|
Item 1.01
|
Entry Into a Material Definitive Agreement.
|
On August 3, 2017, Callaway Golf
Company (“Callaway”) entered into a definitive agreement to acquire travisMathew, LLC, a California limited liability company (“TravisMathew”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and
among Callaway, TravisMathew, OTP LLC, a California limited liability company and wholly-owned subsidiary of Callaway (“Merger Sub”), and John Kruger, an individual, in his capacity as the member representative. The Merger Agreement
provides that Callaway will acquire TravisMathew by way of a merger of Merger Sub with and into TravisMathew, with TravisMathew surviving as a wholly-owned subsidiary of Callaway (the “Merger”). The board of directors of Callaway has
unanimously approved the Merger, the Merger Agreement and the transactions contemplated thereby.
Under the terms of the Merger Agreement,
Callaway will pay an aggregate purchase price of $125.5 million in cash, subject to a working capital adjustment. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the
“Effective Time”), each unit (other than dissenting units, if any) of limited liability company interest of TravisMathew (each a “Company Unit”) will be automatically converted into the right to receive, subject to the terms of
the Merger Agreement, the cash merger consideration.
Callaway and TravisMathew agreed to customary representations, warranties and
covenants in the Merger Agreement. Subject to certain limitations, the holders of Company Units are required to indemnify Callaway for losses resulting from any breaches of TravisMathew’s representations, warranties and covenants made in the
Merger Agreement and certain other matters. To supplement the indemnification provided by the holders of Company Units, Callaway has obtained representation and warranty insurance.
During the period from the date of the Merger Agreement until the Effective Time, TravisMathew has agreed to conduct its business in the
ordinary course and in a manner consistent with past custom and practice and not to take certain actions prior to the Effective Time without the consent of Callaway.
The closing of the Merger is subject to customary conditions, including, among others, (i) the absence of any governmental order
restraining, enjoining or otherwise making illegal the consummation of the transactions contemplated by the Merger Agreement, (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, (iii) the accuracy of the parties’ representations and warranties contained in the Merger Agreement (subject to certain materiality qualifications), (iv) the parties’ compliance with the covenants and
agreements in the Merger Agreement in all material respects, and (v) the absence of any material adverse effect on TravisMathew. The Merger is expected to close in the third quarter of 2017.
The Merger Agreement contains customary termination rights for both Callaway and TravisMathew, including, among other bases for termination,
if the Merger is not consummated within 90 days following the date of the Merger Agreement.
The foregoing description of the Merger
Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form
8-K
and is
incorporated herein by reference.
The Merger Agreement has been attached to this Current Report on Form
8-K
to provide investors with information regarding its terms. The Merger Agreement is not intended to provide any other factual information about Callaway, TravisMathew or any of their respective subsidiaries
or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates set forth therein, were solely for the benefit of the parties to the Merger
Agreement, may be subject to important qualifications and limitations agreed upon by the parties for the purposes of allocating contractual risk among such parties to the Merger Agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to such contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of
the actual state of facts or condition of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after
the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Callaway’s public disclosures.