Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On
The Merger Agreement provides that, upon the terms and subject to the conditions
set forth therein, Merger Sub will be merged with and into the Company (the
"Merger") with the Company continuing as the surviving corporation in the
Merger, and, at the effective time of the Merger (the "Effective Time") each
share of common stock of the Company, par value
Based on the recommendation of the special committee (the "Special Committee")
of the board of directors of the Company (the "Board"), consisting solely of
independent and disinterested directors, the Board unanimously (i) adopted and
approved the Merger Agreement and the transactions contemplated by the Merger
Agreement (including the Merger), (ii) determined the Merger Agreement and the
transactions contemplated by the Merger Agreement (including the Merger) to be
in the best interests of, and fair to, the Company and its stockholders and
(iii) determined the Merger Consideration to be the "fair value" of the Common
Stock as of the date of the Merger Agreement, having been determined by the
Special Committee's independent financial advisor and the Special Committee
using customary and current valuation concepts and techniques generally employed
for similar businesses in the context of a merger and without discounting for
lack of marketability or minority status. Stockholders of the Company will be
asked to vote on the approval of the Merger Agreement at a special stockholders
meeting that will be held on a date to be announced (the "Special Meeting"). The
closing of the Merger is subject to, among other conditions, the approval of the
Merger Agreement by a majority of the outstanding shares of Common Stock
entitled to vote on such matter (the "Company Stockholder Approval"). Purchaser
Parties and their respective affiliates currently beneficially own approximately
80% of the Company's outstanding shares of Common Stock. Approval of the holders
of at least a majority of the shares of Common Stock not beneficially owned by
the Purchaser Parties and their respective affiliates is not required under
In addition to the Company Stockholder Approval condition, consummation of the Merger is also subject to various customary conditions, including, but not limited to, the obtainment of any necessary regulatory approvals.
The Company is subject to customary restrictions on its ability to initiate, solicit, propose or knowingly encourage or otherwise knowingly facilitate Acquisition Proposals (as defined in the Merger Agreement) from third parties and to provide any information or data concerning the Company or access to the Company's properties, books and records to any person in connection with any Acquisition Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an Acquisition Proposal, with customary exceptions regarding the Board's fiduciary duties under applicable law. The Board has recommended that the Company's stockholders vote to adopt and approve the Merger Agreement and the transactions contemplated thereby (including the Merger), subject to certain customary exceptions regarding the Board's fiduciary duties under applicable law.
The Merger Agreement contains certain termination rights, including the right of
the Company to terminate the Merger Agreement to accept a Superior Proposal (as
defined in the Merger Agreement). In addition, subject to certain exceptions and
limitations set forth in the Merger Agreement, either party may terminate the
Merger Agreement if the Merger is not consummated by
The Company has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (1) to conduct its business in the ordinary course during the period between the Signing Date and the Effective Time, (2) not to engage in certain types of transactions during this period unless agreed to in writing by Parent, (3) to convene and hold the Special Meeting for the purpose of obtaining the Company Stockholder Approval, (4) subject to certain conditions, not to withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Parent, the recommendation of the Board that the Company's stockholders vote affirmatively at the Special Meeting to approve the Merger Agreement and the Merger, and (5) to cooperate with Parent to use their respective reasonable best efforts to take or cause to be taken all actions necessary or advisable to obtain any required antitrust approval for the Merger.
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The foregoing summary 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 attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference herein.
The Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger 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 to the Merger Agreement 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 are not third-party beneficiaries under the Merger Agreement and 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 thereto 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 Merger Agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures.
Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description of Exhibit 2.1* Agreement and Plan of Merger, dated as ofNovember 11, 2020 , by and amongAeroGrow International, Inc. ,SMG Growing Media, Inc. ,AGI Acquisition Sub, Inc. , and, solely for the purposes stated in Section 6.4,The Scotts Miracle-Gro Company .
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The
Company hereby undertakes to supplementally furnish copies of any omitted
schedules to the
Additional Information and Where to Find It
In connection with the proposed Merger, the Company will file a preliminary
proxy statement and the Purchaser Parties,
Investors and stockholders may obtain a free copy of documents filed by the
Company with the
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Participants in the Solicitation
The Company,
Forward-Looking Statements
Statements about the expected timing, completion and effects of the proposed Merger and related transactions and all other statements in this Current Report on Form 8-K and the exhibits furnished or filed herewith, other than historical facts, constitute forward-looking statements. When used in this report, the words "expect," "believe," "anticipate," "goal," "plan," "intend," "estimate," "may," "will" or similar words are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. The Company may not be able to complete the proposed Merger on the terms described above or other acceptable terms or at all because of a number of factors, including, but not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (2) the failure to obtain the Company Stockholder Approval or the failure to satisfy the closing conditions in the Merger Agreement, (3) the potential for regulatory authorities to require divestitures, behavioral remedies or other concessions in order to obtain their approval of the Merger, (4) risks related to disruption of management's attention from the Company's ongoing business operations due to the Merger, (5) the effect of the announcement of the Merger on the ability of the Company to retain and hire key personnel and maintain relationships with its customers, suppliers, operating results and business generally, (6) the Merger may involve unexpected costs, liabilities or delays, (7) the Company's business may suffer as a result of the uncertainty surrounding the Merger, including the timing of the consummation of the Merger, (8) the outcome of any legal proceeding relating to the Merger, (9) the Company may be adversely affected by other economic, business and/or competitive factors, including, but not limited to, those related to COVID-19, and (10) other risks to consummation of the Merger, including the risk that the Merger will not be consummated within the expected time period or at all, which may adversely affect the Company's business and the price of its common stock.
Actual results may differ materially from those indicated by such
forward-looking statements. In addition, the forward-looking statements
represent the Company's views as of the date on which such statements were made.
The Company anticipates that subsequent events and developments may cause its
views to change. However, although the Company may elect to update these
forward-looking statements at some point in the future, it specifically
disclaims any obligation to do so. These forward-looking statements should not
be relied upon as representing the Company's views as of any date subsequent to
the date hereof. Additional factors that may affect the business or financial
results of the Company are described in the risk factors included in the
Company's filings with the
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