HOWMET AEROSPACE INC. Item 1.01. Entry Into a Material Definitive Agreement. Agreement and Plan of Merger
On
The Merger Agreement provides that, among other things, and on the terms and
subject to the conditions of the Merger Agreement, (a) Merger Sub will merge
with and into the Company (the "Merger"), with the Company surviving the Merger
as a wholly owned subsidiary of Parent, and (b) at the effective time of the
Merger (the "Effective Time"), each issued and outstanding share of common stock
of the Company, par value
The Board of Directors of the Company (the "Board") has approved the Merger Agreement and the transactions contemplated thereby and resolved to recommend that the Company's stockholders approve the adoption of the Merger Agreement. The stockholders of the Company will be asked to vote on the adoption of the Merger Agreement at a stockholder meeting that will be held on a date, and at a time and place, to be announced when finalized.
The Merger Agreement provides that, following the Effective Time, the Common
Shares will be delisted from the
Treatment of Company Equity Awards
At the Effective Time, on the terms and subject to the conditions of the Merger Agreement, each then-outstanding stock option award, restricted share unit award (a "Company RSU Award") (other than Company RSU Awards granted after the date of the Merger Agreement), deferred stock unit award and performance-based Company RSU Awards (a "Company PSU Award"), will be cancelled in exchange for the Merger Consideration (less the applicable exercise price in the case of stock option awards). The number of Shares subject to each Company PSU Award shall be determined in accordance with the award agreements, by deeming the applicable performance goals to be achieved at the target level of performance, provided that with respect to any Company PSU Award for which fifty percent or more of the applicable performance period has been completed as of the Effective Time, the number of Shares will be determined based on actual performance. Company RSU Awards granted on or after the date of the Merger Agreement (other than any such awards granted to non-employee members of the Board) will be cancelled and converted into a cash award equal to the product of (a) the number of Shares subject to such Company RSU Award as of immediately prior to the Effective Time multiplied by (b) the Merger Consideration, with such cash awards being subject to the same terms and conditions that applied to the Company RSU Award immediately prior to the Effective Time (including service-based vesting conditions).
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Conditions to Closing
The Closing (as defined in the Merger Agreement) is subject to the fulfillment or waiver of certain customary mutual closing conditions, including: (a) the adoption of the Merger Agreement by holders of a majority of the outstanding Shares (the "Company Stockholder Approval"), (b) the absence of any injunction by any court or other tribunal of competent jurisdiction, or adoption of any law, that prohibits or makes the consummation of the Merger illegal, and (c) 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 certain other regulatory approvals. The obligation of each party to consummate the Merger is also conditioned upon certain unilateral closing conditions, including the other party's representations and warranties being accurate (subject to certain customary materiality exceptions) and the other party having performed and complied with its covenants in the Merger Agreement in all material respects. The availability of Parent's financing is not a condition to the consummation of the Merger. The transaction is expected to close in the second half of 2023.
No-Shop
Under the Merger Agreement, the Company has agreed to certain "no-shop" restrictions which require the Company not to, and to cause its subsidiaries, affiliates and representatives not to, among other things, (a) solicit, initiate or knowingly encourage or knowingly facilitate any inquiries or proposals that would reasonably be expected to lead to an alternative acquisition proposal or otherwise participate or engage in any discussions or negotiations regarding an alternative acquisition proposal or (b) provide access to properties, books and records or any non-public information relating to the Company or its subsidiaries to induce or knowingly facilitate the making of an alternative acquisition proposal. The Company may, however, prior to obtaining the Company Stockholder Approval, engage in discussions or negotiations and provide non-public information to a third party which has made a bona fide, written alternative acquisition proposal that did not result from a material breach of the Company's "no-shop" restrictions and that the Board determines in good faith after consultation with its outside legal counsel and financial advisors that constitutes or would reasonably be expected to result in a Superior Proposal (as defined in the Merger Agreement).
Prior to obtaining the Company Stockholder Approval, the Board may, in certain circumstances, effect a Change of Recommendation (as defined in the Merger Agreement) and/or terminate the Merger Agreement to enter into a Superior Proposal, subject to complying with specified notice requirements to Parent and other conditions set forth in the Merger Agreement, including paying a termination fee to Parent in specified circumstances, as described below.
Termination and Fees
The Merger Agreement contains termination rights for each of the Company and Parent, including, among others, (a) subject to certain limitations, if the consummation of the Merger does not occur on or before the nine-month anniversary of the signing of the Merger Agreement subject to (x) up to two 90-day extensions if on such date a closing condition related to regulatory approvals has not been satisfied or waived (the "End Date") and (y) extension in certain circumstances wherein the Marketing Period (as defined in the Merger Agreement) for Parent's debt financing has commenced but has not yet been completed by such date and (b) if the Company Stockholder Approval is not obtained following the meeting of the Company's stockholders for purposes of obtaining such Company Stockholder Approval. In addition, subject to certain conditions, the Merger Agreement may be terminated (i) by Parent if the Board effects a Change of Recommendation or (ii) by the Company if the Company terminates the Merger Agreement to enter into a definitive contract with respect to a Superior Proposal. The Company and Parent may also terminate the Merger Agreement by mutual written consent.
The Company is required to pay Parent a termination fee of
The Merger Agreement also provides that a reverse termination fee of
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The Merger Agreement also provides that, in certain circumstances, either party may seek to compel the other party to specifically perform its obligations under the Merger Agreement (including, subject to the terms and conditions of the Merger Agreement and the equity commitment letters, to force Parent to enforce the equity commitment letters and to consummate the Merger).
