Item 1.01 Entry into a Material Definitive Agreement
On May 15, 2019, Colfax Corporation, a Delaware corporation (the “Company”) entered into a definitive equity and asset purchase
agreement (the “Purchase Agreement”) with Granite Holdings US Acquisition Co., a Delaware corporation, and Brillant 3047. GmbH, a company organized under the laws of Germany (collectively, “Purchaser”), which are affiliates of
KPS Capital Partners, LP (“KPS”), pursuant to which Purchaser has agreed to purchase certain subsidiaries and assets comprising Colfax’s Air and Gas Handling business (the “Business”) for an enterprise value of
$1.80 billion, including $1.66 billion in cash consideration and $0.14 billion in assumed liabilities and minority interest (the “Transaction”). The purchase price is subject to certain adjustments pursuant to the Purchase
Agreement.
The Purchase Agreement contains customary representations, warranties and covenants by each party. The covenants relate to,
among other things, the conduct by the Company of the Business during the period between the signing of the Purchase Agreement and the closing of the Transaction (the “Closing”), the parties’ efforts to obtain regulatory approvals in
connection with the Transaction, Purchaser’s efforts to obtain financing for the transaction, and the Company’s ability to compete with the Business for a limited period following the Closing. Both the Company and Purchaser have agreed to
indemnify the other for losses arising from certain breaches of covenants of the parties under the Purchase Agreement and for certain other potential liabilities, subject to certain limitations.
The Transaction is subject to customary closing conditions, including, among others, the receipt of required antitrust and certain other
regulatory approvals (and the expiration or termination of waiting periods required in connection therewith), the completion of certain restructuring transactions contemplated to be completed by the Company prior to the Closing, the delivery of
audited financial statements for the Business demonstrating at least a specified threshold of adjusted EBITDA (which condition will be deemed satisfied on the tenth calendar day following receipt by Purchaser of such audited financial statements
unless Purchaser timely exercises its right to terminate the Purchase Agreement (as further described below)), the absence of any injunction or order prohibiting or restricting the consummation of the Transaction, the accuracy of the parties’
representations and warranties (generally subject to a “material adverse effect” standard) and the parties’ performance and compliance in all material respects with their respective obligations and covenants under the Purchase
Agreement.
The obligations of Purchaser to consummate the Transaction are not conditioned on receipt of financing. However, Purchaser is
not required to consummate the Transaction until after the completion of a “Marketing Period
”
(as defined in the Purchase Agreement). Purchaser has obtained financing commitments for the full amount of the purchase price, including
equity financing commitments from investment funds affiliated with KPS and debt financing commitments from JPMorgan Chase Bank, N.A., Barclays Bank PLC, BNP Paribas Securities Corp., BNP Paribas, Royal Bank of Canada, RBC Capital Markets, LLC, HSBC
Bank USA, N.A. and HSBC Securities (USA) Inc.
Each party may terminate the Purchase Agreement under certain circumstances. In the event
the Company terminates the Purchase Agreement because Purchaser fails to consummate the Transaction as required by the Purchase Agreement after all of the conditions to Purchaser’s obligation to close the Transaction have been satisfied (other
than those conditions that, by their nature, are to be satisfied at the Closing), or due to a material breach by Purchaser of its covenants and obligations under the Purchase Agreement, which breach gives rise to a failure of the closing conditions
having been satisfied, Purchaser will be required to pay the Company a customary reverse termination fee.
In addition to the foregoing
termination rights, (x) either party may terminate the Purchase Agreement if the Transaction is not consummated on or before an end date of November 15, 2019, with an option to extend to February 15, 2020, if necessary to obtain regulatory
approval under circumstances specified in the Purchase Agreement and (y) after delivery of the audited financial statements for the Business, Purchaser has the right, for ten days following such delivery, to terminate the Purchase Agreement if such
audited financial statements demonstrate that adjusted EBITDA of the Business is below a specified threshold.
The foregoing description
of the Purchase Agreement is qualified in their entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 2.1 to this report.
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