Item 1.01
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Entry into a Material Definitive Agreement.
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On November 19, 2018, Colfax Corporation (NYSE:CFX) (the Company), Motion Merger Sub, Inc., an indirect wholly-owned subsidiary of the Company
(Merger Sub), DJO Global, Inc. (DJO) and Grand Slam Holdings, LLC, in its capacity as the securityholder representative, entered into a definitive Agreement and Plan of Merger (the Merger Agreement) pursuant to
which, subject to the terms and conditions set forth therein, the Company will acquire DJO from private equity funds managed by The Blackstone Group L.P. for approximately $3.15 billion in cash, subject to certain adjustments set forth in the
Merger Agreement (the Transaction). The Transaction has been approved by the Board of Directors of the Company and is expected to close in the first quarter of 2019, subject to the satisfaction of customary closing conditions.
The Merger Agreement contains customary representations, warranties and covenants of DJO, the Company and Merger Sub. The covenants relate to, among other
things, the conduct by DJO of its business during the period between the signing of the Merger Agreement and the closing of the Transaction, the parties efforts to obtain regulatory approvals in connection with the Transaction and the
Companys efforts to obtain financing for the Transaction.
The Transaction is subject to the satisfaction of customary closing conditions including,
among other things, the receipt of certain regulatory approvals (or the termination or expiration of applicable waiting periods), compliance by each party with their respective covenants under the Merger Agreement, the absence of a Material
Adverse Effect on DJO and the accuracy of each partys representations and warranties set forth in the Merger Agreement. The Merger Agreement also provides that the Company will pay DJO a termination fee of $220.5 million if DJO
terminates the Merger Agreement under certain specific conditions.
The Company expects to finance the Transaction with approximately $100 million of
cash from its balance sheet, proceeds from credit facilities and a contemplated debt offering, and $500 to $700 million from a contemplated offering of equity or equity-linked securities. The Company has entered into a Commitment Letter, dated
as of November 18, 2018 (the Commitment Letter), by and among the Company, J.P. Morgan Chase Bank, N.A, Credit Suisse AG and Credit Suisse Loan Funding LLC, pursuant to which such financial institutions have committed to provide
$3.29 billion of bridge financing for the transaction (the Bridge Facility). The Bridge Facility availability is subject to reduction in equivalent amounts upon any incurrence by the Company of loans, notes or equity in a public
offering or private placement prior to the consummation of the Transaction and upon other specified events, subject to certain exceptions set forth in the Commitment Letter. The funding of the bridge financing is contingent on the satisfaction of
customary conditions, including (i) the execution and delivery of definitive documentation with respect to the bridge financing in accordance with the terms set forth in the related commitment letter, and (ii) the consummation of the
Transaction in accordance with the Merger Agreement. The Commitment Letter also provides for $1.8 billion of commitments to replace the Companys existing Credit Agreement, dated as of June 5, 2015, among the Company, as borrower, the
subsidiaries of the Company parties thereto as guarantors, the other parties thereto and Deutsche Bank AG New York Branch, as administrative agent (as amended, restated or otherwise modified through the date hereof, the Existing Credit
Agreement), which commitments are contingent on the failure to obtain certain amendments to the Existing Credit Agreement set forth in the Commitment Letter, including an amendment to allow the Company to draw on commitments available under
the Existing Credit Agreement to fund the Transaction with the same conditionality as contemplated for the Bridge Facility.
The foregoing description of
the Merger Agreement and the transactions contemplated thereby is not complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, a copy of which is filed with this Current Report on Form
8-K
as Exhibit 2.1 and the terms of which are incorporated herein by reference. 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 full text of the Commitment Letter, a copy of which is filed with this Current Report on Form
8-K
as Exhibit 2.2 and the terms of which are incorporated herein by
reference.