Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On June 5, 2017, Albany Molecular Research,
Inc., a Delaware corporation (“
AMRI
”), entered into an Agreement and Plan of Merger (the “
Merger
Agreement
”) with UIC Parent Corporation, a Delaware corporation (“
Parent
”), and UIC Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“
Merger Sub
” and, together with
Parent, the “
Acquiring Parties
”), pursuant to which, subject to the satisfaction or waiver of the conditions
therein, Merger Sub will merge with and into AMRI (the “
Merger
”), with AMRI surviving as a wholly-owned
subsidiary of Parent. Parent and Merger Sub were formed by (i) affiliates of Carlyle Partners VI, L.P. (“
Carlyle
”)
and (ii) GTCR Fund XI/A LP, GTCR Fund XI/C LP, and GTCR Co-Invest XI LP, collectively (“
GTCR
”). The Merger
Agreement was unanimously approved by the members of the board of directors of AMRI (the “
Board
”) and
by a special committee of the Board (the “
Special Committee
”), and the Board, upon the recommendation
of the Special Committee, unanimously resolved to recommend approval of the Merger Agreement to AMRI’s stockholders (the
“
Board Recommendation
”).
Subject to the terms of the Merger
Agreement, at the effective time of the Merger (the “
Effective Time
”), each share of AMRI common
stock issued and outstanding immediately prior to the Effective Time (other than shares owned by the Acquiring Parties or
AMRI and shares held by stockholders who have perfected their statutory rights of appraisal under Section 262 of the
Delaware General Corporation Law) will be automatically cancelled and converted into the right to receive $21.75 in cash,
without interest and less any applicable withholding taxes (the “
Merger Consideration
”).
As of the Effective Time, each AMRI stock
option, whether or not vested and exercisable, that is outstanding and unexercised immediately prior to the Effective Time and
which has an exercise price less than the Merger Consideration will be automatically converted into the right to receive an amount
in cash equal to the product of (x) the excess, if any, of the Merger Consideration over the per share exercise price of such
AMRI stock option and (y) the aggregate number of shares of AMRI common stock that were issuable upon exercise or settlement
of such AMRI stock option immediately prior to the Effective Time. As of the Effective Time, (i) each outstanding share of
AMRI restricted stock shall become fully vested and the restrictions with respect thereto shall lapse and each such share shall
be converted into the right to receive the Merger Consideration and shall be treated in the same manner as the other
shares of AMRI common stock, (ii) each outstanding AMRI time-based and performance-based restricted stock unit shall be cancelled
in exchange for the right to receive an amount in cash equal to the product of (X) the Merger Consideration and (Y) the
aggregate number of shares of AMRI common stock subject to such AMRI restricted stock unit award (with such performance-based restricted
stock unit deemed fully earned at the greater of 100% of the specified target award level and the percentage of the target award
level that would be earned based on the achievement of the applicable performance metric as of the Effective Time), and (iii) each
outstanding AMRI phantom stock award shall be converted into the right to receive an amount in cash equal to the product of (A) the
Merger Consideration and (B) the aggregate number of shares of AMRI common stock subject to such AMRI phantom stock award.
The Merger Agreement contains customary representations,
warranties and covenants of AMRI and the Acquiring Parties, including, among others, covenants by AMRI to conduct its business
in the ordinary course during the period between execution of the Merger Agreement and consummation of the Merger (the “
Closing
”)
and prohibiting AMRI from engaging in certain kinds of activities during such period without the consent of the Acquiring Parties.
The Merger Agreement also contains customary termination provisions for both AMRI and Parent, as discussed in more detail below.
The Merger is conditioned upon, among other
things, the approval of the Merger Agreement by the affirmative vote of holders of at least a majority of all outstanding shares
of common stock of AMRI (the “
Stockholder Approval
”) at a meeting of AMRI’s stockholders held for
such purpose (the “
Stockholder Meeting
”), the expiration of the applicable waiting periods (and any extension
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and applicable foreign antitrust laws and other customary
closing conditions.
