Item 1.01
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Entry into a Material Definitive Agreement.
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On December 13, 2018, Belmond Ltd., an exempted company incorporated in Bermuda (the “
Company
”), entered into an Agreement and Plan of Merger (the “
Merger Agreement
”) with LVMH Moët Hennessy - Louis Vuitton SE, a corporation
organized under the laws of France (“
LVMH
”), Palladio Overseas Holding Limited, a company organized under the laws of England and Wales and an indirect, wholly-owned
subsidiary of LVMH (“
Holding
”), and Fenice Ltd., an exempted company organized under the laws of Bermuda and a wholly-owned subsidiary of Holding (“
Merger Sub
”) pursuant to which LVMH will acquire the Company.
The Merger Agreement
The Merger Agreement provides that, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into the
Company in accordance with the Bermuda Companies Act (the “
Merger
”). At the effective time of the Merger (the “
Effective Time
”), the separate corporate existence of Merger Sub will thereupon cease and the Company will be the surviving company in the Merger (the “
Surviving
Company
”) and become a subsidiary of Holding.
Under the Merger Agreement, at the Effective Time, each Class A common share, par value $0.01 per share, of the Company (the “
Class A Shares
”) issued and outstanding immediately prior to the Effective Time (other than Class A Shares held by the Company as treasury stock or that are owned by LVMH,
Holding or Merger Sub or by any subsidiary of the Company) will be converted into the right to receive $25.00 per Class A Share in cash, net of applicable withholding taxes and without interest (the “
Per Share Merger Consideration
”). Any Class A Shares that are owned by shareholders who have complied with the requirements under the Bermuda Companies Act with respect to their rights to require appraisal of
their Class A Shares and have not withdrawn or waived such right shall also be converted into the right to receive the Per Share Merger Consideration, together with any greater amount in accordance with the appraisal procedures under the Bermuda
Companies Act. All of the Company’s Class B common shares, par value $0.01 per share (“
Class B Shares
”), will remain outstanding as Class B shares, par value $0.01 per
share, of the Surviving Company and be unaffected by the Merger.
At the Effective Time, (i) all Company stock options outstanding immediately prior to the Effective Time will be cancelled in exchange
for the right to receive a lump sum cash payment (without interest and less applicable withholding taxes) in an amount equal to the excess of the Per Share Merger Consideration over the per share exercise price of the option,
multiplied by
the number of Class A Shares underlying the option, (ii) all Company deferred share awards and Company restricted share awards outstanding
immediately prior to the Effective Time will be cancelled in exchange for the right to receive a lump sum cash payment (without interest and less applicable withholding taxes) in an amount equal to the Per Share Merger Consideration,
multiplied by
the number of Class A Shares underlying the award and (iii) all Company performance share awards outstanding immediately prior to the Effective
Time will be cancelled in exchange for the right to receive a lump sum cash payment (without interest and less applicable withholding taxes) in an amount equal to the Per Share Merger Consideration,
multiplied by
the number of Class A Shares subject to the performance share award calculated based on the target level of achievement.
The completion of the Merger is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement,
including: (i) the approval of the Merger Agreement by three-fourths (75%) of the votes cast by the Company’s Class A and Class B shareholders, voting together as a class, at the Company’s shareholder meeting, (ii) the receipt of antitrust
approvals in certain foreign jurisdictions and (iii) the absence of any law or governmental order prohibiting the Merger. The parties’ respective obligations to complete the Merger are also subject to certain other customary conditions, including,
among other things, the accuracy of their representations and warranties in the Merger Agreement (including, in the case of the Company, no material adverse effect on the Company having occurred since the signing of the Merger Agreement), and the
performance of their respective obligations.
The Company has made customary representations and warranties in the Merger Agreement. The Merger Agreement also contains customary
pre-closing covenants, including that the Company operate its businesses in the ordinary course consistent with past practice and refrain from taking certain actions without LVMH’s consent. The Company and LVMH have each agreed to use their best
efforts to consummate the Merger, including using best efforts to obtain all required regulatory approvals.
The Merger Agreement also contains covenants by the Company not to participate in any discussions or negotiations with any person making
an inquiry or proposal for an alternative transaction, and requiring the Company’s board of directors to recommend that the Company’s shareholders vote to approve the Merger Agreement at the Company’s shareholder meeting, in each case subject to
certain exceptions. The board of directors of the Company may change its recommendation in certain circumstances specified in the Merger Agreement in response to an unsolicited proposal for an alternative transaction or following an intervening
event, and in the case of an unsolicited superior proposal the Company would have the right to terminate the Merger Agreement, provided that it pay the termination fee described below.
