Item 1.01 Entry into a Material Definitive Agreement
On May 31, 2017, OSI Systems, Inc. (the Company) and its subsidiary OSI (Holdings) Company Limited, a UK limited company (collectively, the Purchaser), entered into an Equity Purchase Agreement (the Purchase Agreement), with Smiths Detection, LLC, a Delaware limited liability company, Smiths Detection United Kingdom Limited, a UK limited company, and Smiths Detection (Australia) Pty Ltd, an Australian company (collectively, the Sellers), and Smiths Detection Group Limited, a UK limited company, pursuant to which Purchaser has agreed to acquire the global explosive trace detection business that Seller Parent (as defined in the Purchase Agreement) acquired from Morpho USA, Inc. in April 2017.
The Purchase Agreement provides for the payment of cash consideration to the Sellers of $75.5 million in cash, subject to certain adjustments as of the closing date, for 100% of the equity interests of each of MD US Trace Holding, LLC, a Delaware limited liability company, MD UK Trace Holding Limited, a UK limited company, and MD Australia Trace Holding Pty Ltd, an Australian company (collectively, the Target Companies).
The completion of the transaction is subject to the satisfaction of customary conditions, including approval by the DOJ, EC and Portuguese antitrust authority. The Company intends to fund the transaction with a combination of cash on hand and money borrowed under the Companys existing revolving credit facility.
The Purchase Agreement contains representations, warranties and covenants of the Purchaser and the Sellers that are customary for a transaction of this nature. The Sellers and the Purchaser have a right to terminate the Purchase Agreement in the event of a judgment of any governmental authority in the United States or Portugal or of the European Commission restraining, enjoining, declining to approve or otherwise prohibiting the transaction.
The foregoing descriptions of the Purchase Agreement and the transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The Purchase Agreement, which has been included to provide investors with information regarding its terms and is not intended to provide any other factual information about the Purchaser, the Sellers, or the Target Companies, contains representations and warranties of each of the Purchaser and the Sellers. The assertions embodied in those representations and warranties were made for purposes of the Purchase Agreement and are subject to important qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Purchase Agreement, including information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Purchase Agreement. In addition, certain representations and warranties may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or which may have been used for purposes of allocating risk between the respective parties rather than establishing matters of fact. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures. Investors and security holders are not third-party beneficiaries under the Purchase Agreement.