Item 1.01
Entry into a Material Definitive
Agreement
Agreement and Plan of Merger
On April 21, 2019,
Jacobs Engineering Group Inc., a
Delaware corporation (“
Jacobs
”)
, entered into an Agreement and Plan of Merger
(the “
Merger Agreement
”) with The KeyW Holding Corporation, a
Maryland corporation (“
KeyW
”), and Atom Acquisition Sub, Inc., a
Maryland corporation and a wholly owned indirect subsidiary of Jacobs (“
Merger Sub
”).
Transaction Structure
Pursuant to and subject to the terms and conditions of the
Merger Agreement, Merger Sub will
commence an all-cash tender offer (the “
Offer
”) within fifteen (15) business days after the date of the Merger
Agreement to acquire all of KeyW’s issued and outstanding shares of common stock, par value $0.001 per share (the “
Shares
”), at a price per Share of $11.25
(the “
Offer Price
”), payable net to the seller in cash, without interest, and subject to any required withholding taxes. The Offer will initially expire at
one minute after 11:59 p.m. (New York City time) on the date that is twenty (20) business days following the commencement of the Offer. Under certain circumstances, Merger Sub may be required to extend the Offer on one or more occasions in
accordance with the terms set forth in the Merger Agreement and the applicable rules, regulations, interpretations and positions of the United States Securities and Exchange Commission (the “
SEC
”) or its staff or the NASDAQ Global Select Market. Merger Sub will not be required to extend the Offer beyond August 31, 2019 (the “
Outside Date
”), and may not extend the Offer beyond such date without KeyW’s consent.
Pursuant to and subject to the terms and conditions of the Merger Agreement, as soon as reasonably practicable (and in no event later than
two (2) business days) following the time at which the Shares validly tendered (and not properly withdrawn) pursuant to the Offer are first accepted for payment by Merger Sub (the “
Acceptance Time
”), Merger Sub will merge with and into KeyW, with the separate existence of Merger Sub ceasing and KeyW continuing as the surviving corporation and as a wholly owned indirect subsidiary of Jacobs
(the “
Merger
”). The Merger will be effected pursuant to the procedures provided for under Section 3-106.1 of the Maryland General Corporation Law. No
stockholder vote is required to consummate the Merger.
At the effective time of the Merger (the “
Effective Time
”),
each issued and outstanding Share (other than Shares owned by Jacobs, Merger Sub or any other direct or indirect wholly-owned subsidiary of Jacobs, and Shares held by KeyW as treasury stock immediately prior to the Effective Time, which will
automatically be canceled and will cease to exist) will automatically be converted into the right to receive cash in an amount equal to the Offer Price, without interest, subject to any required withholding taxes.
At the Effective Time, (i) each outstanding Company RSU, Company Restricted Stock Award, Company PSU (each, whether vested or unvested and
as defined in the Merger Agreement) will be terminated and cancelled as of immediately prior to the Effective Time, and in exchange, the holder thereof will be entitled to receive, for each Share subject to the cancelled Company RSU, Company
Restricted Stock Award, Company PSU, a cash payment equal the Offer Price (with performance for Company PSUs to be deemed at target for this purpose), (ii) each outstanding Company Long-Term Incentive Share (as defined in the Merger Agreement)
will be terminated and cancelled as of immediately prior to the Effective Time, and in exchange, the holder thereof will be entitled to the receive, for each Share subject to the cancelled Company Long-Term Incentive Share, a cash payment equal
to the Offer Price (regardless of whether the per Share price targets applicable to the outstanding Company Long-Term Incentive Share are in excess of the Offer Price) and (iii) each outstanding Company Option (as defined in the Merger
Agreement), whether vested or unvested, will be terminated and cancelled as of immediately prior to the Effective Time, and in exchange the holder thereof will be entitled to receive, for each Share subject to the cancelled Company Option, a cash
payment equal to the Offer Price less the exercise price per Share applicable to such Company Option.
Conditions
The obligation of Merger Sub to purchase Shares validly tendered (and not properly withdrawn) pursuant to the Offer is subject to customary
conditions, including, among other things: (i) there having been validly tendered in the Offer (and not properly withdrawn) that number of Shares which, together with the number of Shares then owned by Jacobs or its Subsidiaries (if any),
represents at least a majority of the Shares then outstanding,
(ii)
the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) the absence of any law or any order, injunction, judgment or other similar legal restraint by any governmental authority of competent jurisdiction that would make the Offer or the Merger
illegal or otherwise prevent the consummation of the Offer or the Merger, (iv) no material adverse effect on KeyW shall have occurred and be continuing as of the expiration date of the Offer, (v) the accuracy of KeyW’s
representations and warranties contained in the Merger Agreement, subject to specified materiality qualifications set forth in the Merger Agreement, (vii) KeyW’s performance
of, and compliance with, its covenants, obligations and agreements under the Merger Agreement in all material respects prior to the Acceptance Time, and (viii) the board of directors of KeyW (the “
KeyW Board
”) not having changed its recommendation to the stockholders of KeyW with respect to the Offer. The consummation of the Offer and Merger is not subject to a financing condition.
Other terms of the Merger Agreement
The Merger Agreement contains representations, warranties
and covenants of the parties customary for a transaction of this type, including
the obligation of KeyW to (i) carry on its business in the ordinary course during the period between the execution of the Merger Agreement and the
Effective Time and (ii) comply with
certain other negative operating covenants, as set forth more fully in the Merger Agreement.
The Merger Agreement also contains a customary “no solicitation” provision that, subject to certain exceptions, restricts KeyW’s ability
to (i) solicit, initiate or knowingly encourage or facilitate, any inquiries or expressions of interest that would reasonably be expected to lead to a takeover proposal or (ii) participate in discussions or negotiations with, provide any
nonpublic information concerning KeyW, or approve, recommend or enter into any agreement, in each case, in connection with a takeover proposal. The provision is subject to a “fiduciary out” that permits KeyW, under certain circumstances and in
compliance with certain obligations, to terminate the Merger Agreement and accept a superior proposal upon payment to Jacobs of the termination fee discussed below.
The Merger Agreement
also contains certain customary
termination rights for both Jacobs and KeyW, including, among others, (i) the ability of either KeyW or Jacobs to terminate the Merger Agreement if the Merger has not been consummated by the Outside Date, (ii) the ability of KeyW to terminate
the Merger Agreement, under certain circumstances and in compliance with certain obligations, to enter into an agreement for an alternative transaction that constitutes a superior proposal and (iii) the ability of Jacobs to terminate the Merger
Agreement due to a change in the KeyW Board’s recommendation to the stockholders of KeyW with respect to the Offer.
Upon the termination of the Merger Agreement, under
specified circumstances, including clauses (ii) and (iii) above, KeyW will be required to pay Jacobs a termination fee of $21,000,000.
A copy of the Merger Agreement is filed as Exhibit 2.1 hereto. The foregoing description of the Merger Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is incorporated herein by reference.
The Merger Agreement and the above
description have been included to provide investors and security holders with information regarding the terms of the Merger Agreement. They are not intended to provide any financial or other factual information about Jacobs, Merger Sub, KeyW or
their respective subsidiaries or affiliates or stockholders
or to modify or supplement any factual disclosures about Jacobs or KeyW in their respective public reports filed with the SEC
. The representations, warranties and covenants contained in the Merger Agreement (i) were made only for purposes of the Merger Agreement and as of specific dates; (ii) were made solely for
the benefit of the parties to the Merger Agreement; (iii) may be subject to limitations agreed upon by the parties to the Merger Agreement, including being qualified by confidential disclosures made by each contracting party to the other for
the purposes of allocating contractual risk between them that differ from those applicable to investors; and (iv)
may be subject to standards of materiality applicable to the contracting parties that differ from those generally
applicable to Jacobs’ or KeyW’s SEC filings
. Investors should not rely on the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts or condition of KeyW, Jacobs, Merger Sub or any of their respective subsidiaries, affiliates, businesses or stockholders. Moreover, information concerning the subject matter of the
representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by KeyW or Jacobs. Accordingly, the representations and warranties
in the Merger Agreement should not be relied on as characterizations of the actual state of facts about Jacobs or KeyW, and investors should read the representations and warranties in the Merger Agreement not in isolation but only in
conjunction with the other information about KeyW or Jacobs and their respective subsidiaries that the respective companies include in reports, statements and other filings they make with the
SEC
.