate that Cloudium Solutions GmbH generated EU revenue of approximately €180,000,000–€210,000,000 during the relevant period. This revenue was principally derived from enterprise customers in Germany, Austria, and other EU member states in the DACH and broader European region.

(c) Other EU Revenue. In addition to revenue generated directly through Cloudium Solutions GmbH, Cloudium also generates certain revenue from EU-based customers through direct sales from its UK and US entities. Based on our review, these additional EU revenue streams are relatively de minimis, estimated at approximately €15,000,000–€25,000,000 during the relevant period.

Aggregating these components, we estimate Cloudium's total EU turnover at approximately €195,000,000–€235,000,000. This figure alone is well below the €500 million threshold, meaning that the threshold cannot be met on the basis of Cloudium's EU turnover in isolation.

C. Solara's EU Turnover

As discussed in Section IV.A above, the FSR requires aggregation of the EU turnover of the entire acquirer group, including all portfolio companies controlled by the Solara fund family through Solara Digital GP LLC and its affiliated GP entities. Solara's portfolio companies across Funds IV, V, and VI comprise 14 platform investments, focused principally on enterprise software, cloud infrastructure, data analytics, and SaaS platform businesses.

We have assessed the aggregate EU turnover of the Solara group based on a review of available financial data provided by Solara's finance team and management representations received from Marcus Elliston (Managing Director and Head of Portfolio Operations) and Priya Narasimhan (Chief Financial Officer). Several of Solara's portfolio companies have EU-based operations or generate revenue from EU-based customers, including through direct sales subsidiaries in Germany, the Netherlands, France, and Ireland.

Based on this review, we estimate that the aggregate EU turnover of Solara and its controlled portfolio companies is approximately €280,000,000–€350,000,000 during the relevant period.

We note that the precise methodology for aggregating portfolio company turnover under the FSR acquirer group concept remains subject to some interpretive uncertainty, particularly in the private equity context where multiple fund vehicles share a common GP but have different limited partner bases. Our analysis follows the established EUMR group concepts, as incorporated by reference into the FSR, which attribute portfolio company turnover to the acquirer group where those portfolio companies are controlled by the same ultimate GP entity. We have applied this approach conservatively.

D. Combined EU Turnover Assessment

Combining the EU turnover of the Cloudium group and the Solara group yields the following range:

As this range illustrates, the combined EU turnover of the parties straddles the €500 million threshold. Depending on the exact turnover figures — which can be refined only through a more granular, line-item analysis of each portfolio company's EU revenue allocation — the threshold may or may not be met. At the lower end of the range, the combined EU turnover falls below €500 million; at the upper end, it modestly exceeds the threshold.

We have not undertaken the detailed quantification exercise that would be required to determine with certainty whether Threshold 1 is met, for the following reason: even if Threshold 1 is marginally met, Threshold 2 (the €50 million financial contributions threshold) is the binding constraint in this analysis. As set forth in detail in Section V below, Threshold 2 is not met based on our analysis. Because both thresholds must be satisfied simultaneously for the mandatory notification obligation to arise, the fact that Threshold 2 is not met renders the Threshold 1 analysis moot. Accordingly, we have accepted the ambiguity in the Threshold 1 analysis and focused our detailed quantification efforts on Threshold 2.

V. Analysis of Threshold 2: Financial Contributions from Third Countries ≥ €50 Million

A. Relevant Third Countries

The second jurisdictional threshold under the FSR requires that the combined aggregate financial contributions received from third countries by all undertakings concerned exceed €50 million over the three fiscal years preceding notification. As discussed in Section III.C above, a "third country" is any country that is not a member of the European Union, and financial contributions from all levels of government in such third countries are captured.

For purposes of this analysis, the relevant third countries are those in which the Solara group and the Cloudium group have material operations or from which they may have received financial contributions:

(a) United States. Both Solara and Cloudium are headquartered in the United States and have substantial US operations. The United States is a "third country" under the FSR. US federal and state tax incentives, R&D tax credits, and any other government financial contributions must be assessed.

(b) United Kingdom. Following Brexit, the United Kingdom qualifies as a "third country" under the FSR. Cloudium Technologies UK Ltd. has approximately 1,200 employees and significant operations in the UK. UK government financial contributions, including R&D tax relief and any other incentives, must be assessed.

(c) India. Cloudium Technologies India Pvt. Ltd. operates a significant R&D and customer support center in Bangalore, India, with approximately 2,400 employees. India is a "third country" under the FSR. Indian tax holidays, income tax exemptions, and other government incentives available to the Indian subsidiary must be assessed.

(d) Germany. Cloudium Solutions GmbH is based in Berlin, Germany. Germany is an EU Member State, and accordingly, financial contributions from the German government (at any level) are not third-country financial contributions and are not relevant to the Threshold 2 analysis.

(e) Other jurisdictions. Based on our review, neither the Solara group nor the Cloudium group has material operations in other non-EU jurisdictions that would give rise to significant financial contributions. To the extent that certain Solara portfolio companies may have minor operations in other third countries (e.g., Canada, Israel, Singapore), any associated financial contributions are assessed to be de minimis.

B. Solara Group — Financial Contributions Analysis

Solara Digital Infrastructure LP, as a private equity sponsor, does not itself engage in commercial operations that would generate government financial contributions. Solara's fund vehicles — including Fund VI — are investment partnerships that receive committed capital from limited partners (principally institutional investors such as pension funds, endowments, sovereign wealth funds, and insurance companies) and deploy that capital into portfolio investments. The capital contributions from limited partners do not constitute "financial contributions" from a third country within the meaning of the FSR, even where certain limited partners may be state-affiliated entities (e.g., public pension funds), because the contributions are made on arm's-length commercial terms in the ordinary course of the fund's investment activities.

The relevant inquiry for the Solara group therefore focuses on whether any of Solara's controlled portfolio companies across Funds IV through VI received material financial contributions from third-country governments during the three fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.

Based on representations received from Marcus Elliston (Managing Director and Head of Portfolio Operations) and Priya Narasimhan (Chief Financial Officer) at Solara, and on our review of available financial and tax information for Solara's 14 platform investments, we have identified the following:

(a) Government grants, subsidized loans, or capital injections. No material government grants, subsidized loans, loan guarantees, or capital injections from any third-country government have been received by Solara or any of its portfolio companies during the relevant three-year period. Solara's portfolio companies are principally US-based enterprise software and cloud infrastructure businesses financed through conventional private equity and debt capital markets financing. None of the portfolio companies has received government bailout funding, state-backed venture capital, or similar directed financial support.

(b) US federal and state R&D tax credits and standard tax measures. Several of Solara's US-based portfolio companies claim federal research and development tax credits under Section 41 of the Internal Revenue Code, as well as certain state-level tax incentives (e.g., California research credits, New York State economic development incentives). The European Commission's guidance under the FSR indicates that generally available tax measures in a third country — such as standard corporate tax deductions, depreciation schedules, and broadly available R&D tax credits — are reportable as financial contributions for purposes of the threshold analysis. While such measures are unlikely to be found to constitute distortive foreign subsidies in a substantive assessment, they must nonetheless be quantified for the purpose of determining whether the €50 million threshold is met.

(c) Quantification. Based on Solara management's representations and our review, we estimate that the aggregate third-country financial contributions received by the Solara group (principally in the form of US federal and state R&D tax credits and similar standard, generally available tax measures) over the three-year look-back period total approximately €8,000,000–€15,000,000.

Conclusion: The Solara group's third-country financial contributions over the relevant three-year period are well below the €50 million threshold on a standalone basis.

C. Cloudium Group — Financial Contributions Analysis

Cloudium and its subsidiaries have operations in three principal third-country jurisdictions — the United States, the United Kingdom, and India. We have assessed the financial contributions received from each of these third countries during the three fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.

1. United States. Cloudium's US headquarters in San Francisco houses a significant portion of its executive leadership, sales and marketing, and product development functions. The key categories of US financial contributions identified are as follows:

(a) Federal R&D tax credits (IRC § 41). Cloudium has claimed federal research and development tax credits under Section 41 of the Internal Revenue Code in each of the relevant fiscal years. Based on our review of data room materials, including Cloudium's US federal tax returns and supporting R&D credit studies, we estimate that Cloudium's annual federal R&D tax credit claims during the relevant period were approximately $3,000,000–$5,000,000 per year.

