Item 1.01. Entry into a Material Definitive Agreement.
Acquisition Agreement
On January 15, 2018,
Energizer Holdings, Inc., a Missouri corporation (the
Company
), entered into a definitive Acquisition Agreement (the
Acquisition Agreement
) with Spectrum Brands Holdings, Inc., a Delaware corporation
(
Spectrum
). On the terms and subject to the conditions set forth in the Acquisition Agreement, the Company will acquire from Spectrum (the
Acquisition
), its global battery, lighting and portable power business
(the
Business
) for an aggregate purchase price of $2.0 billion in cash (the
Purchase Price
), subject to customary purchase price adjustments.
The Acquisition Agreement provides that, upon the terms and subject to the conditions set forth in the Acquisition Agreement, the Company will purchase the
equity of certain subsidiaries of Spectrum involved in, and assets of Spectrum and its subsidiaries used or held for use primarily in, or that arise primarily out of, the Business and will assume certain liabilities arising primarily out of or
relating primarily to the Business.
In the Acquisition Agreement, the Company and Spectrum have made customary representations and warranties and have
agreed to customary covenants relating to the Acquisition. Among other things, prior to the consummation of the Acquisition, Spectrum will be subject to certain business conduct restrictions with respect to its operation of the Business.
The Company and Spectrum have agreed to indemnify each other for losses arising from certain breaches of the Acquisition Agreement and for certain other
matters. In particular, Spectrum has agreed to indemnify the Company for certain liabilities relating to the assets retained by Spectrum, and the Company has agreed to indemnify Spectrum for certain liabilities assumed by the Company, in each case
as described in the Acquisition Agreement.
The Company and Spectrum have agreed to enter into related agreements ancillary to the Acquisition that will
become effective upon the consummation of the Acquisition, including a customary transition services agreement and reverse transition services agreement.
The consummation of the Acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse
effect on the Business, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign
jurisdictions (the conditions contained in (ii) and (iii) together, the
Antitrust Conditions
), (iv) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect
standard (as described in the Acquisition Agreement) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the Acquisition in certain jurisdictions, and (vi) material compliance by
the parties with their respective covenants and agreements under the Acquisition Agreement. The consummation of the Acquisition is not subject to any financing condition. The Acquisition is expected to be consummated prior to the end of calendar
2018. The Company has obtained financing commitments with respect to the Acquisition from Barclays Bank PLC and JPMorgan Chase Bank, N.A.
The Acquisition
Agreement also contains certain termination rights, including the right of either party to terminate the Acquisition Agreement if the consummation of the Acquisition has not occurred on or before July 15, 2019 (the
Termination
Date
). Further, if the Acquisition has not been consummated by the Termination Date and all conditions precedent to the Companys obligation to consummate the Acquisition have otherwise been satisfied except for one or more of the
Antitrust Conditions, then the Company would be required to pay Spectrum a termination fee of $100 million.
The foregoing description of the
Acquisition Agreement and the transactions contemplated thereby is not complete and is subject to, and qualified in its entirety by reference to, the Acquisition Agreement, a copy of which is filed with this Current Report on
Form 8-K as
Exhibit 2.1 and is incorporated by reference herein. The Acquisition Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any
other factual information about the Company, Spectrum or the Business. In particular, the assertions embodied in the representations and warranties in the Acquisition Agreement were made as of a specified date, are modified or qualified by
information in a confidential disclosure letter prepared in connection with the execution and delivery of the Acquisition Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to
shareholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Acquisition Agreement are not necessarily characterizations of the actual state of facts about the
Company, Spectrum, or the Business at the time they were made or otherwise and should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the U.S.
Securities and Exchange Commission (the
SEC
).
Financing of the Acquisition
The Company has obtained debt financing commitments the proceeds of which will be used by the Company to pay the cash consideration in respect of the
Acquisition, for the refinancing of the Companys existing credit facility, to provide working capital and for the payment of related fees and expenses. Pursuant to a debt commitment letter (the
Commitment Letter
), dated
as of January 15, 2018, with Barclays Bank PLC and JP Morgan Chase Bank, N.A. (together, the
Commitment Parties
), the Commitment Parties have committed to provide the Company with the following, in each case on the terms and
subject to the conditions respectively set forth therein:
|
1.
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An aggregate of up to $2,040 million of senior secured first lien credit facilities consisting of:
|
|
a.
|
a $1,640 million senior secured first lien term loan facility (the
Term Loan Facility
); and
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b.
|
a $400 million senior secured first lien revolving credit facility (the
Revolving Credit Facility
and, together with the Term Loan Facility, the
Senior Secured Credit
Facility
); and
|
|
2.
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Senior unsecured bridge loans in an aggregate principal amount of up to $720 million (plus any amounts by which the Term Loan Facility is reduced in order to comply with the consolidated secured leverage ratio
under the indenture dated as of June 1, 2015 governing the 5.500% Senior Notes due 2025 issued by the Company) (the
Bridge Facility
).
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The Commitment Letter contemplates that the Company may issue notes in capital market transactions or other private placements in lieu of a portion or all of
the loans under the Term Loan Facility and the Bridge Facility. The funding of the Senior Secured Credit Facility and the Bridge Facility are contingent upon the satisfaction of customary conditions, including (i) the execution and delivery of
definitive documentation in accordance with the terms set forth in the Commitment Letter and (ii) the consummation of the Acquisition in accordance with the Acquisition Agreement.
The foregoing description of the Commitment Letter and the transactions contemplated thereby is not complete and is subject to, and qualified in its entirety
by reference to, the Commitment Letter, a copy of which is filed with this Current Report on
Form 8-K as
Exhibit 10.1 and is incorporated by reference herein.