Financing
Parent has obtained equity financing and debt financing commitments for the purpose of financing the transactions contemplated by the Merger Agreement and paying related fees and expenses.
Affiliates of funds managed by affiliates of Apollo, on the one hand, and an
affiliate of Irenic, on the other hand (each, an "Investor", and collectively,
the "Investors"), have severally committed to capitalize Parent at the Closing
with an aggregate equity contribution equal to approximately
The Investors have also committed to provide debt financing in an aggregate
principal amount of
Limited Guarantees
Concurrently with the execution of the Merger Agreement, the Investors entered into limited guarantees with the Company pursuant to which they agreed to severally guarantee the obligations of Parent and Merger Sub under the Merger Agreement, including payment of the reverse termination fee, damages payable by Parent for fraud or willful breach of the Merger Agreement and certain other reimbursement obligations and expenses under the Merger Agreement, in each case subject to the terms and conditions set forth in the Merger Agreement and the limited guarantees.
Other Terms of the Merger Agreement
The Company has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants to use reasonable best efforts to conduct its business in the ordinary course, use commercially reasonable efforts to preserve its business organization intact and maintain existing relations with key governmental entities and third parties, and refrain from taking certain actions without Parent's consent during the period between the date of the Merger Agreement and the Closing. The parties have agreed to use reasonable best efforts to take all actions necessary, proper or advisable to consummate the Merger as promptly as practicable, including an obligation to defend against any litigation challenging the transaction, to commit and agree to any divestitures with respect to Parent, the Company and their respective subsidiaries, and to commit to any go-forward restrictions or obligations on Parent, the Company and their respective subsidiaries after Closing, in each case to permit Closing by the End Date.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated by reference herein.
The Merger Agreement and the above description have been included to provide investors with information regarding its terms. They are not intended to provide any other factual information about the Company, Parent, Merger Sub or their respective affiliates. 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 among 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 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 . . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Exhibit 2.1* Agreement and Plan of Merger, dated as ofMay 4, 2023 , by and amongArconic Corporation ,Arsenal AIC Parent LLC andArsenal AIC MergeCo Inc. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Schedules and exhibits have been omitted pursuant to
Item 601(a)(5) of Regulation S-K.
supplemental copies of any of the omitted schedules or exhibits upon request
by the
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for
any schedules or exhibits so furnished.
Additional Information About the Proposed Transaction and Where to Find It
This Current Report on Form 8-K relates to the proposed transaction involving
the Company. In connection with the proposed transaction, the Company will file
relevant materials with the
The Company's stockholders will be able to obtain a free copy of the Proxy
Statement, as well as other filings containing information about the Company,
without charge, at the
Participants in the Solicitation of Proxies
The Company and certain of its directors, executive officers and employees may
be deemed to be participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding the Company's directors and
executive officers is available in the Company's definitive proxy statement for
its 2023 annual meeting of stockholders, which was filed with the
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Forward-Looking Statements and Information
This Current Report on Form 8-K contains statements that relate to future events
and expectations and, as such, constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include those containing such words as "anticipates," "believes,"
"could," "estimates," "expects," "forecasts," "goal," "guidance," "intends,"
"may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets,"
"will," "would" or other words of similar meaning. All statements that reflect
the Company's expectations, assumptions, projections, beliefs or opinions about
the future, other than statements of historical fact, are forward-looking
statements, including, without limitation, statements, relating to the condition
of, or trends or developments in, the ground transportation, aerospace, building
and construction, industrial, packaging and other end markets; the Company's
future financial results, operating performance, working capital, cash flows,
liquidity and financial position; cost savings and restructuring programs; the
Company's strategies, outlook, business and financial prospects; share
repurchases; costs associated with pension and other post-retirement benefit
plans; projected sources of cash flow; potential legal liability; the impact of
inflationary price pressures; and the potential impact of public health
epidemics or pandemics, including the COVID-19 pandemic. These statements
reflect beliefs and assumptions that are based on the Company's perception of
historical trends, current conditions and expected future developments, as well
as other factors the Company believes are appropriate in the circumstances.
Forward-looking statements are not guarantees of future performance, and actual
results may differ materially from those indicated by these forward-looking
statements due to a variety of risks, uncertainties and changes in
circumstances, many of which are beyond the Company's control. Such risks and
uncertainties include, but are not limited to: (i) continuing uncertainty
regarding the impact of the COVID-19 pandemic on our business and the businesses
of our customers and suppliers; (ii) deterioration in global economic and
financial market conditions generally; (iii) unfavorable changes in the end
markets we serve; (iv) the inability to achieve the level of revenue growth,
cash generation, cost savings, benefits of our management of legacy liabilities,
improvement in profitability and margins, fiscal discipline, or strengthening of
competitiveness and operations anticipated or targeted; (v) adverse changes in
discount rates or investment returns on pension assets; (vi) competition from
new product offerings, disruptive technologies, industry consolidation or other
developments; (vii) the loss of significant customers or adverse changes in
customers' business or financial condition; (viii) manufacturing difficulties or
other issues that impact product performance, quality or safety, or timely
delivery; (ix) the impact of pricing volatility in raw materials and
inflationary pressures on our costs of production, including energy; (x) a
significant downturn in the business or financial condition of a key supplier or
other supply chain disruptions; (xi) challenges to or infringements on our
intellectual property rights; (xii) the inability to successfully implement or
to realize the expected benefits of strategic initiatives or projects; (xiii)
the inability to identify or successfully respond to changing trends in our end
markets; (xiv) the impact of potential cyber attacks and information technology
or data security breaches; (xv) geopolitical, economic, and regulatory risks
relating to our global operations, including compliance with
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