Item 1.01 Entry into a Material Definitive Agreement.
On November 3, 2016, Metaldyne Performance Group Inc. (the
Company
), American Axle & Manufacturing Holdings,
Inc. (
American Axle
) and Alpha SPV I, Inc., a wholly-owned subsidiary of American Axle (
Merger Sub
), entered into an Agreement and Plan of Merger (the
Merger Agreement
) pursuant to which
American Axle will acquire the Company.
In accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub
will merge with and into the Company (the
Merger
), with the Company surviving the Merger and continuing as a wholly-owned subsidiary of American Axle. Upon consummation of the transactions contemplated by the Merger Agreement,
each outstanding share of common stock, par value $0.001 per share, of the Company (the
Company Common Stock
) will automatically be converted into the right to receive (i) $13.50 per share in cash (without interest) and
(ii) 0.5 (the
Exchange Ratio
) shares of common stock, par value $0.01 per share, of American Axle (the
American Axle Common Stock
and the consideration to be received in (i) and (ii), the
Merger Consideration
). In addition, all Company stock options, restricted stock awards and restricted stock units outstanding as of immediately prior to the effective time of the Merger will be accelerated in full immediately
prior to the Merger. Holders of Company stock options will receive an amount in cash equal to the Merger Consideration less the strike price on the applicable Company stock option (calculated based on the aggregate number of shares of Company Common
Stock that were issuable upon exercise of such Company Stock Option immediately prior to the Merger). Holders of restricted stock will receive the Merger Consideration for each share of restricted stock in the same manner as holders of outstanding
shares of Company Common Stock and holders of restricted stock units will receive the applicable Merger Consideration in an amount equal to the number of shares of Company Common Stock underlying the cancelled restricted stock unit.
The Company, American Axle and Merger Sub each made certain representations, warranties and covenants in the Merger Agreement, including,
among other things, covenants by the Company and American Axle to conduct their respective businesses in the ordinary course during the interim period between the execution of the Merger Agreement and consummation of the Merger and not to take
certain actions prior to the closing of the Merger without the prior approval of the other party.
The Company and American Axle have each
agreed to recommend that their respective stockholders approve the transaction and not to (a) solicit or encourage any inquiries with respect to any proposals relating to an alternative acquisition transaction, (b) subject to certain
exceptions, enter into any agreements with respect to any alternative acquisition transaction or (c) subject to certain exceptions, enter into discussions or negotiations concerning, or to provide confidential information in connection with,
any proposals for any alternative acquisition transaction. Prior to the adoption of the Merger Agreement and approval of the related transactions by their respective stockholders, however, (x) each party may provide information to, or engage in
negotiations or discussions with, any third party making a bona fide, unsolicited proposal with respect to certain alternative acquisition transactions, provided such partys board of directors (the
Board
) has determined that
the failure to do so would be inconsistent with its fiduciary duties and (y) the Board may withhold, withdraw or modify its recommendation, approve or recommend any alternative acquisition proposal, or terminate the Merger Agreement to enter
into an Acquisition Agreement (as defined in the Merger Agreement) providing for a Superior Proposal (as defined in the Merger Agreement), subject to each party complying with notice and other specified conditions set forth in the Merger Agreement,
including giving the other party the opportunity to negotiate proposed modifications to the terms and conditions of the Merger Agreement and, in the case of any such termination, paying the Termination Fee or Parent Termination Fee (each as defined
below) concurrently with such termination.
Consummation of the Merger is subject to various conditions, including, among others, adoption
of the Merger Agreement and approval of the transactions contemplated thereby by the requisite vote of the Companys stockholders (the
Merger Approval
); approval of the issuance of American Axle Common Stock to the
Companys stockholders in the Merger by the requisite vote of the American Axle stockholders; the effectiveness of American Axles registration statement registering the American Axle Common Stock to be issued to the Companys
stockholders pursuant to the Merger Agreement and approval of such shares for listing on the New York Stock Exchange; expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt
of certain other foreign regulatory approvals as set forth in the Merger Agreement; and the execution
of a stockholders agreement between American Axle and ASP MD Investco LP (
ASP Investco
), the Companys largest stockholder. The obligation of each party to
consummate the Merger is also conditioned upon the other partys representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations
under the Merger Agreement.
