Item 1.01 Entry into a Material Definitive Agreement.
On June 30, 2019, Applied Materials, Inc., a Delaware corporation ("Buyer" or
"Applied"), entered into a Share Purchase Agreement (the "Share Purchase
Agreement"), among Buyer, Kokusai Electric Corporation, a stock company
(kabushiki kaisha) organized under the laws of Japan (the "Company"), and KKR
HKE Investment L.P., a limited partnership organized under the laws of the
Cayman Islands ("Seller"). Pursuant to the Share Purchase Agreement, at the
closing of the transactions contemplated by the Share Purchase Agreement (the
"Closing"), Seller will sell all of the common shares (the "Shares") of the
Company to Buyer, Buyer will purchase all of the Shares from Seller and the
Company will become a wholly-owned subsidiary of Buyer.
Subject to the terms and conditions set forth in the Share Purchase Agreement,
at the Closing, Buyer will pay $2.2 billion in cash for the Company, subject to
adjustments for net debt, transaction expenses and net working capital, as
further described in the Share Purchase Agreement.
The Closing is subject to customary conditions, including, among others, the
absence of a material adverse effect on the Company and the receipt of specified
regulatory and governmental consents and approvals.
The Share Purchase Agreement contains representations, warranties and covenants
of the parties customary for a transaction of this type, including covenants of
the parties to use their reasonable best efforts to obtain all required
governmental and regulatory consents and approvals, subject to certain
exceptions contained in the Share Purchase Agreement.
The Share Purchase Agreement contains certain termination rights by either Buyer
or Seller, including if the transactions contemplated by the Share Purchase
Agreement are not consummated on or before June 30, 2020, which date may be
extended by three months on two separate occasions if, on the applicable date,
the only conditions to closing relate to required regulatory approvals. If the
Share Purchase Agreement is terminated under certain circumstances involving the
failure to obtain required regulatory approvals, Buyer will be obligated to pay
Seller a termination fee equal to $154 million in cash.
The foregoing description of the Share Purchase Agreement and the transactions
contemplated thereby does not purport to be complete and is qualified in its
entirety by reference to the full text of the Share Purchase Agreement, which is
filed as Exhibit 2.1 hereto and incorporated herein by reference. The Share
Purchase Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual information
about Buyer, Seller, the Company or any of their respective subsidiaries or
affiliates. The representations, warranties and covenants contained in the Share
Purchase Agreement were made only for purposes of the Share Purchase Agreement
as of the specific dates therein, were solely for the benefit of the parties to
the Share Purchase Agreement, may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential disclosures made
for the purposes of allocating contractual risk between the parties instead of
establishing these matters as facts, and may be subject to standards of
materiality applicable to the contracting parties that differ from those
applicable to investors. Investors 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 parties to the Share Purchase
Agreement or any of their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of representations and warranties may
change after the date of the Share Purchase Agreement.
Buyer expects to finance the transaction with a combination of balance sheet
cash and a term loan facility.
Item 7.01 Regulation FD Disclosure.
On July 1, 2019, Buyer issued a press release announcing the execution of the
Share Purchase Agreement, the text of which is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
2.1 Share Purchase Agreement, dated as of June 30, 2019, among Buyer,
the Company and Seller*
99.1 Press Release issued by Applied Materials, Inc. dated July 1, 2019
* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. Applied agrees to furnish supplementally a copy of any such
schedule or exhibit to the U.S. Securities and Exchange Commission upon
This report contains forward-looking statements, including those regarding
Applied's proposed acquisition of the Company; the impact on Applied's earnings,
gross and operating margins, strategic position, product and service offerings
in semiconductor and services markets, ability to serve customers' requirements,
and delivery of long-term value to stockholders; benefits to Applied's and the
Company's customers, employees and stockholders; financing activities and usage
of cash in connection with and after the proposed acquisition; and all
statements other than those of historical fact. Forward-looking statements may
contain words such as "expect," "believe," "may," "can," "should," "will,"
"forecast," "anticipate" or similar expressions, and include the assumptions
that underlie such statements. These statements are subject to known and unknown
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements Risks and uncertainties
include but are not limited to: the ability of the parties to consummate the
proposed acquisition in a timely manner or at all; satisfaction of the
conditions precedent to consummation of the proposed acquisition, including the
ability to secure regulatory approvals in a timely manner and upon terms
anticipated by the parties or at all; the possibility of or an increase in
litigation and other claims (including related to the transaction itself);
successful completion of anticipated financing arrangements; Applied's ability
to successfully integrate the Company's operations, product and service lines,
technology and employees and realize expected synergies from the proposed
acquisition; disruptions of Applied's and the Company's current plans,
operations and relationships with customers, suppliers and employees caused by
the announcement and pendency of the proposed acquisition; unknown,
underestimated or undisclosed commitments or liabilities; the level of demand
for the combined companies' products and services, which is subject to many
factors, including uncertain global economic and industry conditions, demand for
electronic products and semiconductors, and customers' new technology and
capacity requirements; Applied's ability to (i) develop, deliver and support a
broad range of products and services, expand its markets and develop new
markets, (ii) timely align its cost structure with business conditions, and
(iii) attract, motivate and retain key employees of Applied and the Company; and
other risks and uncertainties described in Applied's SEC filings, including its
most recent Forms 10-Q and 8-K. All forward-looking statements are based on
management's estimates, projections and assumptions as of the date hereof.
Neither Applied nor the Company undertakes any obligation to update any
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