Pure Storage Proposed Private Offering of $450 Million of Convertible Senior Notes

Pure Storage, Inc. intends to offer, subject to market conditions and other factors, $450 million aggregate principal amount of convertible senior notes due 2023 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The company also intends to grant the initial purchasers of the notes an option to purchase up to an additional $67.5 million principal amount of notes, solely to cover over-allotments.

The notes will be general unsecured obligations and will accrue interest payable semiannually in arrears. The notes will be convertible into cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at company’s election. The interest rate, initial conversion rate and other terms of the notes will be determined at the time of pricing of the offering through negotiation with the initial purchasers.

Pure Storage intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions described below. It intends to use the remainder of the net proceeds for general corporate purposes and to repurchase up to $20 million of shares of its Class A common stock.

It expects to repurchase such shares in privately negotiated transactions at a purchase price equal to the closing price per share of its Class A common stock on the New York Stock Exchange on the date of the pricing of the offering. These repurchases of Class A common stock could increase (or reduce the size of any decrease in) the market price of firm’s Class A common stock or the notes prior to or concurrently with the pricing of the notes, and could result in a higher effective conversion price for the notes. Pure Storage may also use a portion of the net proceeds from this offing for the acquisition of, or investment in, technologies, solutions or businesses that complement its business, although it has no commitments or agreements to enter into any such acquisitions or investments at this time.

In connection with the pricing of the notes, Pure Storage expects to enter into capped call transactions with one or more of the initial purchasers and/or their respective affiliates or other financial institutions (the option counterparties). The capped call transactions are expected generally to reduce potential dilution to Class A common stock upon any conversion of notes andor offset any cash payments Pure Storage is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their over-allotment option, the company expects to enter into additional capped call transactions with the option counterparties.

In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to Class A common stock concurrently with or shortly after the pricing of the notes and/or purchase shares of Class A common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Class A common stock or the notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Class A common stock and/or purchasing or selling Class A common stock or other securities of Pure Storage in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes). This activity could also cause or avoid an increase or a decrease in the market price of Class A common stock or the notes, which could affect a noteholder’s ability to convert its notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the number of shares and value of the consideration that a noteholder will receive upon conversion of its notes.

Neither the notes, nor any shares of Class A common stock issuable upon conversion of the notes, have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.