(b) State-level tax incentives. Cloudium has benefited from certain California state tax incentives, including the California research credit and standard corporate tax deductions. These are generally available measures and are not targeted to Cloudium specifically. The incremental value of these state-level tax benefits is relatively modest and is incorporated into our overall US estimate.

(c) Government grants and subsidized financing. We have not identified any material US government grants, subsidized loans, loan guarantees, or other non-tax financial contributions received by Cloudium or any of its US-based entities during the relevant period.

Based on this assessment, we estimate Cloudium's total US financial contributions over the three-year look-back period at approximately €9,000,000–€15,000,000 (converting from US dollars at prevailing exchange rates).

2. United Kingdom. Cloudium Technologies UK Ltd. is Cloudium's largest subsidiary outside the United States, with approximately 1,200 employees and annual revenue of approximately £312,000,000. As noted above, the United Kingdom is a "third country" for purposes of the FSR, and UK government financial contributions must be assessed.

(a) UK R&D tax relief (RDEC regime). Cloudium Technologies UK Ltd. has made claims under the UK's Research and Development Expenditure Credit ("RDEC") regime, which provides a tax credit for qualifying R&D expenditure. Based on our review of Cloudium's UK statutory accounts and related data room materials, we estimate that Cloudium UK's annual RDEC claims during the relevant period were approximately £2,000,000–£4,000,000 per year.

(b) UK government grants and other support. We have not identified any material UK government grants, subsidized loans, loan guarantees, or other non-tax financial contributions received by Cloudium Technologies UK Ltd. during the relevant period. We note that certain UK government programs (such as Innovate UK grants and the Enterprise Investment Scheme) may be relevant for other companies in the UK technology sector, but based on our data room review, Cloudium UK has not been a recipient of material funding under such programs.

Based on this assessment, we estimate Cloudium's total UK financial contributions over the three-year look-back period at approximately €7,000,000–€15,000,000 (converting from British pounds at prevailing exchange rates).

3. India. Cloudium Technologies India Pvt. Ltd. operates a substantial engineering and customer support center in Bangalore, Karnataka, with approximately 2,400 employees. India offers various tax incentive programs for technology companies, and we have assessed whether Cloudium India has benefited from any such programs.

(a) Special Economic Zone ("SEZ") and Software Technology Parks of India ("STPI") benefits. Based on our review of Cloudium India's financial statements and tax filings in the data room, Cloudium India has benefited from certain income tax exemptions available under Indian tax law, including benefits associated with operations in designated technology zones. The specific quantum of these benefits has been estimated based on the differential between the standard Indian corporate tax rate and the effective rate paid by Cloudium India, as well as any direct tax holidays or deductions claimed.

(b) Other Indian government support. We have not identified any material Indian government grants, subsidized loans, or other non-tax financial contributions received by Cloudium India during the relevant period.

Based on this assessment, we estimate Cloudium India's total financial contributions over the three-year look-back period at approximately €3,000,000–€6,000,000.

4. Cloudium Group — Combined Third-Country Financial Contributions. Aggregating the financial contributions from each third country, we arrive at the following estimates for the Cloudium group:

D. Combined Financial Contributions Assessment

Combining the financial contributions of the Solara group and the Cloudium group yields the following:

On a range basis, the combined financial contributions fall between approximately €27 million and €51 million. We acknowledge that the upper end of this range marginally touches the €50 million threshold, which could in theory raise a question as to whether the threshold is met. However, the range estimates set forth above are deliberately conservative, reflecting the widest plausible range of outcomes based on the data available. A more refined analysis, using the actual figures from Cloudium's financial statements and tax returns (as reviewed in the data room) and Solara management's specific representations, produces materially lower point estimates.

Specifically, based on our refined analysis:

(a) Refined Solara group estimate: approximately €10,000,000. This figure is based on aggregated R&D tax credits and similar standard measures across Solara's portfolio companies, as confirmed by Solara's finance team.

(b) Refined Cloudium group estimate: approximately €25,000,000. This figure reflects the midpoint of our estimates for US, UK, and Indian financial contributions, informed by the specific data points in the data room materials.

Even allowing for reasonable margins of error in the underlying estimates, we are confident that the combined aggregate financial contributions fall below the €50 million threshold. The wide range estimates described above are conservative in several respects: they assume the maximum plausible value of each financial contribution category, they treat all potentially qualifying tax measures as reportable financial contributions even where there may be arguments for exclusion, and they do not reflect any offsets or adjustments that might reduce the reported amounts.

Conclusion: Threshold 2 is not met. The combined aggregate financial contributions from third countries to the Solara group and Cloudium group over the prior three fiscal years do not reach the €50 million threshold. Since both thresholds under Article 20(3) of the FSR must be met simultaneously for the mandatory notification obligation to arise, the failure to meet Threshold 2 is dispositive, and no FSR concentration notification is required — regardless of the outcome of the Threshold 1 analysis.

VI. Additional Considerations

A. Ex Officio Review Powers (Article 9)

Even where a transaction does not meet the mandatory notification thresholds under Article 21 of the FSR, the European Commission retains broad investigative powers under Article 9 to examine foreign subsidies on its own initiative (ex officio). Under this provision, the Commission may initiate an investigation where it has indications that an undertaking may have been granted a foreign subsidy that distorts the internal market. The ex officio power is not subject to the same jurisdictional thresholds as the concentration notification regime, and the Commission could, in principle, examine any concentration — including sub-threshold transactions — if it identifies relevant concerns.

We have assessed the risk of the Commission exercising its ex officio powers in connection with this Transaction and consider the risk to be low, for the following reasons:

(a) Nature of the acquirer. Solara is a well-established, US-based private equity sponsor with a track record of institutional fundraising and market-rate investment activity. Solara's capital is sourced from institutional limited partners on arm's-length terms, and there is no indication that Solara or its funds have received any form of government financial support that could be characterized as a distortive foreign subsidy. The Transaction does not involve any state-owned enterprise, sovereign wealth fund, or government-backed entity as an acquirer or co-investor.

(b) Nature of the financial contributions. The financial contributions identified in our analysis are overwhelmingly standard, generally available tax measures — principally R&D tax credits under the US Internal Revenue Code, UK RDEC claims, and Indian tax incentives available to technology companies broadly. These are widely utilized measures that are available to all qualifying taxpayers in the relevant jurisdictions and are not targeted specifically at Cloudium or Solara. The European Commission's guidance under the FSR suggests that generally available tax measures are unlikely to be found to constitute distortive foreign subsidies, as they do not confer a selective advantage on any particular undertaking or industry.

(c) Competitive landscape. The cloud-native ERP, CRM, and business-intelligence SaaS market in the EU is highly competitive, with well-established players including both EU-based and non-EU-based providers. Cloudium's EU market position, while meaningful, is not dominant, and the Transaction is not expected to give rise to material concerns about market distortion in the EU. There are no indications that the Transaction would eliminate an important competitive force in the EU or that the acquirer's competitive position in the EU is attributable to foreign subsidies.

(d) Absence of political sensitivities. We are not aware of any political or regulatory sensitivities that would be likely to attract the Commission's attention to this Transaction. The Transaction does not involve critical infrastructure, sensitive technology, or strategic assets that might heighten regulatory scrutiny.

For these reasons, we assess the risk of an ex officio investigation as low and do not recommend any proactive engagement with the Commission on this issue.

B. Interaction with EUMR Analysis

As noted in Section II.B above, a separate EU Merger Regulation jurisdictional analysis memorandum, also dated December 3, 2023, has been prepared in connection with this Transaction. That analysis concludes that the EUMR turnover thresholds (Article 1(2) and Article 1(3) of Regulation (EC) No 139/2004) are not met and that no EUMR notification is required.

The FSR and the EUMR are separate regulatory instruments with distinct jurisdictional thresholds and substantive assessment criteria. However, where both an EUMR notification and an FSR notification are required for the same transaction, the filing timelines and review processes would need to be carefully coordinated. The European Commission has indicated that it will seek to align the review of parallel EUMR and FSR notifications where possible, but the two reviews remain formally independent. Since neither an EUMR filing nor an FSR filing is required for this Transaction, no coordination issues arise, and no further analysis of the interaction between the two regimes is necessary.

