Item 1.01
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Entry Into a Material Definitive Agreement.
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Purchase Agreement
On October 31, 2017, Owens & Minor, Inc. (the Company) entered into a Purchase Agreement (the Purchase
Agreement) by and among the Company, Halyard Health, Inc. (Halyard) and certain affiliates of Halyard. The Purchase Agreement provides for the acquisition by the Company, subject to the terms and conditions of the Purchase
Agreement, of substantially all of Halyards Surgical and Infection Prevention (S&IP) business, the name Halyard Health (and all variations of that name and related intellectual property rights) and Halyards IT
system (the Acquisition). The total price payable by the Company will be $710 million in cash, consisting of $708.5 million plus an additional $1.5 million for certain assets in India, in each case subject to certain adjustments as
provided in the Purchase Agreement. The Company expects the transaction to close in the first quarter of 2018.
The closing of the
Acquisition is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and other acquisition and competition laws applicable to the Acquisition, (ii) receipt of all required consents from, and the making of all required notices to, governmental authorities (subject to a material adverse effect
standard), and (iii) the absence of any law, regulation, or order issued by a court or other governmental authority restraining or making illegal the Acquisition. Each partys obligation to consummate the Acquisition is also conditioned
upon the accuracy of the other partys representations and warranties (generally subject, other than for certain representations and warranties, to a material adverse effect standard) and the other party having performed in all material
respects its obligations under the Purchase Agreement. Each partys obligation to consummate the Acquisition is further subject to the completion of certain actions by Halyard necessary to separate the S&IP business from Halyards
remaining operations.
The Purchase Agreement contains customary representations, warranties and covenants from both the Company and
Halyard, and contains certain customary termination rights for each of the Company and Halyard. Subject to certain exceptions and limitations, the Company and Halyard have agreed to indemnify each other for breaches of representations, warranties,
covenants and other specified matters contained in the Purchase Agreement. Among these other specified matters, Halyard has agreed to indemnify the Company for losses related to certain pending litigation against the S&IP business, including
with respect to the matter styled
Bahamas Surgery Center, LLC v. Kimberly-Clark Corporation and Halyard Health, Inc.,
No.
2:14-cv-08390-DMG-SH
(C.D. Cal.).
Pursuant to the terms of the Purchase Agreement,
at or before the closing of the Acquisition, the Company and Halyard will enter into transition services agreements pursuant to which the Company, Halyard and each partys respective affiliates will provide to each other various transitional
services, including, but not limited to, facilities, product supply, financial and business services, procurement, human resources, research and development, regulatory affairs and quality assurance, sales and marketing, information technology and
other support services. The services generally are expected to commence on the closing date of the Acquisition and terminate no later than two years thereafter.
The foregoing description of the Purchase Agreement and the Acquisition does not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Purchase Agreement which is attached hereto as Exhibit 2.1, which is incorporated herein by reference.
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The Purchase Agreement contains various representations and warranties made by the parties solely
for the benefit of the other parties to the Purchase Agreement. Such representations and warranties (a) have been made only for purposes of the Purchase Agreement, (b) have been qualified by confidential disclosures made to the other parties in
connection with the Purchase Agreement, (c) are subject to materiality qualifications contained in the Purchase Agreement that may differ from what may be viewed as material by investors, (d) were made only as of the date of the Purchase
Agreement or such other date as is specified in the Purchase Agreement, and (e) have been included in the Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts.
Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding either party or its
business. Investors should not rely on the representations or warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the S&IP business, the Company, or any of its subsidiaries or affiliates.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be reflected in the Companys public disclosures. The
Purchase Agreement and the foregoing description of it and the Acquisition should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by
reference into, the Form
10-K,
Form
10-Q
and other documents that the Company files or has filed with the Securities and Exchange Commission (the SEC).
Commitment Letter
Bank of
America, N.A. (Bank of America) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the Lead Arranger and, together with Bank of America, the Commitment Parties) have committed to provide a term loan
B facility in an initial aggregate principal amount of up to $450 million (the TLB Facility) and to backstop on a fully committed basis an amendment (the Amendment) to the Companys existing credit agreement (which
existing credit agreement currently provides for borrowing capacity of $600 million and a $250 million term loan) to permit the TLB Facility and make certain other changes thereto, in each case on the terms and subject to the conditions
set forth in the commitment letter and a fee letter, each dated October 31, 2017.