Cummins Inc. (NYSE:CMI) entered into an arrangement agreement to acquire 81.4% stake in Hydrogenics Corporation (NasdaqGM:HYGS) from Fuzhou Bonded Zone Hejili Equity Investment Limited and others for approximately $240 million on June 28, 2019. Pursuant to the terms of agreement, Cummins will pay $15 in cash per share to the shareholders (other than The Hydrogen Company and its affiliates). As a part of the transaction, The Hydrogen Company, a wholly-owned subsidiary of L'Air Liquide, S.A., and Hydrogenics' current largest equity shareholder, will maintain its ownership in Hydrogenics. The Hydrogen Company has agreed to exchange its shares for shares pursuant to the transaction. The Hydrogen Company will contribute all of its 3.54 million shares of Hydrogenics, representing 18.6% of the outstanding shares, for common shares of Cummins on a one-for-one basis. The agreement provides for, among other things, customary representations, warranties and covenants, including customary non-solicitation covenants from Hydrogenics and a “fiduciary out” that allows the Board of Directors to accept a superior proposal in certain circumstances subject to a “right to match” in favour of Cummins and payment by Hydrogenics of a $8.9 million termination fee to Cummins. The employees and innovations of Hydrogenics will join Cummins. Following completion of the transaction, Hydrogenics will be de-listed from the Toronto Stock Exchange and NASDAQ and applications will be made for Hydrogenics to cease to be a reporting issuer or equivalent under the securities legislation of each of the provinces of Canada and Hydrogenics' registration of Shares under the United States Securities Exchange Act of 1934 will be terminated.

The transaction is subject to approval of at least 66 2/3% of the votes cast by shareholders, as well as the approval by a simple majority of votes cast by disinterested shareholders, excluding shares held by The Hydrogen Company and its affiliates and any other shareholders required to be excluded under MI 61-101, approval by Board of Directors of Hydrogenics, regulatory approval, approval of the Ontario Superior Court of Justice and the satisfaction of other customary closing conditions. The transaction does not contain a financing condition. The Hydrogen Company has entered into a voting and support agreement with Cummins to vote in favour of the transaction. The Directors and senior officers of the company, who as of the date hereof collectively hold approximately 1% of the issued and outstanding shares, have also entered into voting and support agreements with Cummins to vote in favour of the transaction. A Special Committee of the Board of Directors comprised of Doug Alexander, Sara Elford, David Ferguson and Don Lowry was formed to, among other things, review, evaluate and negotiate the terms of the transaction, make recommendations to the Board of Directors in respect of the transaction, and supervise the preparation of a formal valuation of the fair market value of the shares.

Origin Merchant Partners which was retained by the Special Committee as an independent financial advisor, formal valuator and fairness opinion provider is of the opinion that the consideration to be received by shareholders (other than The Hydrogen Company and its affiliates) pursuant to the transaction is fair, from a financial point of view, to such shareholders. After consideration, the Special Committee unanimously recommended that the Board of Directors approve the transaction and recommend to shareholders (other than The Hydrogen Company and its affiliates) that they vote in favor of the transaction. The Board of Directors, after receiving financial and legal advice and following receipt of the fairness opinion of Houlihan Lokey and the unanimous recommendation of the Special Committee, unanimously approved the transaction and recommended that shareholders vote in favor of the transaction. There will be a special meeting of Hydrogenics Corporation shareholders on August 29, 2019, at which shareholders of record as of July 15, 2019, will vote on a special resolution to approve the transaction. At the special meeting of Hydrogenics' shareholders held on August 29, 2019, shareholders voted in favor of a special resolution approving the transaction. The transaction is expected to close in the third quarter of 2019. As of August 12, 2019, the transaction is expected to close in September 2019. As on August 29, 2019, Hydrogenics intends to seek a final order of the Ontario Superior Court of Justice (Commercial List) to approve the Transaction at a hearing expected to be held on September 3, 2019. The Ontario Superior Court of Justice (Commercial List) approved the deal on September 3, 2019. The transaction is expected to be completed on or about September 9, 2019.

Origin Merchant Partners acted as financial advisor and fairness opinion provider to Special Committee of the Board of Directors of Hydrogenics. Jim Lavelle of Houlihan Lokey Capital, Inc. acted as financial advisor to Hydrogenics. Houlihan Lokey Capital, Inc. also acted as fairness opinion provider to Board of Directors of Hydrogenics. Morgan Stanley & Co. LLC acted as financial advisor to Cummins. Barnes & Thornburg LLP and Nurhan Aycan and Michael S.F. Watson of Gowling WLG (Canada) LLP acted as legal advisors to Cummins. Alexandra Shelly, John Emanoilidis and Andrew Gray of Torys LLP acted as legal advisors to Hydrogenics. Stikeman Elliott LLP and Dorsey &Whitney LLP acted as legal advisors to Air Liquide, parent company of The Hydrogen Company. Innisfree M&A Incorporated acted as proxy solicitor for Hydrogenics for a fee of $40,000 plus reimbursement of customary expenses and AST Trust Company (Canada) acted as transfer agent to Hydrogenics. Origin was to be paid a fixed fee of $0.05 million upon execution of the engagement agreement and creditable against the valuation and fairness opinion fee, a fixed fee of $0.15 million upon delivery of a preliminary report of its views with respect to the value of the shares, and a further fixed fee of $0.35 million upon delivery of the valuation and fairness opinion. Alston & Bird LLP is advising Houlihan Lokey Capital, Inc. as financial advisor to Hydrogenics, in connection with its 81.4% stake acquisition by Cummins Inc.

Cummins Inc. (NYSE:CMI) completed the acquisition of 81.4% stake in Hydrogenics Corporation (NasdaqGM:HYGS) from Fuzhou Bonded Zone Hejili Equity Investment Limited and others on September 9, 2019.