C. Public Procurement Notification (Article 28)

In addition to the concentration notification regime, the FSR establishes a separate mandatory notification regime for participants in certain EU public procurement procedures. Under Article 28, a notification to the relevant EU contracting authority and the European Commission is required where (i) the estimated value of the public procurement contract exceeds €250 million, and (ii) the bidder (or members of a consortium or subcontractors) has received financial contributions from third countries of at least €4 million per third country over the prior three fiscal years.

We have assessed whether this public procurement notification regime is relevant to the Transaction. Our assessment is as follows:

(a) Cloudium's government contracting activities. Cloudium does participate in government contracting, principally through its US operations. One of Cloudium's key customers is Aegis Federal Solutions Inc., a US government contractor, which generates approximately $84,000,000 in annual recurring revenue. However, this is a US government contract — not an EU public procurement — and accordingly falls outside the scope of Article 28 of the FSR.

(b) EU public procurement participation. Based on our review of the data room materials, we have not identified any current or pending bids by Cloudium or any of its subsidiaries in EU public procurement procedures that would meet the Article 28 value threshold of €250 million.

Conclusion: The Article 28 public procurement notification regime is not relevant to this Transaction.

VII. Conclusion and Recommendation

Based on the foregoing analysis, our conclusions are as follows:

1. The FSR concentration notification is not triggered for the proposed acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP. The mandatory notification obligation under Article 21 of the FSR requires both jurisdictional thresholds to be satisfied simultaneously, and Threshold 2 is not met.

2. Threshold 1 (€500 million EU turnover) may be marginally met depending on the precise combined EU turnover figures for the Solara group and the Cloudium group. The combined EU turnover range of approximately €475 million to €585 million straddles the threshold. We have not undertaken the detailed quantification exercise that would be necessary to resolve this ambiguity, as the Threshold 1 analysis is ultimately moot given the dispositive conclusion on Threshold 2.

3. Threshold 2 (€50 million third-country financial contributions) is not met. The combined refined estimate of aggregate third-country financial contributions received by the Solara group and the Cloudium group over the prior three fiscal years is approximately €35 million, which is well below the €50 million threshold. Even under the most conservative range assumptions, the upper bound of approximately €51 million would represent only a marginal and unlikely exceedance, and the refined point estimate provides a substantial margin of safety.

4. No FSR filing is required, and no standstill obligation applies under the FSR in connection with this Transaction.

5. The risk of an ex officio investigation by the European Commission under Article 9 of the FSR is assessed as low, given the nature of the parties, the character of the identified financial contributions, and the absence of any political or competitive sensitivities.

6. No further action is needed on this workstream. We do not recommend any proactive engagement with the European Commission on FSR matters in connection with this Transaction.

7. This conclusion should be revisited if material new information emerges regarding third-country financial contributions received by either party — for example, if new government grants, subsidized financing, or other financial contributions come to light during the continued due diligence process or in the period between signing and closing.

VIII. Limitations and Qualifications

This analysis is subject to the following limitations and qualifications, which should be noted and understood by all recipients of this memorandum:

1. Information cut-off date. This analysis is based on information available as of December 3, 2023, including data room materials reviewed through November 30, 2023, and representations received from Solara management (Marcus Elliston and Priya Narasimhan). The analysis does not reflect any developments occurring after this date.

2. Reliance on management representations and estimates. The financial contribution estimates set forth in this memorandum rely in part on management representations from Solara and on publicly available financial data for Cloudium. We have not independently verified the accuracy or completeness of these representations or data. Actual figures may vary upon completion of a more detailed quantification exercise comparable to that required for Form FS-CO. No such detailed quantification exercise has been undertaken, as it is not warranted given our conclusion that the notification threshold is not met.

3. Limited enforcement precedent. The FSR is a new regulation that became applicable for concentrations on October 12, 2023. As of the date of this memorandum, the European Commission has not published any formal decisions under the FSR concentration notification regime, and the body of interpretive guidance remains limited. The Commission's approach to defining the scope of reportable financial contributions, the methodology for quantifying such contributions, and the treatment of generally available tax measures may evolve as the Commission gains enforcement experience. Our analysis reflects our best understanding of the FSR's requirements based on the regulation's text, the Commission's published guidance, and analogous principles from EU state aid law and EUMR practice.

4. Scope of analysis. This memorandum addresses solely the question of whether the proposed Transaction triggers a mandatory notification obligation under the FSR's concentration notification regime. It does not constitute advice on the substantive assessment of whether any identified financial contributions constitute "foreign subsidies" within the meaning of Article 3(1) of the FSR, or on whether any such foreign subsidies would be found to be "distortive" of the internal market within the meaning of Article 4. Nor does this memorandum address the separate FSR public procurement notification regime (except to confirm that it is not relevant here) or the Commission's ex officio powers (except to assess the risk of their exercise in connection with this Transaction).

5. Currency conversion. Where financial figures have been converted between currencies for purposes of this analysis, we have used approximate exchange rates prevailing during the relevant fiscal periods. Precise exchange rates have not been applied on a transaction-by-transaction basis, and minor variations in conversion rates would not materially affect our conclusions.

6. No legal opinion. This memorandum sets forth our legal analysis and recommendations based on the facts and circumstances described herein. It does not constitute a formal legal opinion, and its conclusions are subject to the limitations and qualifications described above.

•

We are available to discuss this analysis at your convenience. Please do not hesitate to contact me if you have any questions or if additional information becomes available that may affect the analysis set forth herein.

CALDERWOOD & HARKNESS LLP

By: ________

Name: Elaine Forsythe

Title: Specialist Partner, Antitrust & Competition

Date: December 3, 2023

Calderwood & Harkness LLP 599 Lexington Avenue, New York, NY 10022 One Bartholomew Close, London EC1A 7BL

Matter No. 1041-00003

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is a privileged and confidential communication prepared at the direction of counsel in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. This memorandum is intended solely for the use of the addressees and the individuals identified on the distribution list. Any distribution, copying, or disclosure of this memorandum or its contents to any other person is strictly prohibited without the prior written consent of Calderwood & Harkness LLP.

Metric	Amount
LTM Revenue (FYE September 30, 2023)	$1,620,000,000
LTM EBITDA	$405,000,000
Annual Recurring Revenue (as of December 31, 2023)	$1,740,000,000
EV/EBITDA Multiple	~16.8x
Total Employees (Global)	~6,800
Party	Estimated EU Turnover
Cloudium group	€195,000,000–€235,000,000
Solara group	€280,000,000–€350,000,000
Combined	€475,000,000–€585,000,000
Third Country	Estimated Financial Contributions (3-Year Period)
United States	€9,000,000–€15,000,000
United Kingdom	€7,000,000–€15,000,000
India	€3,000,000–€6,000,000
Cloudium Group Total	€19,000,000–€36,000,000
Party	Estimated Financial Contributions (3-Year Period)
Solara group	€8,000,000–€15,000,000
Cloudium group	€19,000,000–€36,000,000
Combined Total	€27,000,000–€51,000,000

