Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On September 1, 2021, Quanta Services, Inc. (the "Company") entered into an
Agreement and Plan of Merger (the "Merger Agreement") by and among the Company,
Quanta Merger Sub, LLC, a Delaware limited liability company and a wholly owned
subsidiary of the Company ("Merger Sub"), Blattner Holding Company, a Minnesota
corporation ("Blattner"), solely for certain sections specified in the Merger
Agreement, the Designated Company Shareholders (as defined in the Merger
Agreement), and, following the completion of a holding company reorganization by
Blattner pursuant to the Merger Agreement, David Henry Company, a Minnesota
corporation and 100% wholly owned subsidiary of Blattner ("New Holdco").
Pursuant to the Merger Agreement, Merger Sub will be merged with and into
Blattner (the "Merger") at the effective time of the Merger (the "Effective
Time"), and Blattner will continue as the surviving entity. The transaction
consideration of $2.7 billion anticipated to be paid at closing of the Merger
will consist of approximately $2.36 billion in cash, as well as shares of common
stock of the Company valued at $337.5 million (such agreed value as of the
execution of the Merger Agreement). Additionally, pursuant to the terms of the
Merger Agreement, Blattner shareholders will be eligible for additional
consideration of up to $300 million to the extent certain financial performance
targets are achieved by the acquired business during a designated
post-acquisition period.
At the Effective Time, as a result of the Merger and except as otherwise
provided in the Merger Agreement, (i) all shares of common stock of Blattner
outstanding immediately prior to the Effective Time and owned directly or
indirectly by Blattner, if any, will be automatically cancelled and will cease
to exist and no consideration will be delivered in exchange for such common
stock; (ii) all shares of common stock of Blattner outstanding in the name of
Blattner's shareholders (which does not include any shares of New Holdco common
stock) immediately prior to the Effective Time will be cancelled and be
converted into the right to receive payment of the Merger Consideration (as
defined in the Merger Agreement), which includes a combination of cash and
shares of common stock of the Company, and (iii) each outstanding award under
the long term incentive plan of Blattner will become fully vested and will be
cancelled in exchange for an amount as set forth in the Merger Agreement.
The Company intends to finance the transaction through debt financing and cash
on hand, or a combination thereof. The Company has obtained commitments for debt
financing as described below under "-Bridge Facility Commitment Letter," should
it be needed to complete the closing of the Merger. However, the Company expects
to pursue certain other debt financing alternatives to finance the cash portion
of the transaction consideration.
The members of the Board of Directors of each of the Company and Blattner, as
well as the shareholders of Blattner, have approved the Merger Agreement and the
transactions contemplated by the Merger Agreement.
The transaction is expected to close in the Company's fourth fiscal quarter of
2021, subject to satisfaction of certain closing conditions. Each party's
obligation to consummate the transaction pursuant to the Merger Agreement is
subject to a number of conditions as set forth therein, including, among others,
(i) the accuracy of the representations and warranties of the parties (subject
to certain materiality qualifiers), (ii) performance in all material respects by
each of the parties of its obligations and covenants and (iii) the expiration or
termination of review under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the receipt of any other required antitrust approvals. The
Merger Agreement also contains certain termination rights for both the Company
and Blattner.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Merger Agreement, a copy of
which will be filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2021. Subject to the terms of the Merger Agreement,
the representations and warranties set forth in the Merger Agreement were made
solely for the benefit of the parties to the Merger Agreement, and (i) should
not be treated as categorical statements of fact, but rather as a way of
allocating the risk to one of the parties if those statements prove to be
inaccurate, (ii) may have been qualified in the Merger Agreement by disclosures
that were made to the other parties in accordance with the Merger Agreement,
(iii) may apply contractual standards of "materiality" that are different from
"materiality" under applicable securities laws, and (iv) were made only as of
the dates specified in the Merger Agreement.
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Bridge Facility Commitment Letter
On September 1, 2021, in connection with the execution of the Merger Agreement,
the Company entered into a commitment letter (the "Commitment Letter") with Bank
of America, N.A., BofA Securities, Inc., Wells Fargo Bank, National Association
and Wells Fargo Securities, LLC (collectively, the "Commitment Parties"),
pursuant to which two of the Commitment Parties have committed to provide a
364-day senior unsecured bridge facility in an aggregate principal amount of up
to $2.1835 billion (the "Bridge Facility"). The Bridge Facility would be
available to the Company to finance the cash consideration estimated to be due
at closing of the Merger and to pay fees and expenses incurred in connection
therewith should the Company choose to utilize it. The funding of the Bridge
Facility provided for in the Commitment Letter is contingent upon the
satisfaction of customary conditions, including (i) execution and delivery of
definitive documentation with respect to the Bridge Facility in accordance with
the terms set forth in the Commitment Letter and (ii) consummation of the Merger
in accordance with the Merger Agreement. The definitive documentation governing
the Bridge Facility has not been finalized, and accordingly, the actual terms
may differ from the description of such terms in the Commitment Letter.
Commitments under the Bridge Facility will be permanently reduced on a
dollar-for-dollar basis by, among other sources, the net cash proceeds received
from any issuance or incurrence of debt for borrowed money, subject to certain
limited exceptions. The Company expects to replace some or all of the Bridge
Facility prior to closing the Merger with permanent financing. There can be no
assurance that the permanent financing will be completed.
The foregoing description of the Commitment Letter and the transactions
contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Commitment Letter, a copy of
which will be filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2021.
Item 3.02 Unregistered Sales of Equity Securities.
The information under Item 1.01 of this Report with respect to the shares of
common stock of the Company valued at $337.5 million (such agreed value as of
the execution of the Merger Agreement) to be issued to the Designated Company
Shareholders (as defined in the Merger Agreement) as transaction consideration
is incorporated herein by reference. Such shares of common stock are expected to
be issued in reliance on the exemption from registration provided by
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities
Act"), and/or Rule 506 promulgated under the Securities Act.
Item 7.01 Regulation FD Disclosure.
On September 2, 2021, the Company issued a press release announcing the
transaction. A copy of the press release is being furnished pursuant to
Regulation FD as Exhibit 99.1 this Report.
The information furnished in Item 7.01 of this Report, including Exhibit 99.1,
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section, and shall not be incorporated by reference in any filing under the
Securities Act, except as expressly set forth by specific reference in such a
filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
99.1 Press Release dated September 2, 2021.
104 Cover Page Interactive Data File (the cover page XBRL tags
are embedded within the Inline XBRL document).
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