PENDING ACQUISITION OF THE COMPANY
|9 Months Ended|
Sep. 30, 2019
|Business Combinations [Abstract]|
|PENDING ACQUISITION OF THE COMPANY||
PENDING ACQUISITION OF THE COMPANY
On September 22, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Argonaut Intermediate, Inc., a Delaware corporation (“Parent”), and Argonaut Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent (“Merger Sub”), providing for the acquisition of the Company by Parent. Pursuant to the terms of the Merger Agreement, Merger Sub will, at the closing of the transactions contemplated by the Merger Agreement, merge with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent (the “Merger”).
Pursuant to the Merger Agreement, each share of common stock of the Company, par value $0.01 per share (a “Share”) other than Cancelled Shares as defined in the Merger Agreement and Dissenting Shares as defined in the Merger Agreement, issued and outstanding immediately prior to the effective time of the Merger, and each restricted stock unit award share including unvested awards and each restricted stock award share including unvested awards, shall be automatically converted into the right to receive $3.00 in cash, net of applicable tax withholding, without interest, payable to the holder thereof in the manner provided in the Merger Agreement.
The consummation of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver, if permitted by law, of certain customary closing conditions, including, without limitation, (i) the absence of any law or order whether temporary, preliminary, or permanent enacted, entered, promulgated, or enforced by any governmental entity which prohibits, restrains, or enjoins the consummation of the Merger, and (ii) obtaining the affirmative vote, in person or by proxy of the holders of a majority of the outstanding Shares entitled to vote thereon in favor of the adoption of the Merger Agreement. The consummation of the Merger is not subject to any financing condition.
The Merger Agreement contains customary representations and warranties of the Company, Parent and Merger Sub. The Merger Agreement also contains customary covenants and agreements, including with respect to the operation of the business of the Company and its subsidiaries between signing and closing, governmental filings and approvals, public disclosures and similar matters.
The Merger Agreement provides that the Merger Agreement may be terminated by the Company or Parent under certain circumstances, and in certain specified circumstances upon termination of the Merger Agreement one party may be required to pay the other a termination fee.
Upon termination of the Merger Agreement in accordance with its terms, under specified circumstances, including (i) by the Company to accept a Superior Proposal, (ii) by Parent upon an Adverse Company Board Recommendation Change, or (iii) in certain other specified circumstances where the Company enters into an alternative acquisition within twelve (12) months after termination of the Merger Agreement, the Company will be required to pay Parent a fee of $2,400,000 (the “Company Termination Fee”). In the event the Merger Agreement is terminated by Parent (i) in response to an Adverse Company Board Recommendation Change or (ii) because the Company commits a Willful Breach, as defined in the Merger Agreement, of any of its obligations under the non-solicitation provisions of the Merger Agreement, the Company will be required to pay Parent an amount equal to that required to reimburse Parent, Merger Sub, and their respective affiliates for all reasonable and documented out-of-pocket fees and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby, up to $800,000.
The Merger Agreement also provides that Parent may be required to pay the Company a fee of $3,200,000 if the Company terminates the Merger Agreement because (i) Parent or Merger Sub has breached or failed to perform any of its representations, warranties, covenants, or agreements under the Merger Agreement such that a closing condition is not satisfied (subject to notice and cure and other customary exceptions) or (ii) Parent fails to close the Merger when required to do so under the Merger Agreement.
The Company expects to incur significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger. Additional information about the Merger Agreement is set forth in the Company’s Current Report on Form 8-K filed with the SEC on September 23, 2019.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef