Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed in a Current Report on Form 8-K, filed on January 28,
2020, BorgWarner Inc., a Delaware corporation (the "Company"), entered into a
Transaction Agreement, dated January 28, 2020 (the "Agreement"), by and between
the Company and Delphi Technologies PLC, a public limited company formed under
the laws of the Bailiwick of Jersey ("Delphi Technologies"), pursuant to which
the Company, or one of its subsidiaries, will acquire Delphi Technologies in an
all-stock transaction. Subject to the terms and conditions of the Agreement, at
the Effective Time (as defined below), the Company, or one of its subsidiaries,
will acquire all of the outstanding ordinary shares of Delphi Technologies,
$0.01 par value per share (each, a "Delphi Share" and, collectively, the "Delphi
Shares"), from the shareholders of Delphi Technologies (the "Delphi
Shareholders") for newly issued shares of common stock of the Company pursuant
to a scheme of arrangement (the "Scheme of Arrangement") under Part 18A of the
Companies (Jersey) Law 1991, as amended from time to time (the "Transaction").
Pursuant to the terms of the Agreement and the Scheme of Arrangement, the
Company will issue, for each Delphi Share, 0.4534 shares of common stock of the
Company, par value $0.01 per share (each, a "Company Share") (or cash in lieu of
any fractional Company Share) (the "Exchange Ratio"). Following the
implementation of the Transaction, Delphi Technologies will become a
wholly-owned subsidiary of the Company. The Agreement and the transactions
contemplated thereby have been approved by the board of directors of the
Company, and the board of directors of Delphi Technologies (the "Delphi Board")
has adopted resolutions approving, among other things, the Agreement (including
the Transaction, the Scheme of Arrangement and the other transactions
contemplated thereby) and recommending that the Delphi Shareholders vote in
favor of the Transaction. The Transaction is expected to close in the second
half of 2020. Under the Agreement, on the date of the closing of the
Transaction, the Scheme of Arrangement is to become effective at such time as an
act of the Royal Court of Jersey (the "Royal Court") sanctioning the Scheme of
Arrangement has been delivered to the Registrar of Companies in Jersey (such
date and time, the "Effective Time").
Subject to certain exceptions, each award of restricted stock units (other than
performance-based restricted stock units) of Delphi Technologies (an "Existing
RSU Award") will, as of immediately prior to the Effective Time, be cancelled
and automatically be converted into an award of restricted stock units of the
Company ("Company RSUs") covering a number of Company Shares determined by
multiplying the number of Delphi Shares subject to such Existing RSU Award
immediately prior to closing by the Exchange Ratio (and rounding up or down to
the nearest whole number). The converted Company RSUs will have the same terms
and conditions as the Existing RSU Award and will generally become fully vested
upon certain qualifying terminations of employment of the holder thereof prior
to the second anniversary of the Effective Time. Existing RSU Awards that are
not converted into Company RSUs will, as of immediately prior to the Effective
Time, be cancelled and automatically be converted into the right to receive, for
each restricted stock unit, an amount of cash equal to the Cash Value. "Cash
Value" means an amount equal to the product of (A) the Closing Volume-Weighted
Average Price and (B) the Exchange Ratio. "Closing Volume-Weighted Average
Price" means the volume-weighted average price of Company Shares on the New York
Stock Exchange for the period of ten consecutive trading days ending on the
second full trading day prior to the Effective Time. Subject to certain
exceptions, each award of performance-based restricted stock units of Delphi
Technologies (an "Existing PSU Award") will, as of immediately prior to the
Effective Time, be cancelled and automatically be converted into an award of
Company RSUs covering a number of Company Shares determined by multiplying (i)
the number of Delphi Shares subject to such Existing PSU Award immediately prior
to closing (with performance deemed to have been achieved for this purpose at
the greater of (A) the value of the performance units subject to such Existing
PSU Award based on the level of attainment of the applicable performance goal as
of the Effective Time, as determined by the compensation committee of the Delphi
Board in its reasonable judgment (such value the "Achieved PSU Number") and (B)
the target number of Delphi Shares subject to such Existing PSU Award, by (ii)
the Exchange Ratio (and rounding up or down to the nearest whole number) (such
restricted stock unit of the Company, a "Converted PSU Award"). Each Converted
PSU Award will be subject to the same time-based vesting conditions that applied
to the Existing PSU Award immediately prior to closing and will not be subject
to any performance-based vesting conditions. In all other respects, the
Converted PSU Award will be subject to substantially the same terms and
conditions applicable to the Existing PSU Award and will generally become fully
vested upon certain qualifying terminations of employment of the holder thereof
prior to the second anniversary of the Effective Time. Each Existing PSU Award
that is not converted into a Converted PSU Award will, as of immediately prior
to the Effective Time, be cancelled and automatically be converted into the
right to receive, for each restricted stock unit subject to such Existing PSU
Award, which, for this purpose, shall be a number equal to the greater of the
Achieved PSU Number and the target number of Delphi Shares subject to the
Existing PSU Award, an amount of cash equal to the Cash Value. Each award of
options to acquire Delphi Shares that is outstanding and unexercised immediately
prior to the Effective Time will, as of the Effective Time, be cancelled and
automatically converted into the right to receive an amount of cash equal to the
product of (i) the excess, if any, of the Cash Value over the exercise price per
Delphi Share of such option multiplied by (ii) the total number of Delphi Shares
subject to such option. Each award of restricted stock units that has been
granted to a non-employee member of the Delphi Board will, in accordance with
the terms applicable to such restricted stock units under the applicable plan
and award agreement pursuant to which the units were granted (i) vest as of the
Effective Time and (ii) be cancelled and converted into the right to receive,
for each restricted stock unit subject to such award, an amount of cash equal to
the Cash Value. As of the Effective Time, the Company will assume all of the
Delphi Technologies stock plans including with respect to any amount of shares
(as adjusted pursuant to the Exchange Ratio) that remain (or may again become)
available for future issuance thereunder, subject to any limitations under
applicable law or any applicable securities exchange listing requirements.
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Representations, Warranties and Covenants
The parties to the Agreement have made representations, warranties and covenants
that are customary for transactions of this nature including, among others, (i)
covenants by both parties to use reasonable best efforts to obtain governmental
and regulatory approvals and (ii) covenants by each of Delphi Technologies and
the Company to conduct its business in the ordinary course during the period
between the execution of the Agreement and the consummation of the Transaction
and not to take certain kinds of actions during such period.
Delphi Technologies has agreed not to solicit proposals relating to alternative
business combination transactions or, subject to certain exceptions that permit
the Delphi Board to comply with its fiduciary duties, enter into discussions
concerning or furnish non-public information in connection with any proposals
for alternative business combination transactions.
Conditions to Closing
The Transaction is subject to customary closing conditions, including, among
other things, the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the receipt of any other necessary permits, approvals, clearances and consents
of, or filings with, any governmental or regulatory authorities being procured
or made, as applicable. The consummation of the Transaction is also subject to
the sanctioning of the Scheme of Arrangement by the Royal Court, with or without
modification (but subject to any such modification being acceptable to the
Company and Delphi Technologies).
The Transaction is also subject to the approval of the Scheme of Arrangement by
a majority in number of the Delphi Shareholders present and voting, either in
person or by proxy, representing at least 75% of the voting rights of those
holders, at such meeting or meetings of the Delphi Shareholders as the Royal
Court may direct in relation to the Scheme of Arrangement (or at any adjournment
or postponement of such meeting).
Termination and Termination Fee
The Agreement may be terminated at any time prior to the Effective Time by the
mutual written consent of the parties and in certain other circumstances,
including if the Transaction has not been consummated by October 28, 2020 and
the delay in closing is not due to the material breach of the Agreement by the
party seeking termination. The Agreement provides that Delphi Technologies will
pay a $53.5 million termination fee (the "Termination Fee") to the Company if,
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
with respect to the issuance of Company Shares in connection with the
Transaction is incorporated by reference herein. The Company Shares issuable in
connection with the Transaction will not be registered under the Securities Act
of 1933, as amended (the "Securities Act"), in reliance on the exemption from
registration provided by Section 3(a)(10) of the Securities Act and/or the
regulations promulgated thereunder.
No Offer or Solicitation
This communication is being made in respect of the proposed Transaction. This
communication is not intended to and does not constitute an offer to sell or the
solicitation of an offer to subscribe for or buy or an invitation to purchase or
subscribe for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the proposed Transaction or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. In particular, this communication is not an
offer of securities for sale into the United States. No offer of securities
shall be made in the United States absent registration under the Securities Act
or pursuant to an exemption from, or in a transaction not subject to, such
registration requirements. Any securities issued in the Transaction are
anticipated to be issued in reliance upon available exemptions from such
registration requirements pursuant to Section 3(a)(10) of the Securities Act. In
connection with the proposed Transaction, Delphi Technologies will file certain
proxy materials, which shall constitute the scheme document and the proxy
statement relating to the Transaction (the "proxy statement"). The proxy
statement will contain the full terms and conditions of the Transaction,
including details with respect to the Delphi Technologies shareholder vote in
respect of the Transaction. Any decision in respect of, or other response to,
the Transaction should be made only on the basis of the information contained in
the proxy statement.
Participants in the Solicitation
Delphi Technologies, the Company and certain of their respective directors,
executive officers and employees may be deemed "participants" in the
solicitation of proxies from the Delphi Shareholders in respect of the proposed
Transaction. Information regarding the foregoing persons, including a
description of their direct or indirect interests, by security holdings or
otherwise, will be set forth in the proxy statement and any other relevant
documents to be filed with the Securities and Exchange Commission (the "SEC").
You can find information about Delphi Technologies' directors and executive
officers in its Annual Report on Form 10-K for the fiscal year ended December
31, 2018, its definitive proxy statement filed with the SEC on Schedule 14A on
March 15, 2019, and certain of Delphi Technologies' Current Reports on Form 8-K
filed with the SEC on January 7, 2019 and July 30, 2019. You can find
information about the Company's directors and executive officers in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2018 and its
definitive proxy statement filed with the SEC on Schedule 14A on March 15, 2019.
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Additional Information and Where to Find It
This communication may be deemed solicitation material in respect of the
Transaction. In connection with the Transaction, Delphi Technologies will file
with the SEC and furnish the proxy statement and other relevant documents to the
Delphi Shareholders. This communication does not constitute a solicitation of
any vote or approval. Before making any voting decision, the Delphi Shareholders
are urged to read the proxy statement and any other relevant documents filed or
to be filed with the SEC in connection with the proposed Transaction or
incorporated by reference in the proxy statement (if any) carefully and in their
entirety when they become available because they will contain important
information about the proposed Transaction and the parties to the proposed
Transaction.
Investors will be able to obtain free of charge the proxy statement and other
documents filed with the SEC at the SEC's website at http://www.sec.gov. In
addition, the proxy statement and Delphi Technologies' and the Company's
respective annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant
to section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act"), are available free of charge through Delphi
Technologies' and the Company's websites at www.delphi.com and
www.borgwarner.com, respectively, as soon as reasonably practicable after they
are electronically filed with, or furnished to, the SEC.
Forward-Looking Statements
This communication may contain forward-looking statements as contemplated by the
1995 Private Securities Litigation Reform Act that reflect, when made, Delphi
Technologies' or the Company's respective current views with respect to future
events, including the proposed Transaction, and financial performance or that
are based on their respective management's current outlook, expectations,
estimates and projections, including with respect to the combined group
following the proposed Transaction, if completed. Such forward-looking
statements are subject to many risks, uncertainties and factors relating to
Delphi Technologies' or the Company's respective operations and business
environment, which may cause the actual results of Delphi Technologies or the
Company to be materially different from any future results. All statements that
address future operating, financial or business performance or Delphi
Technologies' or the Company's respective strategies or expectations are
forward-looking statements. In some cases, you can identify these statements by
forward-looking words such as "may," "might," "will," "should," "could,"
"designed," "effect," "evaluates," "forecasts," "goal," "guidance,"
"initiative," "intends," "pursue," "seek," "target," "when," "will," "expects,"
"plans," "intends," "anticipates," "believes," "estimates," "predicts,"
"projects," "potential," "outlook" or "continue," the negatives thereof and
other comparable terminology. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, the possibility that the proposed Transaction will not be pursued; failure
to obtain necessary regulatory approvals or required financing or to satisfy any
of the other conditions to the proposed Transaction; adverse effects on the
market price of Delphi Technologies' ordinary shares or the Company Shares and
on Delphi Technologies' or the Company's operating results because of a failure
to complete the proposed Transaction; failure to realize the expected benefits
of the proposed Transaction; failure to promptly and effectively integrate
Delphi Technologies' businesses; negative effects relating to the announcement
of the proposed Transaction or any further announcements relating to the
proposed Transaction or the consummation of the proposed Transaction on the
market price of Delphi Technologies' ordinary shares or the Company Shares;
significant transaction costs and/or unknown or inestimable liabilities;
potential litigation associated with the proposed Transaction; general economic
and business conditions that affect the combined company following the
consummation of the proposed Transaction; changes in global, political,
economic, business, competitive, market and regulatory forces; changes in tax
laws, regulations, rates and policies; future business acquisitions or
disposals; competitive developments; and the timing and occurrence (or
non-occurrence) of other events or circumstances that may be beyond Delphi
Technologies' or the Company's control.
For additional information about these and other factors, see the information
under the caption "Risk Factors" in Delphi Technologies' most recent Annual
Report on Form 10-K filed with the SEC and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" filed on February 21, 2019,
and the information under the caption "Risk Factors" in the Company's most
recent Annual Report on Form 10-K filed with the SEC and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
February 19, 2019.
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Delphi Technologies' and the Company's forward-looking statements speak only as
of the date of this communication or as of the date they are made. Delphi
Technologies and the Company each disclaim any intent or obligation to update or
revise any "forward looking statement" made in this communication to reflect
changed assumptions, the occurrence of unanticipated events or changes to future
operating results over time, except as may be required by law. All subsequent
written and oral forward-looking statements attributable to Delphi Technologies,
the Company or their respective directors, executive officers or any person
acting on behalf of any of them are expressly qualified in their entirety by
this paragraph.
General
The release, publication or distribution of this communication in or into
certain jurisdictions may be restricted by the laws of those jurisdictions.
Accordingly, copies of this communication and all other documents relating to
the proposed Transaction are not being, and must not be, released, published,
mailed or otherwise forwarded, distributed or sent in, into or from any such
. . .
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