AMRI will be subject to a
customary “no-shop” provision whereby, subject to certain exceptions, it will be prohibited from (i)
soliciting, initiating, knowingly facilitating, or knowingly encouraging any inquiries, proposals or offers that constitute,
or that could reasonably be expected to lead to, an alternative transaction (an “
Acquisition
Proposal
”), (ii) engaging in, continuing or otherwise participating in discussions or negotiations with third
parties regarding an Acquisition Proposal, or furnishing to third parties any information or providing any access to the
business, properties, assets or personnel of AMRI or any of its subsidiaries relating in any way to, or for the purpose of
encouraging or facilitating an Acquisition Proposal, or (iii) entering into any letter of intent or agreement with respect to
an Acquisition Proposal or requiring AMRI to abandon the Merger. The “no shop” provision is subject to a
customary “fiduciary out” provision that allows AMRI, under certain circumstances and in compliance with certain
obligations, to provide information and engage in discussions or negotiations with respect to an Acquisition Proposal that
constitutes, or could reasonably be expected to result in, a superior acquisition proposal (a “Superior
Proposal”) and, until approval of the Merger at the Stockholder Meeting, to accept a Superior Proposal and terminate
the Merger Agreement, subject to the payment of a termination fee in certain instances, as described below.
AMRI is required to pay a $35 million
termination fee (i) if Parent terminates the Merger Agreement because the Board withdraws or otherwise acts in a manner
adverse to the Board Recommendation (including by failing to include the Board Recommendation in the proxy statement or
reaffirm the Board Recommendation under certain circumstances or there is a material breach by AMRI of the “no
shop” or “fiduciary out” provisions noted above), (ii) if AMRI terminates the Merger Agreement because the
Board withdraws the Board Recommendation and, concurrently with such termination, enters into a Superior Proposal for at
least 50% of the assets or voting equity of AMRI, or (iii) if (x) the Merger Agreement is terminated by AMRI or Parent
because AMRI fails to obtain Stockholder Approval or by Parent for certain uncured breaches by AMRI or by either AMRI or
Parent if the end date under the Merger Agreement has occurred and AMRI has materially breached the Merger
Agreement, (y) an Acquisition Proposal was made under certain circumstances, and (z) a Superior Proposal for at least 50% of
the assets or voting equity of AMRI is consummated or entered into within twelve months after termination and is subsequently
consummated (whether during such twelve month period or thereafter). In no event would AMRI be required to pay a termination
fee on more than one occasion.
The Merger Agreement provides that
Parent shall pay to AMRI a $70 million termination fee (the “
Parent Termination Fee
”) if AMRI terminates
the Merger Agreement in certain circumstances due to certain breaches by the Acquiring Parties or if the Acquiring Parties
fail to consummate the Merger and all other conditions to Closing are satisfied or waived (other than those conditions that
would be and are capable of being satisfied at Closing).
Parent has obtained equity and debt financing
commitments to finance the transactions contemplated by the Merger Agreement, including the payment of the Merger Consideration,
payments in respect of equity awards, repayment of indebtedness and payment of all related fees and expenses. In addition, each
of Carlyle and GTCR has executed a limited guarantee in favor of AMRI to guarantee, subject to the limitations described therein,
the payment of the Parent Termination Fee and certain other expense obligations of the Acquiring Parties under the Merger Agreement.
The foregoing description of the Merger Agreement
and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by,
the full text of the Merger Agreement, which is attached to this Current Report on Form 8-K as Exhibit 2.1 and which is incorporated
herein by reference.
The Merger Agreement is attached to provide
investors with information regarding its terms and is not intended to provide any other factual information about AMRI, Parent
or Merger Sub. The assertions embodied in the representations and warranties the parties made in the Merger Agreement were
made for purposes of the Merger Agreement and are subject to qualifications and limitations agreed to by the respective parties
in connection with negotiating the terms of the Merger Agreement, including information contained in confidential disclosure schedules
that the parties exchanged in connection with signing the Merger Agreement. Accordingly, investors and security holders should
not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they
were only made as of a specific date and are modified in important part by the underlying disclosure schedules. 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 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 Merger Agreement, which subsequent information may or may not be fully reflected in AMRI’s or the Acquiring
Parties’ public disclosures.