Item 1.01 Entry into a Material Definitive Agreement.
On May 24, 2017, Vulcan Construction Materials, LLC (
Buyer
), a subsidiary of Vulcan Materials Company (
Vulcan
), entered into a Membership Interest Purchase Agreement (the
Purchase Agreement
), with Aggregates USA Holdings Sub, LLC (
Seller
), Aggregates USA, LLC (the
Company
), for certain limited purposes, SPO Partners II, L.P. (
Seller Parent
), and for certain limited purposes, Vulcan, pursuant to which, subject to the satisfaction or waiver of certain conditions, Buyer will purchase from Seller all of the issued and outstanding equity interests of the Company (the
Transaction
). The purchase price for the Transaction is $900 million in cash, adjusted to reflect cash, indebtedness, working capital and transaction expenses of the Company as of the closing date.
The completion of the Transaction is subject to customary closing conditions, including the absence of a material adverse effect on the Company, the absence of any injunction or other legal prohibition, accuracy of the parties representations, compliance by the parties with covenants, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Transaction is not subject to approval by the stockholders of Vulcan or to any financing contingency.
The Purchase Agreement contains representations, warranties and covenants of Buyer, Seller and the Company customary for a transaction of this nature. The representations and warranties of the parties do not survive the closing of the transaction, other than certain representations regarding corporate authority, capitalization, ownership of shares being acquired and brokers fees (which survive indefinitely following the closing of the transaction). The covenants of the parties to be performed prior to the closing of the transaction shall survive for 90 days following the closing, and the covenants to be performed after the closing of the transaction shall survive pursuant to their terms. Both Buyer and Seller have agreed to indemnify the other party for losses arising from certain breaches of the Purchase Agreement and for certain other liabilities, subject to certain limitations.
The Seller has agreed, among other covenants, to cause the Company and its subsidiaries to operate their businesses in the ordinary course consistent with past practice during the period between the execution of the Purchase Agreement and the closing of the Transaction, and not to engage in specified types of actions during this period unless consented to by the Buyer.
The Purchase Agreement provides Buyer, Seller and the Company with certain termination rights, including if the closing has not occurred on or prior to the date that is six months from the date of the Purchase Agreement, except that this date may be extended by Buyer, Seller or the Company for up to an additional three months in circumstances where competition and other regulatory approvals have not yet been obtained. A termination of the Purchase Agreement under certain specified conditions will entitle the Seller to receive from the Buyer a reverse termination fee.
The Purchase Agreement provides that Vulcan will guarantee the performance of Buyers obligations and that Seller Parent will guarantee the performance of Sellers obligations pursuant to the Purchase Agreement.
A copy of the Purchase Agreement is attached as Exhibit 2.1 to this current report on Form 8-K and is incorporated herein by reference. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement.
The representations and warranties and covenants set forth in the Purchase Agreement have been made only for the purposes of the Purchase Agreement and solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including