Summary Historical and Pro Forma Financial Information for Acquisition of Royal
Holdings, Inc.
As previously announced, on September 2, 2017, H.B. Fuller Company (the
Company
) and HBF
Windsor Holding Co., a newly formed wholly owned subsidiary of the Company (the
Purchaser
), entered into a Stock Purchase Agreement with ASP Royal Acquisition Corp. (
Royal Holdco 1
) and ASP Royal Holdings LLC
(
Seller
), pursuant to which the Purchaser would acquire Royal Holdings, Inc. and its consolidated subsidiaries (collectively,
Royal
) from Seller, an affiliate of American Securities LLC, subject to the
satisfaction of certain limited, customary closing conditions (the
Royal Acquisition
).
The Royal Acquisition is
structured as an acquisition of 100% of the outstanding equity interests of Royal Holdco 1. Royal Holdco 1 owns all of the equity interests in Royal Acquisition Corp. (
Royal Holdco 2
), which in turn owns all of the equity
interests in Royal. Neither Royal Holdco 1 nor Royal Holdco 2 (i) has engaged in any business activities, (ii) holds, leases, uses or owns any property or assets or equity interests in any company, corporation, partnership, joint venture, trust
or firm or (iii) has any liability or debt (whether absolute, accrued, contingent or otherwise), other than its direct ownership of equity interests in Royal Holdco 2 or Royal, as applicable, and related incidental activities as would not have
or reasonably be expected to have a material adverse impact on Holdco 1 or Holdco 2. Royal Holdco 1 and Royal Holdco 2 are passive holding companies through which Seller indirectly holds its interest in Royal. As a result, there is no material
difference between the consolidated financial condition, results of operations and cash flows of either Holdco 1 or Holdco 2 and the consolidated financial condition, results of operations and cash flows of Royal reflected in its audited and
unaudited financial statements.
The Company is filing this Current Report on Form
8-K
solely to
provide the historical consolidated financial statements of Royal and unaudited pro forma condensed combined financial information of the Company, after giving effect to the Royal Acquisition and related proposed financing transactions, as further
described in Item 9.01 below and incorporated herein by reference. Except as otherwise described in the notes to Royals annual audited consolidated financial statements and unaudited interim consolidated financial statements, Royals
financial statements relate solely to Royal.
The unaudited pro forma condensed combined financial information is provided for
informational and illustrative purposes only and is not intended to represent, or be indicative of, the actual consolidated results of operations or financial position of the Company that would have been reported had the Royal Acquisition and
related proposed financing transactions been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of the Company following the consummation of the Royal
Acquisition and related proposed financing transactions. Readers are cautioned not to place undue reliance on the unaudited pro forma condensed combined financial information.
Forward-Looking Statements
The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This Current Report on Form
8-K
contains forward-looking statements, including
statements relating to the completion of the Royal Acquisition and related proposed financing transactions. Forward-looking statements can usually be identified by the use of words such as aim, anticipate,
believe, continue, could, estimate, evolve, expect, forecast, intend, looking ahead, may, opinion, plan,
possible, potential, project, should, will and other expressions which indicate future events or trends. These forward-looking statements are based upon certain expectations and assumptions
and are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including (1) risks to consummation of the Royal Acquisition, including the risk that the Royal
Acquisition will not be consummated within the expected time period or at all, the risk that conditions to the closing of the Royal Acquisition, including receipt of required regulatory approvals, may not be satisfied, and the risk that the Royal
Acquisition may
be terminated in circumstances requiring the Company to pay the $78.75 million termination fee; (2) the Royal Acquisition may involve unexpected costs, liabilities or delays;
(3) the Companys business or stock price may suffer as a result of uncertainty surrounding the Royal Acquisition; (4) the Company may be unable to secure the financing necessary for the Royal Acquisition on favorable terms, or at
all; (5) the substantial amount of debt the Company would incur to finance Royal Acquisition, the Companys ability to repay or refinance it or incur additional debt in the future, the Companys need for a significant amount of cash
to service and repay the debt and to pay dividends on its common stock, and the effect of restrictions to be contained in the Companys debt agreements that limit the discretion of management in operating the business or ability to pay
dividends; (6) the Company may be unable to achieve expected synergies and operating efficiencies from the Royal Acquisition within the expected time frames or at all; (7) the Company may be unable to successfully integrate Royals
operations into its own, or such integration may be more difficult, time consuming or costly than expected; (8) following the Royal Acquisition, revenues may be lower than expected, and operating costs, customer loss and business disruption
(including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected; (9) the outcome of any legal proceedings related to the Royal Acquisition; (10) the
Company may be adversely affected by other economic, business, and/or competitive factors; (11) risks that the pending transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the
pending transaction; and (12) the risks described from time to time in the Companys reports filed with the Securities and Exchange Commission (the
SEC
) under the heading Risk Factors, including the Annual
Report on Form
10-K
for the fiscal year ended December 3, 2016, subsequent Quarterly Reports on Form
10-Q
and in other of our filings with the SEC. All
forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which
such statements were made. Except as required by applicable law, the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances arising after such date.