Item 8.01 Other Events
Compass Group Diversified Holdings LLC (the “Company”) and Compass Diversified Holdings (“Holdings” and, together with the Company, collectively “CODI,” “us” or “we”) acquires and manages small to middle market businesses in the ordinary course of its business. The following description relates to the recent acquisition of one such business.
BOA Technology
On September 20, 2020, the Company, through its newly formed acquisition subsidiaries, BOA Holdings Inc., a Delaware corporation (“BOA Holdings”) and BOA Parent Inc., a Delaware corporation (“Buyer”) and a wholly-owned subsidiary of BOA Holdings, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Reel Holding Corp., a Delaware corporation (“BOA”) and the sole stockholder of Boa Technology, Inc., BOA Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer (“Merger Sub”), and Shareholder Representative Services LLC (in its capacity as the representative of the stockholders of BOA), pursuant to which Merger Sub will be merged with and into BOA (the “Merger”) such that the separate existence of Merger Sub will cease, and BOA will survive the Merger as a wholly-owned subsidiary of Buyer. Buyer, via the Merger, will acquire BOA and its subsidiaries for $454 million in cash, subject to certain adjustments based on matters such as the working capital and cash balances at the time of the closing. The Company expects to fund the purchase price with cash on its balance sheet and a draw on its revolving credit facility of approximately $300 million.
Concurrently with the execution and delivery of the Merger Agreement, certain existing minority stockholders of BOA executed agreements pursuant to which they will, immediately prior to the effective time of the Merger, contribute shares of BOA common stock (the “Rollover Shares”) to BOA Holdings in exchange for shares of BOA Holdings common stock (the “Stockholder Contributions”). Immediately following consummation of the Stockholder Contributions, BOA Holdings will contribute the Rollover
Shares to Buyer. Upon consummation of the Merger, CODI will directly own 82% of BOA Holdings, which will in turn indirectly own all of issued and outstanding equity interests of BOA.
The Merger Agreement contains customary representations, warranties and covenants. The Merger Agreement also provides certain indemnification rights and, at closing, Buyer will have obtained representation and warranty insurance which will provide coverage for breaches of certain representation and warranties contained in the Merger Agreement, subject to deductibles and certain other terms and conditions. Concurrently with the execution of the Merger Agreement, the Company executed and delivered a limited guaranty to BOA guaranteeing Buyer’s obligations under the Merger Agreement.
Each party’s obligation to consummate the Merger Agreement is subject to certain conditions, including, but not limited to (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) performance in all material respects by the other party of its covenants and agreements, (iii) the absence of any law or order issued by any governmental entity preventing consummation of the Merger, (iv) approval of the Merger by BOA stockholders and (v) the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Merger is expected to close within the next 45 days, but there can be no assurances that all of the conditions to closing will be satisfied.
The foregoing brief description of the Merger Agreement is not meant to be exhaustive and is qualified in its entirety by the Merger Agreement itself, which is attached hereto as Exhibit 99.3 to this Current Report on Form 8-K.