Item 1.01. Entry Into a Material Definitive Agreement.
On February 16, 2017, LMI Aerospace, Inc. (the Company) entered into an Agreement and Plan of Merger (the Merger
Agreement) with Sonaca S.A., a limited liability company validly existing under the laws of Belgium (the Parent), Sonaca USA Inc., a Delaware corporation and direct, wholly-owned subsidiary of Parent (Intermediate Co),
and Luminance Merger Sub, Inc., a Missouri corporation and an indirect, wholly-owned subsidiary of the Parent (the Sub, and collectively with Parent and Intermediate Co, the Parent Entities), relating to the proposed
acquisition of the Company by Parent.
The Merger Agreement provides that, subject to the terms and conditions thereof, Sub will be merged
with and into the Company (the Merger) with the Company continuing as the surviving corporation in the Merger (the Surviving Corporation). At the effective time of the Merger (the Effective Time) each outstanding
share of common stock of the Company (other than shares owned by the Company or the Parent Entities, and shares whose holders seek appraisal and comply with all related statutory requirements of the General and Business Corporation Law of Missouri)
will cease to be outstanding and will be converted into the right to receive $14.00 in cash, without interest and subject to any applicable tax withholding (the Merger Consideration).
Upon the consummation of the Merger, (a) each share of restricted common stock of the Company will be fully vested and will be converted
into the right to receive the Merger Consideration, and (b) each restricted stock unit of the Company will be fully vested and settled in one share of common stock of the Company, and will be converted into the right to receive the Merger
Consideration.
Upon recommendation of the committee of the board of directors of the Company (the Board) formed to consider
the proposed transaction, all independent members of the Board approved, and declared to be advisable, fair to and in the best interests of the Companys shareholders, the Merger Agreement and the transactions contemplated thereby, including
the Merger. Shareholders of the Company will be asked to vote on the approval of the Merger Agreement at a special shareholders meeting that will be held on a date to be announced. The closing of the Merger is subject to the approval of the
Merger Agreement by the affirmative vote of the holders of at least
two-thirds
of the outstanding shares of common stock of the Company (the Shareholder Approval). Consummation of the Merger is not
subject to a financing condition.
In addition to the Shareholder Approval condition, consummation of the Merger is subject to various
customary conditions, including (a) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (b) clearance by the Committee on Foreign Investment in the United States
and by the Directorate of Defense Trade Controls under the International Traffic in Arms Regulations, (c) the absence of any order, injunction or law preventing or prohibiting the consummation of the Merger, (d) the accuracy of the
representations and warranties contained in the Merger Agreement (subject to certain materiality qualifiers), (e) compliance with covenants and agreements in the Merger Agreement in all material respects, and (f) the absence of a material
adverse effect on the Company.
The Merger Agreement contains a
go-shop
provision
that, in general, allows the Company to initiate, solicit and encourage, and engage in discussions or negotiations with respect to, an acquisition proposal for the
30-day
period after execution of the Merger
Agreement. The Company may continue discussions after the
go-shop
period with any party who made an acquisition proposal during the
go-shop
period that the Company
determines in good faith is or could reasonably be expected to result in a superior proposal.
Following the expiration of the
go-shop
period, the Company will be subject to a customary
no-shop
provision whereby, subject to certain exceptions, it will generally be prohibited from
(a) initiating, soliciting or knowingly encouraging, or engaging in discussions or negotiations with respect to, or providing
non-public
information in connection with, any acquisition proposal,
(b) terminating, waiving, amending or releasing any standstill or similar obligation and (c) withholding, withdrawing, amending or modifying in a manner adverse to the Parent Entities the recommendation of the Board that the Companys
shareholders adopt the Merger Agreement. The no shop provision is subject to a customary fiduciary out provision that allows the Company, under certain
2
circumstances and in compliance with certain obligations, to provide
non-public
information and engage in discussions and negotiations with respect to an
acquisition proposal that would reasonably be expected to lead to a superior proposal and, both during and after the
go-shop
period until Shareholder Approval is obtained, to terminate the Merger Agreement in
order to accept a superior proposal.
The Merger Agreement contains certain termination rights for both the Company and the Parent
Entities, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company may be required to pay the Parent a termination fee of either $10 million or $15 million, depending upon
the reason for and timing of the termination, and any costs of collection. In addition, subject to certain exceptions and limitations, either party may terminate the Merger Agreement if the Merger is not consummated by August 16, 2017, subject
to possible extension until September 29, 2017 to allow for the completion of certain regulatory approvals or if the Shareholder Approval has not yet been obtained.
The Company has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants
(a) to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time, (b) not to engage in certain types of transactions during this period unless agreed to in writing by
Parent, (c) to convene and hold a meeting of its shareholders for the purpose of obtaining the Shareholder Approval, and (d) subject to certain exceptions, not to withdraw, qualify or modify or publicly propose to withdraw, qualify or
modify in any manner the recommendation of the Board that the Companys shareholders approve the adoption of the Merger Agreement.
The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to
provide any other factual information about the Company, Parent or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger
Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the
purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts (such disclosures include information that has been included in the Companys public disclosures, as well as
additional
non-public
information), and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries under the Merger Agreement (except for the right of holders of common stock of the Company to
receive the Merger Consideration from and after the consummation of the Merger) and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the
parties thereto or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover,
information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form
8-K
and is
incorporated herein by reference thereto. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement