EMERSON ELECTRIC CO. Item 1.01 Entry into a Material Definitive Agreement.
On
The obligation of the parties to consummate the Closing is subject to the
satisfaction or waiver of customary conditions, including, among other things,
the receipt of applicable regulatory approvals and the expiration or termination
of applicable waiting periods. The Transaction Agreement contains certain
termination rights for each of Emerson and BCP Emerald, including the right of
each party to terminate the Transaction Agreement if the Closing has not been
consummated by
The Transaction Agreement contains customary representations and warranties by each party. The parties have also agreed to various customary covenants and agreements, including, among others, an obligation of Emerson to conduct, subject to certain exceptions, the Climate Technologies business in the ordinary course consistent with past practice during the period between the execution of the Transaction Agreement and the Closing.
The Seller Note will be issued by the Seller Note Issuer at the Closing, in an
aggregate principal amount of
At the Closing, Emerson, BCP Emerald and JV NewCo will enter into a limited partnership agreement with respect to JV NewCo and a limited liability company agreement with respect to the general partner of JV NewCo (in the forms as they have been agreed at signing of the Transaction Agreement, the "JV Agreements") and Emerson and JV NewCo will enter into a transition services agreement, among other agreements as described in the Transaction Agreement.
The JV Agreements will provide, among other things, (i) that Emerson will have the right to designate a minority of the members of the board of managers of JV NewCo and the right to consent to certain material actions of JV NewCo, in each case for so long as Emerson maintains certain ownership percentages and (ii) for the ways in which Emerson and BCP Emerald can each exercise certain liquidity rights with respect to the equity of JV NewCo that they own respectively, and the transfer restrictions Emerson is subject to.
IPO of JV NewCo.
Pursuant to the JV Agreements, Emerson shall have the right to require JV NewCo to consummate Qualified IPO after the fifth anniversary of the Closing and BCP Emerald shall have the right to require JV NewCo to consummate a Qualified IPO after the second anniversary of the Closing. Each of Emerson and BCP Emerald shall have the right to require JV NewCo to consummate a Non-Qualified IPO after the seventh anniversary of the Closing. If Emerson makes a demand for JV NewCo to consummate an IPO (whether a Qualified IPO or a Non-Qualified IPO), BCP Emerald shall have a right of first offer to purchase all of the common equity that Emerson owns.
The JV Agreements provide that certain volume-related transfer restrictions will apply to Emerson following an IPO of JV NewCo, through a priority sell-down right granted to BCP Emerald, until BCP Emerald has received an agreed amount of sale proceeds.
The Preferred Security may convert in an IPO to common equity. If the Preferred Security is not converted to common equity in connection with an IPO, it shall instead convert to a cash-pay security with the same liquidation preference and continue to accrue interest.
Sales of Equity of JV NewCo.
Pursuant to the JV Agreements, Emerson shall have the right to sell 50% of the common equity of JV NewCo that it owns to a third party after the second anniversary of the Closing and the right to sell 100% of the common equity of JV NewCo that it owns to a third party after the fifth anniversary of the Closing, subject, in each case, to certain restrictions and a right of first offer in favor of BCP Emerald.
BCP Emerald shall have "drag-along" rights under the JV Agreements in respect of a sale of JV NewCo that constitutes a change of control. BCP Emerald may exercise these rights to require Emerson to sell its equity in JV NewCo alongside BCP Emerald at any point, but BCP Emerald can only exercise such rights prior to the second anniversary of the Closing if Emerson receives a specified minimum return.
Each of Emerson and BCP Emerald shall have customary "tag-along" rights under the JV Agreements in respect of sales of certain direct or indirect interests in the common equity of JV NewCo prior to an IPO.
The foregoing description of the Transaction Agreement and related documents does not purport to be complete, and is qualified in its entirety by reference to the full text of the Transaction Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Transaction Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about Emerson or any of the other parties to the Transaction Agreement. In particular, the assertions embodied in the representations and warranties contained in the Transaction Agreement are qualified by information in confidential disclosure schedules provided by the parties in connection with the signing of the Transaction Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Transaction Agreement. Moreover, certain representations and warranties in the Transaction Agreement were used for the purpose of allocating risk among the parties rather than establishing matters as facts and were made only as of the date of the Transaction Agreement (or such other date or dates as may be specified in the Transaction Agreement). Accordingly, the representations and warranties in the Transaction Agreement should not be relied upon as characterizations of the actual state of facts about Emerson or any of the parties to the Transaction Agreement.
Item 2.02 Results of Operations and Financial Conditions.
On
References to underlying orders in the press release refer to the Company's trailing three-month average orders growth versus the prior year, excluding currency, acquisitions and divestitures.
The press release contains non-GAAP financial measures as such term is defined
in Regulation G under the rules of the
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Description of Exhibits
Transaction Agreement, dated as of October 30, 2022 , among
2.1 Emerson Electric Co. , BCP Emerald Aggregator L.P. , Emerald Debt
Merger Sub L.L.C and Emerald JV Holdings L.P.*
99.1 Press Release announcing fourth quarter and full year results
issued by Emerson Electric Co. on October 31, 2022
104 Cover Page Interactive Data File (formatted as Inline XBRL)
* Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. Emerson agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the
Forward-Looking and Cautionary Statements
Statements in this Current Report on Form 8-K that are not strictly historical
may be "forward-looking" statements, which involve risks and uncertainties, and
Emerson undertakes no obligation to update any such statements to reflect later
developments. These risks and uncertainties include Emerson's ability to
successfully complete on the terms and conditions contemplated, and the
financial impact of, the proposed Climate Technologies transaction, the proposed
sale of its InSinkErator food waste disposal business, the financial impact of
the proposed sale, the scope, duration and ultimate impacts of the COVID-19
pandemic and the
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