The Merger Agreement contains certain termination rights for the Company and LVMH, including, (i) in the event the Merger is not
completed by October 31, 2019 (subject to each party having the right to extend to December 31, 2019 in the event that the required regulatory approvals have not been obtained), (ii) in the event the Company’s shareholders do not approve the Merger
at the Company’s shareholder meeting, (iii) the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and (iv) the right of LVMH to terminate the Merger Agreement if the Company’s
board of directors changes its recommendation with respect to the Merger.
The Merger Agreement also requires the Company to pay a termination fee of $92,261,000 in the event the Merger Agreement is terminated
in certain circumstances, including if the Company’s board of directors changes its recommendation prior to the shareholder meeting or the Company accepts a superior proposal. The Company will also be required to pay a termination fee if a
competing proposal has been publicly announced or delivered to the board of directors (and not withdrawn) and the Merger Agreement is terminated for certain reasons, including a material breach by the Company or the failure of the Company’s
shareholders to approve the Merger, if the Company enters into an acquisition agreement for or otherwise consummates a competing proposal within 12 months following termination.
Support Agreement
In connection with the Company’s entry into the Merger Agreement, Belmond Holdings 1 Ltd. (“
Belmond Holdings
”), a wholly owned subsidiary of the Company and owner of all of the outstanding Class B Shares entered into a Support Agreement, dated as of December 13, 2018, with LVMH (the “
Support Agreement
”). Under the Support Agreement, Belmond Holdings has agreed to attend the Company’s shareholder meeting and to vote, or cause to be voted, all of the Class B
Shares in favor of the approval of the Merger Agreement at such meeting. The Support Agreement will terminate upon any termination of the Merger Agreement, or if the Company’s board of directors changes its recommendation in favor of the Merger
Agreement.
Rights Agreement Amendment
In connection with the Company’s entry into the Merger Agreement, the Company and Computershare Trust Company N.A. (“
Computershare
”) entered into Amendment No. 3 to the Amended and Restated Rights Agreement, dated December 13, 2018 (the “
Rights Agreement Amendment
”), amending the Rights Agreement, dated June 1, 2000, as amended and restated as of April 12, 2007, by and between the Company (f/k/a Orient-Express Hotels Ltd.) and Computershare, as rights agent
(as amended, the “
Rights Agreement
”). The effect of the Rights Agreement Amendment is to permit the Merger and the other transactions contemplated by the Merger Agreement
and the Support Agreement to occur without triggering any distribution or other adverse event to LVMH or its affiliates under the Rights Agreement. In particular, (i) none of LVMH, Holding, Merger Sub or any of their respective affiliates or
associates will become an Acquiring Person (as defined in the Rights Agreement) and (ii) neither a Shares Acquisition Date (as defined in the Rights Agreement) or a Distribution Date (as defined in the Rights Agreement) will occur as a result of
the announcement, approval, execution, delivery and/or performance of the Merger Agreement or the Support Agreement or the consummation of any of the transactions contemplated thereby, including the Merger. Additionally, the Rights Agreement
Amendment provides that the Rights (as defined in the Rights Agreement) will expire and cease to be exercisable immediately prior to, but contingent on the occurrence of, the Effective Time. In the event that the Merger Agreement is terminated in
accordance with its terms, the Rights Agreement Amendment will be of no further force or effect and the Rights Agreement shall remain the same as it existed immediately prior to the execution of the Rights Amendment, subject to ministerial
exceptions.
Additional Information
The foregoing descriptions of the Merger Agreement, the Support Agreement, the Rights Agreement Amendment and the transactions
contemplated thereby, including the Merger, do not purport to be complete and are qualified in their entirety by the full text thereof, which are attached hereto as Exhibit 2.1, Exhibit 10.1 and Exhibit 4.1, respectively, to this Current Report on
Form 8-K and are incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, LVMH or any other
party to the Merger Agreement or any related agreement. In particular, the representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of such agreement and as of specific dates, were
for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the parties (including qualifications contained in confidential disclosures, some of which have been made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and
security holders. Investors and security holders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the
actual state of facts or condition of any party to the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, and unless required by applicable
law the Company undertakes no obligation any such information.