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Elaine Forsythe, Specialist Partner, Antitrust & Competition, Calderwood & Harkness LLP
TO: Harrison Wexford, Responsible Partner, M&A; Tiffany Rosenthal, Lead Associate, M&A
CC: Fiona McAllister, Lead Partner, UK Competition, Albright & Kerr LLP (for information)
DATE: December 3, 2023
RE: Foreign Subsidies Regulation (EU) — Notification Analysis for the Proposed Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP
MATTER NO.: 1041-00003
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I. Executive Summary
The purpose of this memorandum is to analyze whether the proposed acquisition of Cloudium Technologies plc ("Cloudium" or the "Target") by Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Acquirer"), an investment fund managed by Solara Digital Infrastructure LP ("Solara"), triggers a mandatory pre-closing notification obligation under the European Union's Foreign Subsidies Regulation (Regulation (EU) 2023/1315 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market, the "FSR"). The FSR entered into force on January 12, 2023, and the mandatory notification obligations for concentrations became applicable as of October 12, 2023, for any concentration closing after July 12, 2023. Given the anticipated signing and closing timeline for the proposed transaction, the FSR's notification regime is potentially relevant and warrants careful analysis.
Our conclusion is that the FSR concentration notification is not triggered for this transaction. While the aggregate deal value of approximately $6,800,000,000 is substantial, and while the combined EU-wide turnover of the parties may approach or marginally exceed the FSR's first jurisdictional threshold of €500 million in aggregate EU-wide turnover, the second cumulative threshold — requiring that the combined aggregate financial contributions received from third countries (i.e., non-EU states) by all undertakings concerned exceed €50 million over the prior three fiscal years — is not met. Based on our detailed analysis of the financial contributions received by both the Solara group (including its controlled portfolio companies) and Cloudium group from non-EU governments during the relevant three-year look-back period, we estimate the combined aggregate third-country financial contributions at approximately €35 million on a refined basis. This figure falls comfortably below the €50 million threshold. Because both thresholds must be satisfied simultaneously for the mandatory notification obligation to arise, the failure to meet Threshold 2 is dispositive.
Accordingly, we recommend that no FSR notification filing be made in connection with the proposed transaction, and no further action is needed on this workstream. The risk of the European Commission initiating an ex officio investigation under Article 9 of the FSR is assessed as low, given the nature of the parties and the character of the identified financial contributions.
II. Background
A. Transaction Overview
Solara Digital Infrastructure LP, a Delaware limited partnership with its principal office at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801 (the "Sponsor"), is a technology-focused private equity firm that invests through a series of limited partnership investment vehicles. Through its current investing fund, Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership with a 2022 vintage and approximately $12.4 billion in committed capital from institutional investors (the "Fund" or "Fund VI"), Solara proposes to acquire all of the outstanding shares of common stock of Cloudium Technologies plc.
Cloudium is a public limited company incorporated under the laws of England and Wales (Company No. 09734521), with its registered office at 45 Broadwick Street, London W1F 0DB, United Kingdom, and its principal United States headquarters at 600 Townsend Street, Suite 800, San Francisco, California 94103. Cloudium's shares of common stock are listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." Cloudium is a provider of cloud-native enterprise resource planning ("ERP"), customer relationship management ("CRM"), and business-intelligence software-as-a-service ("SaaS") solutions, serving both mid-market and enterprise customers across a range of industries globally.
The proposed transaction is structured as a reverse triangular merger under the Delaware General Corporation Law ("DGCL"). Stratos Merger Sub Inc., a Delaware corporation incorporated on January 8, 2024, and a wholly owned subsidiary of Fund VI formed solely for the purpose of effecting the proposed transaction ("Merger Sub"), will merge with and into Cloudium, with Cloudium surviving the merger as a wholly owned subsidiary of Fund VI (the "Transaction" or the "Merger"). The aggregate deal value is approximately $6,800,000,000, with per-share merger consideration of approximately $36.92 per share, based on approximately 184,200,000 shares of common stock outstanding as of the record date.
The key financial metrics for Cloudium for the last twelve months ending September 30, 2023 (Cloudium's fiscal year end) are as follows:
Cloudium's operations span four principal jurisdictions — the United States, the United Kingdom, India, and Germany — through the following key subsidiaries:
(a) Cloudium Technologies UK Ltd. (England and Wales, Company No. 11287456): Approximately 1,200 employees; revenue of approximately £312,000,000 (approximately $390,000,000 at an exchange rate of $1.25/£1.00). This subsidiary serves as the operational hub for Cloudium's European, Middle Eastern, and African customer base, as well as a significant portion of the company's product engineering workforce.
(b) Cloudium Technologies India Pvt. Ltd. (Bangalore, Karnataka, India): Approximately 2,400 employees, principally engaged in software engineering, product development, quality assurance, and customer support functions. This subsidiary does not generate material third-party revenue directly.
(c) Cloudium Solutions GmbH (Berlin, Germany): Approximately 400 employees focused on sales and customer success operations in the DACH region (Germany, Austria, and Switzerland). This subsidiary generates revenue primarily from German, Austrian, and other EU-based enterprise customers.
The Transaction contemplates certain rollover equity arrangements. Jonathan Hargrove, Cloudium's Chief Executive Officer, currently holds approximately 4.2% of Cloudium's outstanding shares and will roll over approximately 50% of his equity position, representing a rollover value of approximately $142,814,544. In addition, Pinnacle Growth Ventures LLC ("Pinnacle"), a growth equity fund that currently holds approximately 11.6% of Cloudium's outstanding shares, will roll over approximately 60% of its equity position, representing a rollover value of approximately $473,241,408.
The Transaction will be financed through a combination of debt and equity. The debt financing package consists of a $3,740,000,000 Term Loan B facility and a $500,000,000 Revolving Credit Facility, with Meridian Atlantic Bank, N.A. serving as lead arranger and administrative agent and Ironclad Capital Markets LLC serving as co-arranger. Fund VI will contribute approximately $2,832,888,096 in equity, bringing the total funding requirement (inclusive of estimated transaction costs, debt refinancing, and other closing adjustments) to approximately $7,188,944,048.
B. Relationship to Other Regulatory Filings
This memorandum addresses solely the notification analysis under the FSR. The proposed Transaction is subject to a number of additional regulatory filings and assessments, which are being handled through separate workstreams. For completeness, we note the following cross-references:
(a) HSR Act (United States). A separate pre-filing memorandum under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is being prepared, with an anticipated HSR filing date of February 9, 2024.
(b) UK Competition and Markets Authority. A separate UK merger notice analysis is being prepared in connection with CMA Case No. ME/7184/24. The CMA filing is expected on approximately February 12, 2024. This workstream is being handled by Elaine Forsythe at Calderwood & Harkness in coordination with Fiona McAllister at Albright & Kerr LLP (5 New Street Square, London EC4A 3TW), who is acting as local UK competition counsel.
(c) EU Merger Regulation. A separate jurisdictional analysis memorandum under the EU Merger Regulation (Regulation (EC) No 139/2004, the "EUMR"), also dated December 3, 2023, has concluded that the EUMR turnover thresholds are not met and that no EUMR notification is required for this Transaction. We address the interaction between the EUMR analysis and the FSR analysis in Section VI.B below.
(d) German Foreign Direct Investment Screening. An analysis under the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, "AWV") is being prepared, with a target completion date of December 8, 2023.
(e) Indian FDI/CCI Analysis. An analysis of Indian foreign direct investment regulations and Competition Commission of India filing requirements is being prepared, with a target completion date of December 10, 2023.
(f) CFIUS (United States). A voluntary notice assessment under the Committee on Foreign Investment in the United States framework was completed on November 30, 2023, and concluded that no voluntary CFIUS filing is recommended for this Transaction.
III. Overview of the Foreign Subsidies Regulation
A. Legislative Background
Regulation (EU) 2023/1315 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market — commonly referred to as the Foreign Subsidies Regulation or the "FSR" — represents a significant expansion of the European Union's regulatory toolkit for addressing competitive distortions within the EU internal market. Prior to the FSR's enactment, the EU's existing state aid rules under Articles 107–109 of the Treaty on the Functioning of the European Union ("TFEU") applied only to subsidies granted by EU Member States. Subsidies granted by non-EU governments — so-called "third country" subsidies — fell outside the scope of EU state aid control, even where such subsidies benefited undertakings active in the EU and potentially distorted competition within the internal market.
The FSR was designed to fill this regulatory gap. It provides the European Commission with broad investigative and enforcement powers to scrutinize financial contributions granted by non-EU governments to undertakings active in the EU, across three principal channels: (i) a mandatory pre-closing notification regime for concentrations (mergers and acquisitions) meeting specified thresholds; (ii) a mandatory notification regime for participants in EU public procurement procedures meeting specified thresholds; and (iii) a general ex officio investigative power allowing the Commission to examine any market situation involving potential foreign subsidies.
