Item 1.01.
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Entry Into a Material Definitive Agreement
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Acquisition of Bacharach, Inc. and its Affiliated Companies
On May 23, 2021, MSA Safety Incorporated (“MSA”) and MSA Advanced Detection, LLC (“MSA Advanced Detection”), a wholly owned subsidiary of MSA, entered into an agreement to acquire Bacharach, Inc. and its affiliated companies (referred to herein collectively as “Bacharach”). Pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among MSA, MSA Advanced Detection, Cardinal Merger Subsidiary, Inc. (“Merger Sub”), a wholly owned subsidiary of MSA Advanced Detection, Viking Topco (“Viking Topco”), and Laurel Solutions Holdings LLC (“Laurel Solutions”), as representative of Viking Topco’s stockholders, MSA Advanced Detection will acquire Bacharach through the merger of Merger Sub with and into Viking Topco, with Viking Topco as the surviving entity as a wholly owned subsidiary of MSA Advanced Detection, and with Viking Topco’s former stockholders receiving the cash purchase price.
Viking Topco is the parent corporation of Bacharach, which is engaged in the manufacture and supply of safety equipment, including leak and gas detection equipment and technology. Headquartered in New Kensington, Pennsylvania, Bacharach has four locations in the United States, Canada and Ireland.
The Merger Agreement provides for MSA Advanced Detection to acquire Bacharach for a purchase price of approximately $337 million in cash, less the payoff of existing indebtedness and certain transaction expenses. The purchase price is also subject to working capital and other purchase price adjustments to be finalized after closing.
The closing of the transaction is subject to certain customary closing conditions, including (i) the absence of any injunction or other legal restraint preventing or making illegal the closing of the transaction, (ii) any waiting period applicable to the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 having expired or been terminated, (iii) approval of the stockholders of Viking Topco, and (iv) the accuracy of each party’s representations and warranties and compliance by each party with its covenants under the Merger Agreement, subject to certain materiality qualifications and exceptions. Certain of Viking Topco’s stockholders and employees have also agreed to enter into restrictive covenant agreements with terms of 18 to 36 months.
At the closing, MSA Advanced Detection and Laurel Solutions will enter into an escrow agreement with Citibank, National Association (“Citibank”), pursuant to which $1,000,000 of the purchase price from the Merger Agreement will be placed into escrow with Citibank to fund the post-closing working capital and other purchase price adjustments, if any.
The foregoing description of the transaction to be consummated pursuant to the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to specific terms and conditions of the Merger Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Support Agreement
Concurrently with the execution of the Merger Agreement, certain stockholders of Viking Topco (each, a “Supporting Stockholder”) entered into a support agreement (“Support Agreement”) with MSA Advanced Detection and Viking Topco with respect to all shares of Viking Topco stock beneficially owned by such Supporting Stockholders. The shares of Viking Topco stock subject to the Support Agreement constituted approximately 94% of the outstanding voting shares of Viking Topco stock. On the terms and subject to the conditions set forth in the Support Agreement, each Supporting Stockholder agreed to vote (or deliver a written consent) (i) in favor of adopting the Merger Agreement and the transactions contemplated thereby at any meeting of Viking Topco’s stockholders, and (ii) against any proposal that conflicts, impedes or interferes with the Merger Agreement or the transactions contemplated thereby, including any Company Transaction (as defined in the Merger Agreement).
The foregoing description of the Support Agreement does not purport to be complete and is qualified in its entirety by the full text of the Support Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated by reference herein.
Credit Agreement
On May 24, 2021, MSA, MSA UK Holdings Limited (“MSA UK”), MSA Great Britain Holdings Limited (“MSA GB”) and MSA International Holdings B.V. (“MSA BV”), as borrowers, entered into a Fourth Amended and Restated Credit Agreement dated as of May 24, 2021 (the “Credit Agreement”) with various MSA subsidiaries, as guarantors, various financial institutions, as lenders, and PNC Bank, National Association, as administrative agent. See Item 2.03 below for a description of the Credit Agreement.
Amendment to Note Purchase Agreement
On May 24, 2021, MSA entered into an amendment (the “Note Agreement Amendment”) to its Second Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement dated as of January 22, 2016, as amended (the “Note Agreement”) with PGIM, Inc. and the noteholders party thereto in order to conform the covenants in the Note Agreement to changes made in similar covenants in the Credit Agreement.