The parties have agreed to use their respective reasonable best efforts to obtain all necessary regulatory
approvals for the Merger. In addition, subject to the consummation of the Merger, the parties have agreed that American Axle will be required to divest assets of the Company that generated total worldwide revenues of up to $150 million during the
12-month period ended September 30, 2016, if necessary, in order to obtain required regulatory approvals.
The Merger Agreement also
provides for certain mutual termination rights of the Company and American Axle, including the right of either party to terminate the Merger Agreement if the Merger has not been consummated prior to August 3, 2017 (as such date may be extended
for 90 additional days pursuant to the Merger Agreement if certain required regulatory approvals have not been received, the
Outside Date
). Either party may also terminate the Merger Agreement if the Merger Approval has not been
obtained at a duly convened meeting of the Companys stockholders held therefor, the Share Issuance is not approved at a duly convened meeting of American Axles stockholders held therefor, or a legal order is in effect enjoining or
otherwise prohibiting consummation of the Merger. In addition, the Company may terminate the Merger Agreement if American Axle materially breaches certain obligations with respect to not soliciting alternative transaction proposals or fails to
comply with the procedures for changing its recommendation, if American Axles board of directors changes its recommendation that the American Axle stockholders approve the Share Issuance, if American Axle adopts, approves, recommends or enters
into an agreement with respect to an alternative transaction, or, in certain circumstances, if American Axle fails to publicly recommend the transactions upon the Companys request. American Axle has reciprocal termination rights with respect
to the Company. In addition, prior to the receipt of the required approvals from their respective stockholders and conditioned on their payment of the applicable termination fee described below, the Company and American Axle each have the right to
terminate the Merger Agreement in order to enter into a transaction with respect to a Superior Proposal.
If the Merger Agreement is
terminated (i) by American Axle as a result of the Companys board of directors changing its recommendation that the Companys stockholders approve the transactions contemplated by the Merger Agreement or as a result of the Company
having intentionally and materially breached its obligations with respect to the non-solicitation of alternative transaction proposals, or (ii) by the Company, prior to receipt of the Merger Approval, in order to enter into a definitive written
agreement with respect to a Superior Proposal, then the Company shall be obligated to pay (as a condition to the effectiveness of such termination in the case of termination for a Superior Proposal) American Axle a fee equal to $50.897 million (the
Termination Fee
). American Axle will be required to pay the Company the same Termination Fee if the Merger Agreement is terminated by the Company as a result of the American Axle board of directors changing its recommendation that
the American Axle stockholders approve the Share Issuance or as a result of American Axle having intentionally and materially breached its obligations with respect to the non-solicitation of alternative transactions.
In addition, American Axle will be required to pay to the Company a $61.859 million termination fee if American Axle terminates the Merger
Agreement prior to its stockholders having approved the Share Issuance in order to enter into a definitive written agreement with respect to a Superior Proposal. American Axle will also be required to pay to the Company a $101.794 million
termination fee if either the Company or American Axle terminates the Merger Agreement because the Merger has not been consummated prior to the Outside Date due to the parties failure to obtain the required regulatory approvals or if the
Company terminates the Merger Agreement because American Axle fails to consummate the transactions contemplated by the Merger Agreement following the satisfaction of all closing conditions.
Further, the Company will be required to pay the Termination Fee if the Merger Agreement is terminated (i) by American Axle or the
Company because the Merger Approval was not obtained at the meeting of the Companys stockholders held for the purpose thereof or because the Merger was not consummated by the Outside Date and, at the time of termination, the Merger Approval
had not been obtained or (ii) by American Axle because the Company has committed an uncured or incurable breach of any of its representations, warranties or covenants contained in the Merger Agreement that would cause any of the conditions to
the closing of
the transaction not to be satisfied, prior to such termination a competing proposal for the Company had been publicly announced and not withdrawn, and within 12 months after the date of
termination the Company consummates an alternative transaction or enters into an agreement with respect to an alternative transaction that is subsequently consummated. American Axle is similarly required to pay the Termination Fee to the Company
under equivalent conditions.