The FSR entered into force on January 12, 2023. The provisions establishing the mandatory notification obligations for concentrations and public procurement became applicable on October 12, 2023. For concentrations, the notification obligation applies to any transaction closing on or after July 12, 2023, provided that the relevant thresholds are met. The European Commission is the sole enforcement authority under the FSR, and it has been designated as the competent authority for receiving and reviewing notifications, conducting investigations, and imposing remedies or, where appropriate, prohibiting transactions.
Given that the proposed Transaction is expected to close after October 12, 2023 (indeed, closing is currently anticipated in Q2 2024), the FSR notification regime is squarely applicable in terms of temporal scope, and it is therefore necessary to assess whether the substantive jurisdictional thresholds are met.
B. Concentration Notification Obligation (Article 21)
Article 21 of the FSR establishes a mandatory pre-closing notification obligation for "concentrations" where two cumulative jurisdictional thresholds are met. A "concentration" for purposes of the FSR is defined by reference to the concept of a concentration under the EUMR (Regulation (EC) No 139/2004, Article 3). This includes, among other things, the acquisition of sole or joint control over an undertaking through a merger, the acquisition of shares or assets, or other means. The proposed reverse triangular merger, whereby Merger Sub will merge with and into Cloudium and Cloudium will survive as a wholly owned subsidiary of Fund VI, constitutes an acquisition of sole control by Fund VI over Cloudium and therefore qualifies as a "concentration" within the meaning of the FSR.
The two cumulative jurisdictional thresholds under Article 21 are as follows:
Threshold 1 — Enterprise Turnover (Article 20(3)(a)): At least one of the merging parties, the acquired undertaking, or the joint venture is established in the EU and generates an aggregate EU-wide turnover of at least €500 million. For purposes of this threshold, the turnover of the entire group of the acquiring undertaking (including all entities controlled by the same ultimate parent or controlling entity) and the target undertaking and its subsidiaries must be taken into account. The concept of "turnover" under the FSR follows the methodology established under the EUMR and its implementing regulation (Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004).
Threshold 2 — Financial Contributions (Article 20(3)(b)): The combined aggregate financial contributions received from third countries (i.e., non-EU states, including their regional and local authorities, state-owned enterprises, and other entities whose actions can be attributed to a third country) by all undertakings concerned exceeds €50 million in the three fiscal years preceding the notification. This threshold requires the aggregation of all financial contributions received from any and all third countries by both the acquirer group and the target group during the relevant period, regardless of whether those contributions may ultimately be found to constitute distortive foreign subsidies.
Both thresholds must be met simultaneously for the mandatory notification obligation to arise. If either threshold is not met, no notification is required under Article 21 (without prejudice to the Commission's ex officio powers under Article 9, discussed in Section VI.A below).
Where both thresholds are met, the concentration is subject to a standstill obligation: it may not be implemented (i.e., closing may not occur) before the European Commission has either cleared the transaction or the applicable review period has expired without the Commission having taken a decision.
C. Definition of "Financial Contributions" (Article 3)
Article 3 of the FSR defines "financial contribution" in deliberately broad terms, encompassing a wide range of economic benefits conferred by or attributable to a third country. The definition includes, but is not limited to, the following categories:
(a) Direct transfers of funds or potential direct transfers of funds, including grants, loans, loan guarantees, capital injections, and debt forgiveness.
(b) Revenue foregone that is otherwise due, such as tax exemptions, tax holidays, fiscal incentives, accelerated depreciation allowances, and research and development tax credits, to the extent that such measures result in a reduction of the tax burden that would otherwise apply.
(c) The provision or purchase of goods or services by a third-country government, including through state-owned enterprises, other than at market terms. This could include, for example, below-market-rate infrastructure services, preferential access to government-controlled resources, or above-market-rate government procurement contracts.
(d) Government-directed purchases of goods or services, where a third country government directs a private entity to make purchases from the undertaking in question on terms that confer an advantage.
Importantly, the concept of "financial contribution" for purposes of the FSR thresholds is broader than the concept of a "foreign subsidy." A financial contribution becomes a foreign subsidy only where it confers a benefit on the recipient and is selective (i.e., limited to one or more undertakings or industries). However, for purposes of assessing whether the €50 million notification threshold is met, all financial contributions from third countries must be quantified and aggregated — regardless of whether they constitute foreign subsidies and regardless of whether they may be found to be distortive. This is a critically important distinction: the threshold captures the gross volume of third-country financial contributions, not merely those that are selective or that confer an undue advantage.
The term "third country" encompasses any state that is not a member of the European Union, including — notably for purposes of this analysis — the United Kingdom (which ceased to be an EU Member State upon the completion of the Brexit transition period on December 31, 2020), the United States, India, and all other non-EU jurisdictions.
Financial contributions from entities at all levels of government are captured, including contributions from central government authorities, regional and local authorities, state-owned enterprises, public financial institutions, and any other entities whose actions can be attributed to a third country.
The look-back period for the financial contributions threshold is the three complete fiscal years preceding the date of notification. For purposes of our analysis, we have used Cloudium's fiscal year ending September 30 as the reference point, and have therefore assessed financial contributions received during the fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.
D. Procedural Aspects
For completeness, we briefly summarize the procedural aspects of an FSR concentration notification, although these are not directly relevant given our conclusion that no notification is required.
Where both jurisdictional thresholds are met, the notifying party must submit a completed Form FS-CO to the European Commission. Form FS-CO is a detailed notification form that requires, among other things, comprehensive identification and quantification of all financial contributions received from third countries by the acquirer group and the target group over the relevant three-year period. The form also requires a description of the transaction, the parties, the relevant markets, and the competitive conditions in those markets.
The review timeline proceeds in two phases. Phase I consists of a 25-working-day preliminary review period, which may be extended by 10 working days where the Commission identifies potential concerns. If the Commission opens an in-depth investigation, Phase II provides for a 90-working-day review period, which may be extended by 15 working days in appropriate circumstances. Throughout both phases, the transaction remains subject to a suspensory effect — that is, the concentration may not be implemented (and closing may not occur) until the Commission has issued a clearance decision or the applicable review period has expired without the Commission having taken a decision.
The FSR provides for a range of remedial outcomes, including clearance without conditions, clearance subject to commitments, and (in exceptional cases) prohibition of the concentration.
IV. Analysis of Threshold 1: EU Turnover ≥ €500 Million
A. Identification of Relevant Undertakings
In order to assess whether Threshold 1 is met, it is necessary first to identify the relevant undertakings whose EU turnover must be taken into account. Under the FSR, the relevant undertakings are those "concerned" by the concentration, which follows the same methodology as the EUMR. For an acquisition of sole control, the relevant undertakings are (i) the acquiring undertaking, together with all entities forming part of the same group (i.e., all entities over which the acquirer exercises, directly or indirectly, sole or joint control), and (ii) the target undertaking and its subsidiaries.
For the acquirer side, the relevant group is Solara Digital Infrastructure LP and its controlled entities. This includes Fund VI itself, but also extends to the portfolio companies across Solara's fund family — specifically, Funds IV, V, and VI — to the extent that these portfolio companies are controlled by the same ultimate controlling entity. In this case, Solara Digital GP LLC serves as the general partner or controlling entity of each fund in the Solara fund family, and Solara Fund VI GP LLC is the specific general partner of Fund VI. Under the EUMR group concepts (which the FSR incorporates by reference), portfolio companies controlled by the same GP entity are considered part of the same group for turnover aggregation purposes. Accordingly, we have assessed the aggregate EU turnover of Solara's 14 platform investments across Funds IV through VI.
For the target side, the relevant group is Cloudium Technologies plc and all of its subsidiaries, including Cloudium Technologies UK Ltd., Cloudium Technologies India Pvt. Ltd., and Cloudium Solutions GmbH.
B. Cloudium's EU Turnover
