Item 1.01
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Entry into a Material Definitive Agreement.
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On November 27, 2017, Buffalo Wild
Wings, Inc., a Minnesota corporation (
BWW
or the
Company
), entered into an Agreement and Plan of Merger (the
Merger Agreement
) with Arbys Restaurant Group, Inc., a Delaware corporation
(
Arbys
), and IB Merger Sub I Corporation, a Minnesota corporation and a wholly owned subsidiary of Arbys (
Merger Sub
).
Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, Merger Sub will merge with and into BWW (the
Merger
), with BWW as the surviving corporation and a wholly owned subsidiary of Arbys. At the effective time of the Merger (the
Effective Time
), each share of common stock of BWW (
Company Common
Stock
) then outstanding will be converted into the right to receive $157.00 in cash, without interest (the
Merger Consideration
), other than (1) those shares owned by Arbys or any subsidiary of Arbys or
BWW (which will be cancelled without any consideration), (2) any shares as to which dissenters rights have been perfected (and not withdrawn or lost) in accordance with applicable law (which will be cancelled and converted into the right
to receive a payment determined in accordance with the dissenters rights), and (3) any restricted stock awards (which will be treated as described below).
The Merger Agreement provides that, at the Effective Time, each of the Companys then outstanding equity awards will be treated as
follows: (1) each unexercised option to acquire Company Common Stock will be cancelled in exchange for an amount in cash equal to the excess, if any, of the Merger Consideration over the exercise price per share of Company Common Stock subject
to such option multiplied by the number of shares of Company Common Stock subject to such option; (2) each restricted stock unit award subject solely to time-based vesting will be cancelled in exchange for an amount in cash equal to the Merger
Consideration multiplied by the number of shares of Company Common Stock subject to such time vesting restricted stock unit award; (3) each restricted stock unit award subject to
performance-based
vesting
will be cancelled in exchange for an amount in cash equal to the Merger Consideration multiplied by the number of shares of Company Common Stock attributable to such performance vesting restricted stock unit award based upon an assumed attainment of
the target level of performance applicable to such award; and (4) each restricted stock award will be cancelled in exchange for an amount in cash equal to the Merger Consideration multiplied by the number of shares of Company Common Stock
subject to such restricted stock award.
The obligations of the parties to consummate the Merger are subject to the satisfaction or waiver
of closing conditions set forth in the Merger Agreement, including, among others, (1) the approval of BWWs shareholders, (2) the expiration or termination of any waiting period applicable under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act
), and (3) the absence of a Material Adverse Effect (as defined in the Merger Agreement) with
respect to BWW. The Merger Agreement contains termination rights for each of Arbys and BWW, including, among others, if the Merger has not been consummated by May 29, 2018 (which date may be extended to June 26, 2018 under specified
circumstances). Upon termination of the Merger Agreement under specified circumstances, generally relating to alternative acquisition proposals or an adverse change in BWWs board of directors recommendation in favor of the Merger, BWW
would be required to pay Arbys a termination fee of $74 million. Upon termination of the Merger Agreement under specified circumstances, generally relating to a failure by Arbys to consummate the Merger when required to do so
pursuant to the terms of the Merger Agreement, Arbys would be required to pay BWW a reverse termination fee of $134 million. The Merger Agreement also contains restrictions on BWWs ability to seek specific performance of Arbys
obligation to consummate the Merger and generally limits the aggregate liability of Arbys for a breach of the Merger Agreement to the amount of the termination fee payable by Arbys to BWW.
Each of BWW, Arbys and Merger Sub has made customary representations and warranties and covenants in the Merger Agreement, including
covenants to use their respective reasonable best efforts to effect the transaction, including securing required regulatory approvals. In addition, BWW has agreed to other customary covenants, including, among others, covenants to conduct its
business in the ordinary course during the interim period between the execution of the Merger Agreement and the closing of the Merger.
BWW will be subject to customary restrictions on soliciting or initiating discussions with respect to alternative acquisition proposals and
restrictions on its ability to respond to or enter into any agreement with respect to an alternative acquisition proposal, subject to certain limited exceptions to permit BWW to comply with its fiduciary duties. In the event that the board of
directors of BWW receives an alternative acquisition proposal that it determines is a Superior Proposal (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement, BWW may, subject to compliance with requirements to
provide notice to and a period for Arbys to match such proposal, payment of the termination fee payable by BWW to Arbys described above and other conditions and requirements set forth in the Merger Agreement, terminate the Merger
Agreement to accept the applicable Superior Proposal.
2
Arbys has advised that it intends to finance the Merger and related expenses with a
combination of (i) equity financing to be provided by a fund managed by Roark Capital Management LLC, which has agreed to capitalize Arbys with up to $783 million, subject to the terms and conditions set forth in an equity commitment
letter entered into by the fund and Arbys; (ii) debt financing to be provided pursuant to a debt commitment letter between Arbys and Barclays Bank plc, pursuant to which Barclays Bank plc has agreed to provide Arbys with up to
$2,210 million of borrowings under committed borrowing facilities subject to the terms and conditions set forth in such debt commitment letter (or financing raised in certain capital markets transactions in lieu of a portion of such committed debt
financing); and (iii) cash on hand and other available financial resources.
The foregoing description of the Merger Agreement and
the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached hereto as
Exhibit 2.1
and is incorporated herein by
reference.
The Merger Agreement has been included with this filing to provide investors and security holders with information regarding
the terms of the Merger. It is not intended to provide any other factual information about BWW or Arbys. The representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of that
agreement and as of specific dates, were 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 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 and security holders. Investors and security holders should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of BWW,
Arbys, or Merger Sub or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent
information may or may not be fully reflected in BWWs public disclosures.