Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement
On February 22, 2018, General Mills, Inc. (General Mills) entered into an Agreement and Plan of Merger (the Merger Agreement) with
Blue Buffalo Pet Products, Inc., a Delaware corporation (Blue Buffalo) and Bravo Merger Corp., a Delaware corporation and a wholly owned subsidiary of General Mills (Merger Sub). Pursuant to the Merger Agreement, subject to
the satisfaction or waiver of specified conditions, Merger Sub will merge with and into Blue Buffalo (the Merger), with Blue Buffalo surviving the Merger as a wholly owned subsidiary of General Mills.
Pursuant to the Merger Agreement, at the effective time of the Merger (the Effective Time), each issued and outstanding share of common stock of
Blue Buffalo, par value $0.01 per share (the Common Stock), will be converted into the right to receive $40.00 in cash, without interest (the Merger Consideration), other than shares of Blue Buffalos common stock held
by General Mills, Merger Sub or any other wholly owned subsidiary of General Mills, shares owned by Blue Buffalo (including shares held in treasury) or any of its wholly owned subsidiaries, and shares owned by stockholders who have properly
exercised and perfected appraisal rights under Delaware law.
At the Effective Time, each stock option of Blue Buffalo, whether vested or unvested, that
is outstanding immediately prior to the Effective Time will automatically be cancelled and will only entitle the holder of such stock option to receive, without interest, an amount in cash equal to the product of (i) the total number of shares
of Common Stock subject to the stock option multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price of such stock option, less applicable tax withholding. At the Effective Time, each restricted stock unit of
Blue Buffalo outstanding immediately prior to the Effective Time will, whether vested or unvested, automatically be cancelled and will only entitle the holder thereof to receive, without interest, an amount in cash equal to the product of
(i) the total number of shares of Common Stock subject to the restricted stock unit multiplied by (ii) the Merger Consideration, less applicable tax withholding. Immediately prior to the Effective Time, the holding restrictions applicable
to each share of restricted stock of Blue Buffalo outstanding immediately prior to the Effective Time will automatically expire and each such share of restricted stock will be converted into the right to receive the Merger Consideration.
Each partys obligation to consummate the Merger is subject to certain conditions, including, among others: (i) expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (ii) the absence of any order issued by any court of competent jurisdiction or governmental entity or any applicable law or other legal
restraint, injunction, prohibition that makes consummation of the Merger illegal or otherwise prohibited; and (iii) the passing of twenty (20) days from the date on which Blue Buffalo mails to Blue Buffalos stockholders a Schedule
14C Information Statement in definitive form pursuant to rules adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. General Mills obligation to consummate the Merger is also conditioned on,
among other things, the absence of any Company Material Adverse Effect (as defined in the Merger Agreement).
Following execution of the Merger Agreement
on February 22, 2018, Invus, L.P., The Bishop Family Limited Partnership, William W. Bishop, Jr. and The Orca Trust (the Majority Stockholders), holders of a majority of the issued and outstanding shares of Common Stock, duly
executed and delivered to Blue Buffalo a written consent, approving and adopting the Merger Agreement and the transactions contemplated thereby, including the Merger (the Written Consent). Notwithstanding the execution and delivery of
the Written Consent, the Merger Agreement provides that Blue Buffalo may, subject to the terms and conditions set forth in the Merger Agreement, engage in negotiations or discussions with,
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otherwise contact, or furnish any confidential information to any third party that makes an unsolicited written, bona fide acquisition proposal if, and only if, the board of directors of Blue
Buffalo (the Board) determines in good faith such acquisition proposal constitutes, or would reasonably be expected to lead to, a Superior Proposal (as defined in the Merger Agreement). The Merger Agreement also provides that, in the
event that the Board determines in good faith, after consultation with Blue Buffalos outside legal and financial advisors, that such acquisition proposal constitutes a Superior Proposal, and Blue Buffalo complies with certain notice and other
conditions set forth in the Merger Agreement, including providing General Mills with a three (3) business day period to match or improve upon such Superior Proposal, and General Mills does not deliver a proposal matching or improving upon such
Superior Proposal (as determined by the Board in good faith after consultation with Blue Buffalos outside legal and financial advisors) within such three (3) business day period, Blue Buffalo may, prior to 11:59 p.m., Eastern time, on the
later of (x) March 24, 2018 or (y) in the event Blue Buffalo has delivered a notice to General Mills of a Superior Proposal, the next calendar day following the applicable match right period with respect to such Superior Proposal,
terminate the Merger Agreement to accept such Superior Proposal, subject to Blue Buffalos payment to General Mills of a termination fee of $234 million.
Subject to certain exceptions relating to receipt of an acquisition proposal that constitutes, or would reasonably be expected to lead to or result in, a
Superior Proposal, the Merger Agreement prohibits Blue Buffalo and its subsidiaries and its and their officers, directors and other representatives from directly or indirectly initiating, soliciting, or knowingly encouraging or facilitating an
acquisition proposal from any third party.
The Merger Agreement includes customary representations, warranties and covenants of Blue Buffalo, General
Mills and Merger Sub. Among other things, Blue Buffalo has agreed to conduct in all material respects its business in the ordinary course of business, consistent with past practice until the Merger is consummated. Blue Buffalo and General Mills have
also agreed to use their respective reasonable best efforts to obtain any approvals from governmental authorities for the Merger, including all antitrust approvals, on the terms and subject to the conditions set forth in the Merger Agreement.
The Merger Agreement contains certain provisions giving each of General Mills and Blue Buffalo rights to terminate the Merger Agreement under certain
circumstances. Upon termination of the Merger Agreement, under specified circumstances (including those described above), Blue Buffalo will be required to pay General Mills a termination fee of $234 million.
Support Agreements
In connection with entering into the
Merger Agreement, General Mills and each of the Majority Stockholders entered into a support agreement, dated as of February 22, 2018, providing for each such Majority Stockholders agreement to vote in favor of the Merger and prohibiting
such Majority Stockholders from soliciting alternative acquisition proposals, except as permitted by the Merger Agreement (the Support Agreements). The Support Agreements will automatically terminate if the Merger Agreement is terminated
in accordance with its terms, including in the event of a termination of the Merger Agreement in connection with a Superior Proposal.
The foregoing
description of the Merger Agreement, the Support Agreements and the transactions and agreements contemplated thereby does not purport to be complete and is subject to and qualified in its entirety by reference to the Merger Agreement and the form of
the Support Agreements, copies of each of which are attached hereto as Exhibits 2.1 and 2.2, and the terms of which are incorporated herein by reference.
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The Merger Agreement has been included to provide investors and security holders with information regarding its
terms. It is not intended to provide any other factual information about General Mills, Blue Buffalo or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made by
the parties thereto only for purposes of the Merger Agreement and as of specific dates as set forth therein; were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement; may have been made for the purposes of allocating contractual risk between the parties to the
Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the 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 General Mills, Blue Buffalo, Merger Sub or any of their respective subsidiaries or affiliates. Moreover, information concerning
the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in General Mills public disclosures.