Cloudium's total LTM revenue for the fiscal year ended September 30, 2023 was approximately $1,620,000,000 on a consolidated basis. However, only that portion of Cloudium's revenue that is generated within the European Union counts toward the Threshold 1 assessment. Revenue generated outside the EU — including, critically, revenue generated in the United Kingdom — does not count toward EU turnover, as the UK is no longer a member of the European Union.
The geographic distribution of Cloudium's revenue is as follows:
(a) United Kingdom. Cloudium Technologies UK Ltd. generated revenue of approximately £312,000,000 (approximately $390,000,000 at an exchange rate of $1.25/£1.00) during the relevant period. However, as noted above, UK revenue does not count toward EU turnover for FSR purposes, because the United Kingdom is no longer an EU Member State. While a portion of the UK subsidiary's revenue may be attributable to EU-based customers, the majority of this revenue is generated from UK-domiciled customers and is therefore excluded from the EU turnover calculation.
(b) Germany and the EU (Cloudium Solutions GmbH). Cloudium Solutions GmbH, the company's Berlin-based subsidiary focused on DACH sales and customer success, is the primary generator of Cloudium's EU revenue. Based on our review of data room materials, publicly available financial information, and management representations, we estimate that Cloudium Solutions GmbH generated EU revenue of approximately €180,000,000–€210,000,000 during the relevant period. This revenue was principally derived from enterprise customers in Germany, Austria, and other EU member states in the DACH and broader European region.
(c) Other EU Revenue. In addition to revenue generated directly through Cloudium Solutions GmbH, Cloudium also generates certain revenue from EU-based customers through direct sales from its UK and US entities. Based on our review, these additional EU revenue streams are relatively de minimis, estimated at approximately €15,000,000–€25,000,000 during the relevant period.
Aggregating these components, we estimate Cloudium's total EU turnover at approximately €195,000,000–€235,000,000. This figure alone is well below the €500 million threshold, meaning that the threshold cannot be met on the basis of Cloudium's EU turnover in isolation.
C. Solara's EU Turnover
As discussed in Section IV.A above, the FSR requires aggregation of the EU turnover of the entire acquirer group, including all portfolio companies controlled by the Solara fund family through Solara Digital GP LLC and its affiliated GP entities. Solara's portfolio companies across Funds IV, V, and VI comprise 14 platform investments, focused principally on enterprise software, cloud infrastructure, data analytics, and SaaS platform businesses.
We have assessed the aggregate EU turnover of the Solara group based on a review of available financial data provided by Solara's finance team and management representations received from Marcus Elliston (Managing Director and Head of Portfolio Operations) and Priya Narasimhan (Chief Financial Officer). Several of Solara's portfolio companies have EU-based operations or generate revenue from EU-based customers, including through direct sales subsidiaries in Germany, the Netherlands, France, and Ireland.
Based on this review, we estimate that the aggregate EU turnover of Solara and its controlled portfolio companies is approximately €280,000,000–€350,000,000 during the relevant period.
We note that the precise methodology for aggregating portfolio company turnover under the FSR acquirer group concept remains subject to some interpretive uncertainty, particularly in the private equity context where multiple fund vehicles share a common GP but have different limited partner bases. Our analysis follows the established EUMR group concepts, as incorporated by reference into the FSR, which attribute portfolio company turnover to the acquirer group where those portfolio companies are controlled by the same ultimate GP entity. We have applied this approach conservatively.
D. Combined EU Turnover Assessment
Combining the EU turnover of the Cloudium group and the Solara group yields the following range:
As this range illustrates, the combined EU turnover of the parties straddles the €500 million threshold. Depending on the exact turnover figures — which can be refined only through a more granular, line-item analysis of each portfolio company's EU revenue allocation — the threshold may or may not be met. At the lower end of the range, the combined EU turnover falls below €500 million; at the upper end, it modestly exceeds the threshold.
We have not undertaken the detailed quantification exercise that would be required to determine with certainty whether Threshold 1 is met, for the following reason: even if Threshold 1 is marginally met, Threshold 2 (the €50 million financial contributions threshold) is the binding constraint in this analysis. As set forth in detail in Section V below, Threshold 2 is not met based on our analysis. Because both thresholds must be satisfied simultaneously for the mandatory notification obligation to arise, the fact that Threshold 2 is not met renders the Threshold 1 analysis moot. Accordingly, we have accepted the ambiguity in the Threshold 1 analysis and focused our detailed quantification efforts on Threshold 2.
V. Analysis of Threshold 2: Financial Contributions from Third Countries ≥ €50 Million
A. Relevant Third Countries
The second jurisdictional threshold under the FSR requires that the combined aggregate financial contributions received from third countries by all undertakings concerned exceed €50 million over the three fiscal years preceding notification. As discussed in Section III.C above, a "third country" is any country that is not a member of the European Union, and financial contributions from all levels of government in such third countries are captured.
For purposes of this analysis, the relevant third countries are those in which the Solara group and the Cloudium group have material operations or from which they may have received financial contributions:
(a) United States. Both Solara and Cloudium are headquartered in the United States and have substantial US operations. The United States is a "third country" under the FSR. US federal and state tax incentives, R&D tax credits, and any other government financial contributions must be assessed.
(b) United Kingdom. Following Brexit, the United Kingdom qualifies as a "third country" under the FSR. Cloudium Technologies UK Ltd. has approximately 1,200 employees and significant operations in the UK. UK government financial contributions, including R&D tax relief and any other incentives, must be assessed.
(c) India. Cloudium Technologies India Pvt. Ltd. operates a significant R&D and customer support center in Bangalore, India, with approximately 2,400 employees. India is a "third country" under the FSR. Indian tax holidays, income tax exemptions, and other government incentives available to the Indian subsidiary must be assessed.
(d) Germany. Cloudium Solutions GmbH is based in Berlin, Germany. Germany is an EU Member State, and accordingly, financial contributions from the German government (at any level) are not third-country financial contributions and are not relevant to the Threshold 2 analysis.
(e) Other jurisdictions. Based on our review, neither the Solara group nor the Cloudium group has material operations in other non-EU jurisdictions that would give rise to significant financial contributions. To the extent that certain Solara portfolio companies may have minor operations in other third countries (e.g., Canada, Israel, Singapore), any associated financial contributions are assessed to be de minimis.
B. Solara Group — Financial Contributions Analysis
Solara Digital Infrastructure LP, as a private equity sponsor, does not itself engage in commercial operations that would generate government financial contributions. Solara's fund vehicles — including Fund VI — are investment partnerships that receive committed capital from limited partners (principally institutional investors such as pension funds, endowments, sovereign wealth funds, and insurance companies) and deploy that capital into portfolio investments. The capital contributions from limited partners do not constitute "financial contributions" from a third country within the meaning of the FSR, even where certain limited partners may be state-affiliated entities (e.g., public pension funds), because the contributions are made on arm's-length commercial terms in the ordinary course of the fund's investment activities.
The relevant inquiry for the Solara group therefore focuses on whether any of Solara's controlled portfolio companies across Funds IV through VI received material financial contributions from third-country governments during the three fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.
Based on representations received from Marcus Elliston (Managing Director and Head of Portfolio Operations) and Priya Narasimhan (Chief Financial Officer) at Solara, and on our review of available financial and tax information for Solara's 14 platform investments, we have identified the following:
(a) Government grants, subsidized loans, or capital injections. No material government grants, subsidized loans, loan guarantees, or capital injections from any third-country government have been received by Solara or any of its portfolio companies during the relevant three-year period. Solara's portfolio companies are principally US-based enterprise software and cloud infrastructure businesses financed through conventional private equity and debt capital markets financing. None of the portfolio companies has received government bailout funding, state-backed venture capital, or similar directed financial support.
(b) US federal and state R&D tax credits and standard tax measures. Several of Solara's US-based portfolio companies claim federal research and development tax credits under Section 41 of the Internal Revenue Code, as well as certain state-level tax incentives (e.g., California research credits, New York State economic development incentives). The European Commission's guidance under the FSR indicates that generally available tax measures in a third country — such as standard corporate tax deductions, depreciation schedules, and broadly available R&D tax credits — are reportable as financial contributions for purposes of the threshold analysis. While such measures are unlikely to be found to constitute distortive foreign subsidies in a substantive assessment, they must nonetheless be quantified for the purpose of determining whether the €50 million threshold is met.
