Consummation of the Merger is subject to certain conditions, including (i) the adoption of the Merger Agreement by BMC’s stockholders, (ii) the approval of the Stock Issuance and adoption of the Charter Amendment by the Corporation’s stockholders, (iii) the absence of certain legal impediments, (iv) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (v) the approval for listing on the NASDAQ Stock Market of the shares of the BLDR Common Stock to be issued as consideration in the Merger, (vi) the effectiveness of the registration statement on Form S-4 to be filed with the United States Securities and Exchange Commission (the “SEC”) by the Corporation for the registration under the Securities Act of 1933, as amended, of the shares of BLDR Common Stock to be issued in connection with the Merger, (vii) the absence of a material adverse effect on the Corporation or BMC, (viii) receipt by each party of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and (ix) other conditions customary for a transaction of this type.
The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code so that none of BMC, the Corporation, Merger Sub, or any of the BMC stockholders generally will recognize any gain or loss on the issuance or receipt of BLDR Common Stock in the Merger, except that BMC stockholders generally may recognize gain or loss with respect to cash received in lieu of fractional shares of BLDR Common Stock.
The parties have made customary representations, warranties, and covenants in the Merger Agreement, including covenants regarding the conduct of their respective businesses during the pre-closing period and their use of reasonable best efforts to consummate the Merger.
The Merger Agreement contains restrictions on the Corporation’s and BMC’s ability to (i) solicit competing acquisition proposals and (ii) subject to certain exceptions if their respective boards of directors determine it would be inconsistent with their fiduciary duties, to participate in any discussions or negotiations, or provide any non-public information, or take other actions in furtherance of or relating to any competing acquisition proposals, or change, withdraw, qualify, or modify the recommendation by the Corporation’s or BMC’s board of directors to their respective stockholders to approve the Stock Issuance and adopt the Merger Agreement, respectively.
The Merger Agreement contains certain termination rights for both the Corporation and BMC, including (i) if the Merger is not consummated on or before the “outside date” of May 26, 2021 (subject to extension to August 26, 2021, under certain circumstances), (ii) if the required approval of the Corporation’s stockholders or BMC’s stockholders is not obtained, (iii) if any law or order prohibiting the Merger or the Stock Issuance has become final and non-appealable, (iv) if the board of directors of the other party changes its recommendation of the Merger prior to the receipt of its stockholder approval, (v) if the other party breaches its obligation not to solicit competing acquisition proposals in any material respect, or (vi) if the other party breaches its representations or warranties or fails to perform its covenants and such breach would cause a failure of the related closing condition and either is not curable by the outside date or is not cured within thirty days of notice of the breach. Upon termination of the Merger Agreement, under certain specified circumstances, the Corporation may be required to pay a termination fee of $100 million to BMC or BMC may be required to pay a termination fee of $66 million to the Corporation.
The foregoing description of the Merger Agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated by reference into this Item 1.01. The Merger Agreement has been included to provide security holders with information regarding its terms. It is not intended to provide any other factual information about the Corporation, BMC, or their respective subsidiaries or affiliates. The Merger Agreement contains representations, warranties, and covenants by each of the parties to the Merger Agreement. These representations, warranties, and covenants were made solely for the benefit of the other parties to the Merger Agreement, are subject to limitations agreed upon by the parties, and (i) are not intended to be treated as categorical statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to stockholders, and (iii) were made only as of the date of the Merger Agreement or such other date or dates as may be specified in the Merger Agreement. Accordingly, you should not rely on the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the Corporation or BMC. Further, the Merger Agreement should not be read alone but instead should be read in conjunction with the other information regarding the Merger Agreement, the Merger, the Corporation, BMC, their respective affiliates, and their respective businesses that will be contained in, or incorporated by reference into, the registration statement on Form S-4 and the joint proxy statement/prospectus included therein that will be filed with the SEC, as well as in the Forms 10-K, Forms 10-Q and other filings that the Corporation and BMC may file with the SEC.