Item 1.01.
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Entry into a Material Definitive Agreement.
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Stock Purchase Agreement and Plan of Merger
On April 4, 2018, NU Pet Company, a Delaware corporation (the
Purchaser
) and a direct wholly-owned subsidiary of The J.
M. Smucker Company, an Ohio corporation (the
Company
), entered into a Stock Purchase Agreement and Plan of Merger (the
Merger Agreement
), by and among the Purchaser, PR Merger Sub I, LLC, a Delaware limited
liability company and a direct wholly-owned subsidiary of the Purchaser (
Merger Sub
), Ainsworth Pet Nutrition Parent, LLC, a Delaware limited liability company (
Ainsworth
), CP APN, Inc., a Delaware corporation
(
CP Blocker
), CP APN, L.P., a Delaware limited partnership (
CP Blocker Seller
and, together with CP Blocker, the
CP Blocker Parties
), CP APN, L.P, a Delaware limited partnership, solely in its
capacity as the representative of the CP Blocker Seller and the other holders of the issued and outstanding units of Ainsworth (the
Sellers
Representative
) and, solely for the limited purpose set forth in the
Merger Agreement, the Company, pursuant to which the Purchaser will acquire Ainsworth on the terms and subject to the conditions set forth in the Merger Agreement. The aggregate consideration to be paid by the Purchaser will consist of
$1.9 billion in cash (which will be adjusted for Ainsworths indebtedness, cash, transaction expenses, and certain other amounts, and is subject to a customary working capital adjustment). The Company expects to realize a tax benefit
related to the acquisition of Ainsworth with a present value of approximately $200 million.
Subject to the terms and conditions set
forth in the Merger Agreement, the acquisition of Ainsworth will be effected through (i) the purchase by the Purchaser of all of the issued and outstanding capital stock of CP Blocker and (ii) the merger of Merger Sub with and into
Ainsworth (the
Merger
), as a result of which Ainsworth will survive the Merger and become a direct subsidiary of the Purchaser.
Pursuant to the terms of the Merger Agreement, the Company has irrevocably and unconditionally guaranteed to Ainsworth and CP Blocker Seller
(i) the due and punctual payment of the Purchasers obligations set forth in the Merger Agreement and (ii) the performance of the Purchaser and Merger Sub and each of their respective permitted assignees under the Merger Agreement,
subject to certain conditions set forth in the Merger Agreement (the
Guarantee
).
In connection with the Merger, the
Company expects to refinance at closing all of Ainsworths and certain of its subsidiaries outstanding debt. The aggregate cash consideration, as well as any refinancing of Ainsworths indebtedness, is expected to be financed with a
combination of new debt, commercial paper, and cash on the Companys balance sheet. The Company entered into a commitment letter, dated April 4, 2018, with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of America,
N.A. that provides a commitment, subject to satisfaction of customary conditions, for a $1.9 billion
364-day
senior unsecured bridge term loan credit facility.
The parties respective obligation to complete the Merger is subject to customary conditions, including (i) the expiration or early
termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (ii) the accuracy of all representations and warranties made by the other parties in the Merger Agreement and performance
by the other parties of their obligations under the Merger Agreement (subject in each case to certain materiality standards).
The Merger
Agreement contains certain termination rights, including the right of either party to terminate the Merger Agreement if the Merger has not occurred by August 2, 2018, subject to extension pursuant to the Merger Agreement.
The Merger Agreement contains customary representations and warranties. Each party has agreed to various covenants and agreements, including,
among others, in the case of Ainsworth and its subsidiaries, an agreement to conduct business in the ordinary course during the period prior to the closing of the Merger.
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 attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement has been included as an exhibit hereto solely to provide investors and security holders with information regarding
its terms. It is not intended to be a source of financial, business, or operational information about the Company, Ainsworth, or their respective subsidiaries or affiliates. The representations, warranties, and covenants contained in the Merger
Agreement are made only for purposes of the Merger Agreement and are made as of specific dates; are solely for the benefit of the parties; may be subject to
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qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Merger Agreement, including being qualified by confidential disclosures made for the
purpose of allocating contractual risk between the parties rather than establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security
holders. Investors and security holders should not rely on the representations, warranties, and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company, Ainsworth, or 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
public disclosures.