(c) Quantification. Based on Solara management's representations and our review, we estimate that the aggregate third-country financial contributions received by the Solara group (principally in the form of US federal and state R&D tax credits and similar standard, generally available tax measures) over the three-year look-back period total approximately €8,000,000–€15,000,000.
Conclusion: The Solara group's third-country financial contributions over the relevant three-year period are well below the €50 million threshold on a standalone basis.
C. Cloudium Group — Financial Contributions Analysis
Cloudium and its subsidiaries have operations in three principal third-country jurisdictions — the United States, the United Kingdom, and India. We have assessed the financial contributions received from each of these third countries during the three fiscal years ended September 30, 2021, September 30, 2022, and September 30, 2023.
1. United States.  Cloudium's US headquarters in San Francisco houses a significant portion of its executive leadership, sales and marketing, and product development functions. The key categories of US financial contributions identified are as follows:
(a) Federal R&D tax credits (IRC § 41). Cloudium has claimed federal research and development tax credits under Section 41 of the Internal Revenue Code in each of the relevant fiscal years. Based on our review of data room materials, including Cloudium's US federal tax returns and supporting R&D credit studies, we estimate that Cloudium's annual federal R&D tax credit claims during the relevant period were approximately $3,000,000–$5,000,000 per year.
(b) State-level tax incentives. Cloudium has benefited from certain California state tax incentives, including the California research credit and standard corporate tax deductions. These are generally available measures and are not targeted to Cloudium specifically. The incremental value of these state-level tax benefits is relatively modest and is incorporated into our overall US estimate.
(c) Government grants and subsidized financing. We have not identified any material US government grants, subsidized loans, loan guarantees, or other non-tax financial contributions received by Cloudium or any of its US-based entities during the relevant period.
Based on this assessment, we estimate Cloudium's total US financial contributions over the three-year look-back period at approximately €9,000,000–€15,000,000 (converting from US dollars at prevailing exchange rates).
2. United Kingdom.  Cloudium Technologies UK Ltd. is Cloudium's largest subsidiary outside the United States, with approximately 1,200 employees and annual revenue of approximately £312,000,000. As noted above, the United Kingdom is a "third country" for purposes of the FSR, and UK government financial contributions must be assessed.
(a) UK R&D tax relief (RDEC regime). Cloudium Technologies UK Ltd. has made claims under the UK's Research and Development Expenditure Credit ("RDEC") regime, which provides a tax credit for qualifying R&D expenditure. Based on our review of Cloudium's UK statutory accounts and related data room materials, we estimate that Cloudium UK's annual RDEC claims during the relevant period were approximately £2,000,000–£4,000,000 per year.
(b) UK government grants and other support. We have not identified any material UK government grants, subsidized loans, loan guarantees, or other non-tax financial contributions received by Cloudium Technologies UK Ltd. during the relevant period. We note that certain UK government programs (such as Innovate UK grants and the Enterprise Investment Scheme) may be relevant for other companies in the UK technology sector, but based on our data room review, Cloudium UK has not been a recipient of material funding under such programs.
Based on this assessment, we estimate Cloudium's total UK financial contributions over the three-year look-back period at approximately €7,000,000–€15,000,000 (converting from British pounds at prevailing exchange rates).
3. India.  Cloudium Technologies India Pvt. Ltd. operates a substantial engineering and customer support center in Bangalore, Karnataka, with approximately 2,400 employees. India offers various tax incentive programs for technology companies, and we have assessed whether Cloudium India has benefited from any such programs.
(a) Special Economic Zone ("SEZ") and Software Technology Parks of India ("STPI") benefits. Based on our review of Cloudium India's financial statements and tax filings in the data room, Cloudium India has benefited from certain income tax exemptions available under Indian tax law, including benefits associated with operations in designated technology zones. The specific quantum of these benefits has been estimated based on the differential between the standard Indian corporate tax rate and the effective rate paid by Cloudium India, as well as any direct tax holidays or deductions claimed.
(b) Other Indian government support. We have not identified any material Indian government grants, subsidized loans, or other non-tax financial contributions received by Cloudium India during the relevant period.
Based on this assessment, we estimate Cloudium India's total financial contributions over the three-year look-back period at approximately €3,000,000–€6,000,000.
4. Cloudium Group — Combined Third-Country Financial Contributions.  Aggregating the financial contributions from each third country, we arrive at the following estimates for the Cloudium group:
D. Combined Financial Contributions Assessment
Combining the financial contributions of the Solara group and the Cloudium group yields the following:
On a range basis, the combined financial contributions fall between approximately €27 million and €51 million. We acknowledge that the upper end of this range marginally touches the €50 million threshold, which could in theory raise a question as to whether the threshold is met. However, the range estimates set forth above are deliberately conservative, reflecting the widest plausible range of outcomes based on the data available. A more refined analysis, using the actual figures from Cloudium's financial statements and tax returns (as reviewed in the data room) and Solara management's specific representations, produces materially lower point estimates.
Specifically, based on our refined analysis:
(a) Refined Solara group estimate: approximately €10,000,000. This figure is based on aggregated R&D tax credits and similar standard measures across Solara's portfolio companies, as confirmed by Solara's finance team.
(b) Refined Cloudium group estimate: approximately €25,000,000. This figure reflects the midpoint of our estimates for US, UK, and Indian financial contributions, informed by the specific data points in the data room materials.
(c) Refined combined total: approximately €35,000,000. This figure is comfortably below the €50 million threshold.
Even allowing for reasonable margins of error in the underlying estimates, we are confident that the combined aggregate financial contributions fall below the €50 million threshold. The wide range estimates described above are conservative in several respects: they assume the maximum plausible value of each financial contribution category, they treat all potentially qualifying tax measures as reportable financial contributions even where there may be arguments for exclusion, and they do not reflect any offsets or adjustments that might reduce the reported amounts.
Conclusion: Threshold 2 is not met. The combined aggregate financial contributions from third countries to the Solara group and Cloudium group over the prior three fiscal years do not reach the €50 million threshold. Since both thresholds under Article 20(3) of the FSR must be met simultaneously for the mandatory notification obligation to arise, the failure to meet Threshold 2 is dispositive, and no FSR concentration notification is required — regardless of the outcome of the Threshold 1 analysis.
VI. Additional Considerations
A. Ex Officio Review Powers (Article 9)
Even where a transaction does not meet the mandatory notification thresholds under Article 21 of the FSR, the European Commission retains broad investigative powers under Article 9 to examine foreign subsidies on its own initiative (ex officio). Under this provision, the Commission may initiate an investigation where it has indications that an undertaking may have been granted a foreign subsidy that distorts the internal market. The ex officio power is not subject to the same jurisdictional thresholds as the concentration notification regime, and the Commission could, in principle, examine any concentration — including sub-threshold transactions — if it identifies relevant concerns.
We have assessed the risk of the Commission exercising its ex officio powers in connection with this Transaction and consider the risk to be low, for the following reasons:
(a) Nature of the acquirer. Solara is a well-established, US-based private equity sponsor with a track record of institutional fundraising and market-rate investment activity. Solara's capital is sourced from institutional limited partners on arm's-length terms, and there is no indication that Solara or its funds have received any form of government financial support that could be characterized as a distortive foreign subsidy. The Transaction does not involve any state-owned enterprise, sovereign wealth fund, or government-backed entity as an acquirer or co-investor.
(b) Nature of the financial contributions. The financial contributions identified in our analysis are overwhelmingly standard, generally available tax measures — principally R&D tax credits under the US Internal Revenue Code, UK RDEC claims, and Indian tax incentives available to technology companies broadly. These are widely utilized measures that are available to all qualifying taxpayers in the relevant jurisdictions and are not targeted specifically at Cloudium or Solara. The European Commission's guidance under the FSR suggests that generally available tax measures are unlikely to be found to constitute distortive foreign subsidies, as they do not confer a selective advantage on any particular undertaking or industry.
(c) Competitive landscape. The cloud-native ERP, CRM, and business-intelligence SaaS market in the EU is highly competitive, with well-established players including both EU-based and non-EU-based providers. Cloudium's EU market position, while meaningful, is not dominant, and the Transaction is not expected to give rise to material concerns about market distortion in the EU. There are no indications that the Transaction would eliminate an important competitive force in the EU or that the acquirer's competitive position in the EU is attributable to foreign subsidies.
