Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On August 14, 2018, KMG
Chemicals, Inc., a Texas corporation (KMG), entered into an Agreement and Plan of Merger (Merger Agreement) with Cabot Microelectronics Corporation, a Delaware corporation (Cabot Microelectronics), and Cobalt
Merger Sub Corporation, a Texas corporation and wholly owned subsidiary of Cabot Microelectronics (Merger Sub), providing for the acquisition of KMG by Cabot Microelectronics. The Merger Agreement and the Merger (as defined below) have
been unanimously approved by the board of directors of each of KMG and Cabot Microelectronics.
The Merger Agreement provides that, upon the terms and
subject to the satisfaction or valid waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into KMG (the Merger), with KMG continuing as the surviving corporation and a wholly subsidiary of Cabot
Microelectronics.
At the effective time of the Merger, each outstanding share of KMG common stock, par value $0.01 per share (KMG Common
Stock), other than shares owned by KMG, Cabot Microelectronics and their subsidiaries, dissenting shares, or shares subject to a KMG Equity Award (as defined below), will automatically be converted into the right to receive the following
consideration (collectively, the Merger Consideration), without interest:
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$55.65 in cash (the Cash Consideration); and
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0.2000 shares of common stock of Cabot Microelectronics, par value $0.001 per share (CMC Common
Stock).
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Immediately prior to closing, each restricted stock unit award relating to shares of KMG Common Stock (each, a KMG
Equity Award) granted prior to August 14, 2018 will vest (with any applicable performance targets deemed satisfied at the level specified in the applicable award agreement) and be cancelled in exchange for the Merger Consideration in respect
of each share of KMG Common Stock underlying the applicable KMG Equity Award.
Each KMG Equity Award granted on or following August 14, 2018 will be
converted into a corresponding award relating to shares of CMC Common Stock and continue to vest post-closing in accordance with the terms of the applicable award agreement (which will include vesting on a qualifying termination of employment).
The consummation of the Merger is subject to customary closing conditions, including the adoption of the Merger Agreement by KMGs shareholders and the
expiration or termination of all waiting periods applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
KMG
and Cabot Microelectronics have each made customary representations, warranties and covenants in the Merger Agreement, including covenants by each of the parties relating to conduct of their business prior to the closing of the Merger. The Merger
Agreement contains customary
non-solicitation
restrictions prohibiting KMG from soliciting alternative acquisition proposals from third parties or, subject to certain limited exceptions, providing information
to or participating in discussions or negotiations with third parties regarding alternative acquisition proposals. The Merger Agreement also requires KMG to call and hold a special meeting of KMGs shareholders to adopt the Merger Agreement and
approve the Merger and, subject to certain limited exceptions, recommend that KMGs shareholders adopt the Merger Agreement and approve the Merger.
The Merger Agreement contains certain customary termination rights by either KMG or Cabot, including if the Merger is not consummated by February 14,
2019, which may be extended under certain circumstances to May 14, 2019 in order to obtain a required regulatory approval.