Under the Merger Agreement, the Company is also required to reimburse American Axles expenses in an
amount up to $15 million if the Merger Agreement is terminated because the Companys stockholders do not approve the transactions contemplated by the Merger Agreement or as a result of a breach by the Company of its representations, warranties
or covenants under the Merger Agreement. American Axle has a reciprocal obligation to reimburse up to $15 million of the Companys expenses if the Merger Agreement is terminated because American Axles stockholders do not approve the Share
Issuance or as a result of a breach by American Axle of its representations, warranties or covenants under the Merger Agreement.
In
connection with the transactions contemplated by the Merger Agreement, ASP Investco, the beneficial owner of approximately 76% of the outstanding shares of Company Common Stock, entered into a voting agreement with American Axle (the
Voting
Agreement
) whereby such stockholder has agreed to vote shares of its Company Common Stock representing approximately 38% of the issued and outstanding shares of Company Common Stock in favor of the adoption of the Merger Agreement and the
transactions contemplated thereby and to vote its remaining shares of Company Common Stock proportionately with the vote of the Companys other stockholders with respect to the adoption of the Merger Agreement.
In addition, in connection with the consummation of the transactions contemplated by the Merger Agreement, American Axle and ASP Investco will
enter into a stockholders agreement providing ASP Investco with certain governance and registration rights with respect to its shares of American Axle Common Stock acquired in the Merger. These rights include the right to appoint three
directors to the American Axle board of directors upon the consummation of the Merger (and American Axle has agreed to increase the size of the American Axle board of directors by three members in connection therewith). ASP Investco and certain of
its affiliates will be subject to certain standstill restrictions, including restrictions on acquiring additional shares of American Axle Common Stock (other than in connection with the preemptive rights granted to ASP Investco under the
stockholders agreement) and on taking any hostile actions with respect to American Axle, including seeking to acquire control of American Axle, soliciting proxies against the recommendation of the American Axle board and engaging in a proxy
contest. With the exception of stockholder votes in connection with certain extraordinary transactions (including merger transactions), ASP Investco has also agreed to vote its shares of American Axle Common Stock as recommended by the American Axle
board of directors (or, with respect to matters other than the election of directors, compensation proposals and the engagement of accountants, in proportion to the vote of American Axles other stockholders).
The foregoing description of the Merger Agreement and the Voting Agreement and the transactions contemplated thereby do not purport to be
complete and are qualified in their entirety by reference to the full text of the Merger Agreement and Voting Agreement, which are filed as
Exhibit 2.1
and
Exhibit 2.2
, respectively, hereto and are incorporated by reference into this
Item 1.01.
The Merger Agreement and the above description of the Merger Agreement has been included to provide investors and
security holders with information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about the Company, American Axle or Merger Sub or their respective subsidiaries and affiliates. The Merger
Agreement contains representation and warranties of the Company and American Axle. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure letters that the parties have exchanged in
connection with signing the Merger Agreement as of a specific date. Moreover, the representations and warranties in the Merger Agreement were made solely for the benefit of the other parties to the Merger Agreement and were used for the purpose of
allocating risk among the respective parties. Therefore, investors and security holders should not treat them as categorical statements of fact. Moreover, these representations and warranties may apply standards of materiality in a way that is
different from what may be material to investors and were made only as of the date of the Merger Agreement or such other date or dates as may be specified in the Merger Agreement and are subject to more recent developments. Accordingly, investors
and security holders should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about the Company and American Axle and their subsidiaries that the respective companies
include in reports and statements they file with the U.S. Securities and Exchange Commission.