(d) Absence of political sensitivities. We are not aware of any political or regulatory sensitivities that would be likely to attract the Commission's attention to this Transaction. The Transaction does not involve critical infrastructure, sensitive technology, or strategic assets that might heighten regulatory scrutiny.
For these reasons, we assess the risk of an ex officio investigation as low and do not recommend any proactive engagement with the Commission on this issue.
B. Interaction with EUMR Analysis
As noted in Section II.B above, a separate EU Merger Regulation jurisdictional analysis memorandum, also dated December 3, 2023, has been prepared in connection with this Transaction. That analysis concludes that the EUMR turnover thresholds (Article 1(2) and Article 1(3) of Regulation (EC) No 139/2004) are not met and that no EUMR notification is required.
The FSR and the EUMR are separate regulatory instruments with distinct jurisdictional thresholds and substantive assessment criteria. However, where both an EUMR notification and an FSR notification are required for the same transaction, the filing timelines and review processes would need to be carefully coordinated. The European Commission has indicated that it will seek to align the review of parallel EUMR and FSR notifications where possible, but the two reviews remain formally independent. Since neither an EUMR filing nor an FSR filing is required for this Transaction, no coordination issues arise, and no further analysis of the interaction between the two regimes is necessary.
C. Public Procurement Notification (Article 28)
In addition to the concentration notification regime, the FSR establishes a separate mandatory notification regime for participants in certain EU public procurement procedures. Under Article 28, a notification to the relevant EU contracting authority and the European Commission is required where (i) the estimated value of the public procurement contract exceeds €250 million, and (ii) the bidder (or members of a consortium or subcontractors) has received financial contributions from third countries of at least €4 million per third country over the prior three fiscal years.
We have assessed whether this public procurement notification regime is relevant to the Transaction. Our assessment is as follows:
(a) Cloudium's government contracting activities. Cloudium does participate in government contracting, principally through its US operations. One of Cloudium's key customers is Aegis Federal Solutions Inc., a US government contractor, which generates approximately $84,000,000 in annual recurring revenue. However, this is a US government contract — not an EU public procurement — and accordingly falls outside the scope of Article 28 of the FSR.
(b) EU public procurement participation. Based on our review of the data room materials, we have not identified any current or pending bids by Cloudium or any of its subsidiaries in EU public procurement procedures that would meet the Article 28 value threshold of €250 million.
Conclusion: The Article 28 public procurement notification regime is not relevant to this Transaction.
VII. Conclusion and Recommendation
Based on the foregoing analysis, our conclusions are as follows:
1.  The FSR concentration notification is not triggered for the proposed acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP. The mandatory notification obligation under Article 21 of the FSR requires both jurisdictional thresholds to be satisfied simultaneously, and Threshold 2 is not met.
2.  Threshold 1 (€500 million EU turnover) may be marginally met depending on the precise combined EU turnover figures for the Solara group and the Cloudium group. The combined EU turnover range of approximately €475 million to €585 million straddles the threshold. We have not undertaken the detailed quantification exercise that would be necessary to resolve this ambiguity, as the Threshold 1 analysis is ultimately moot given the dispositive conclusion on Threshold 2.
3.  Threshold 2 (€50 million third-country financial contributions) is not met. The combined refined estimate of aggregate third-country financial contributions received by the Solara group and the Cloudium group over the prior three fiscal years is approximately €35 million, which is well below the €50 million threshold. Even under the most conservative range assumptions, the upper bound of approximately €51 million would represent only a marginal and unlikely exceedance, and the refined point estimate provides a substantial margin of safety.
4.  No FSR filing is required, and no standstill obligation applies under the FSR in connection with this Transaction.
5.  The risk of an ex officio investigation by the European Commission under Article 9 of the FSR is assessed as low, given the nature of the parties, the character of the identified financial contributions, and the absence of any political or competitive sensitivities.
6.  No further action is needed on this workstream. We do not recommend any proactive engagement with the European Commission on FSR matters in connection with this Transaction.
7.  This conclusion should be revisited if material new information emerges regarding third-country financial contributions received by either party — for example, if new government grants, subsidized financing, or other financial contributions come to light during the continued due diligence process or in the period between signing and closing.
VIII. Limitations and Qualifications
This analysis is subject to the following limitations and qualifications, which should be noted and understood by all recipients of this memorandum:
1.  Information cut-off date. This analysis is based on information available as of December 3, 2023, including data room materials reviewed through November 30, 2023, and representations received from Solara management (Marcus Elliston and Priya Narasimhan). The analysis does not reflect any developments occurring after this date.
2.  Reliance on management representations and estimates. The financial contribution estimates set forth in this memorandum rely in part on management representations from Solara and on publicly available financial data for Cloudium. We have not independently verified the accuracy or completeness of these representations or data. Actual figures may vary upon completion of a more detailed quantification exercise comparable to that required for Form FS-CO. No such detailed quantification exercise has been undertaken, as it is not warranted given our conclusion that the notification threshold is not met.
3.  Limited enforcement precedent. The FSR is a new regulation that became applicable for concentrations on October 12, 2023. As of the date of this memorandum, the European Commission has not published any formal decisions under the FSR concentration notification regime, and the body of interpretive guidance remains limited. The Commission's approach to defining the scope of reportable financial contributions, the methodology for quantifying such contributions, and the treatment of generally available tax measures may evolve as the Commission gains enforcement experience. Our analysis reflects our best understanding of the FSR's requirements based on the regulation's text, the Commission's published guidance, and analogous principles from EU state aid law and EUMR practice.
4.  Scope of analysis. This memorandum addresses solely the question of whether the proposed Transaction triggers a mandatory notification obligation under the FSR's concentration notification regime. It does not constitute advice on the substantive assessment of whether any identified financial contributions constitute "foreign subsidies" within the meaning of Article 3(1) of the FSR, or on whether any such foreign subsidies would be found to be "distortive" of the internal market within the meaning of Article 4. Nor does this memorandum address the separate FSR public procurement notification regime (except to confirm that it is not relevant here) or the Commission's ex officio powers (except to assess the risk of their exercise in connection with this Transaction).
5.  Currency conversion. Where financial figures have been converted between currencies for purposes of this analysis, we have used approximate exchange rates prevailing during the relevant fiscal periods. Precise exchange rates have not been applied on a transaction-by-transaction basis, and minor variations in conversion rates would not materially affect our conclusions.
6.  No legal opinion. This memorandum sets forth our legal analysis and recommendations based on the facts and circumstances described herein. It does not constitute a formal legal opinion, and its conclusions are subject to the limitations and qualifications described above.
•    
We are available to discuss this analysis at your convenience. Please do not hesitate to contact me if you have any questions or if additional information becomes available that may affect the analysis set forth herein.
CALDERWOOD & HARKNESS LLP
By: ________
Name: Elaine Forsythe
Title: Specialist Partner, Antitrust & Competition
Date: December 3, 2023
Calderwood & Harkness LLP 599 Lexington Avenue, New York, NY 10022 One Bartholomew Close, London EC1A 7BL
Matter No. 1041-00003
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is a privileged and confidential communication prepared at the direction of counsel in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. This memorandum is intended solely for the use of the addressees and the individuals identified on the distribution list. Any distribution, copying, or disclosure of this memorandum or its contents to any other person is strictly prohibited without the prior written consent of Calderwood & Harkness LLP.
Metric | Amount
LTM Revenue (FYE September 30, 2023) | $1,620,000,000
LTM EBITDA | $405,000,000
Annual Recurring Revenue (as of December 31, 2023) | $1,740,000,000
EV/EBITDA Multiple | ~16.8x
Total Employees (Global) | ~6,800
Party | Estimated EU Turnover
Cloudium group | €195,000,000–€235,000,000
Solara group | €280,000,000–€350,000,000
Combined | €475,000,000–€585,000,000
Third Country | Estimated Financial Contributions (3-Year Period)
United States | €9,000,000–€15,000,000
United Kingdom | €7,000,000–€15,000,000
India | €3,000,000–€6,000,000
Cloudium Group Total | €19,000,000–€36,000,000
Party | Estimated Financial Contributions (3-Year Period)
Solara group | €8,000,000–€15,000,000
Cloudium group | €19,000,000–€36,000,000
Combined Total | €27,000,000–€51,000,000

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1041-00003

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts