Item 1.01 Entry into a Material Definitive Agreement
On July 18, 2018, Armstrong World Industries, Inc., a Pennsylvania corporation (the
Company
) and Knauf International GmbH, a company
incorporated in the Federal Republic of Germany (the
Purchaser
), entered into a Deed of Amendment (the
Amendment
) to that certain Share Purchase Agreement, dated as of November 17, 2017, as amended and
restated on January 22, 2018 (the
Purchase Agreement
), by and between the Company and the Purchaser. Pursuant to the Purchase Agreement, the Purchaser will purchase certain subsidiaries comprising the Companys business
and operations in Europe, the Middle East and Africa (including Russia) and the Pacific Rim (the
International Business
), including the corresponding businesses and operations conducted by Worthington Armstrong Venture, a Delaware
general partnership (
WAVE
), in which the Company holds a fifty percent (50%) interest, as well as Armstrong France and WAVE France (collectively, the
Sale
). The consideration to be paid by the Purchaser in
connection with the Sale is $330 million in cash (the
Consideration
), subject to certain adjustments as provided in the Purchase Agreement and the Amendment.
The Amendment waives certain matters required under the Purchase Agreement. Specifically, the Amendment waives the requirement concerning the receipt of
competition clearances (the
Competition Conditions
) prior to the initiation of a phase II investigation by the European Commission. The Amendment further provides that the Purchaser will irrevocably and unconditionally pay to the
Company: (i) on August 1, 2018, the sum of $250 million, and (ii) on September 15, 2018, if, prior to such date (A) any Competition Condition has not been satisfied, or (B) the closing of the Sale has not yet
occurred, the sum of $80 million, with such payments to be credited against the Consideration at the time of closing. The Amendment also provides for the reduction (from a maximum of $35 million to a maximum of $20 million) of potential
adjustments to the Consideration based on the impact of any remedies required to satisfy the Competition Conditions. Furthermore, the Amendment provides that, in the event that the Purchaser has paid the amounts referred to in (i) and (ii)
above, the Long Stop Date (currently falling on November 19, 2018) shall be extended to June 30, 2019 and can be further extended to allow the Purchaser to fulfill a Remedy (as defined in the Purchase Agreement) which has been approved by a
Competition Authority (as defined in the Purchase Agreement). The Amendment also provides that if the above mentioned payments have been made, the Purchaser shall be permitted to (1) lead the negotiations with competition authorities and offer
remedies without seeking the Companys consent, as long as such remedies are unlikely to adversely and materially affect the value to the Company of the Sale and (2) require the Company to transfer the International Business to a third party
(or a trustee) which can acquire such business without any governmental or antitrust approval.
The Company now expects closing to occur prior to
December 31, 2018.
Other than as expressly modified pursuant to the Amendment, the Purchase Agreement, which was previously filed as Exhibit 2.1 to
the Current Report on Form
8-K
filed with the U.S. Securities and Exchange Commission (the
SEC
) on November 20, 2017, remains in full force and effect. The foregoing description of the
Amendment does not purport to be complete, and is qualified in its entirety by reference to the full text of the Amendment, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.
Caution Concerning Forward-Looking Statements
This
Current Report on Form
8-K
includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Such forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of the Company, including the benefits of the Sale, and other statements that are not historical
facts. These statements are based on the current expectations and beliefs of the Companys management, and are subject to uncertainty and changes in circumstances. The Company cautions readers that any forward-looking information is not a
guarantee of future performance and that actual results may vary materially from those expressed or implied by the statements herein, due to changes in economic, business, competitive, technological, strategic or other regulatory factors, as well as
factors affecting the operation of the business of the Company. More detailed information about certain of these and other factors may be found in filings by the Company with the SEC, including its most recent Annual Report on Form
10-K
in the sections entitled Caution Concerning Forward-Looking Statements and Risk Factors, Quarterly Reports on Form
10-Q,
and Current Reports on
Form
8-K.
Various factors could cause actual results to differ from those set forth in the forward-looking statements including, without limitation, the risk that the anticipated benefits from the Sale may not
be fully realized or may take longer to realize than expected. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter the forward-looking statements contained in this document, whether as a result of new
information, future events or otherwise.