Item 1.01 |
Entry into a Material Definitive Agreement |
Agreement and Plan of Merger
On August 8, 2022, BBQ Holdings, Inc. (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MTY Franchising USA, Inc. (“Parent”) and Grill Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Parent, providing for the acquisition of the Company by Parent in an all-cash transaction, consisting of a tender offer (the “Offer”) for all of the outstanding shares of common stock, par value $0.01 per share (the “Common Stock”), followed by a subsequent merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent.
The Company’s Board of Directors (the “Board”) has determined that the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are fair to, advisable and in the best interests of the Company and its shareholders, has approved the Merger Agreement and the transactions contemplated by the Merger Agreement, and has recommended that the shareholders of the Company accept the Offer and tender their shares of Common Stock in the Offer.
The Merger Agreement provides that Parent will cause Merger Sub to commence, as promptly as practicable, but in no event later than 15 business days after the initial public announcement of the execution of the Merger Agreement, the Offer for all of the Company’s outstanding shares of Common Stock at a purchase price of $17.25 per share in cash (the “Offer Price”), without interest, and subject to any required withholding taxes.
Subject to the terms and conditions of the Merger Agreement, the Offer will initially remain open for 20 business days from the date of commencement of the Offer. If, at the scheduled expiration time of the Offer, any of the conditions to the Offer have not been satisfied or waived, then Merger Sub will extend the Offer for one or more consecutive increments of at least 5 and up to 10 business days to permit the satisfaction of all Offer conditions, except that if the sole remaining unsatisfied Offer condition is the Minimum Condition (as defined below), Merger Sub will not be required to extend the Offer for more than one such additional increment, but may elect to do so in its sole discretion. In any event, Merger Sub will not be required to extend the Offer to a date later than December 6, 2022.
The obligation of Merger Sub to purchase shares of Common Stock tendered in the Offer is subject to customary closing conditions, including (1) shares of Common Stock having been validly tendered (and not validly withdrawn) prior to the expiration of the Offer that represent, together with the shares of Common Stock then owned by Merger Sub, at least a majority of the then issued and outstanding shares of Common Stock (determined on a fully diluted basis (which assumes conversion of exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule, or other terms and conditions thereof) (the “Minimum Condition”), (2) the absence of any law, injunction, judgment or other legal restraint that prohibits, or any instituted and pending legal proceeding by any governmental authority challenging or seeking to make illegal, delay materially or otherwise enjoin or prohibit, the consummation of the Offer or the Merger, (3) the expiration or early termination of the waiting period applicable to the Offer and the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the absence of any voluntary agreement with the Federal Trade Commission or the Department of Justice by the Company not to complete the Merger for any period of time that has not yet passed, (4) the accuracy of the Company’s representations and warranties contained in the Merger Agreement (generally subject to qualifications as to materiality), (5) the Company’s performance of its obligations under the Merger Agreement in all material respects, (6) the absence, since the date of the Merger Agreement, of any effect, change, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the Company or its ability to consummate the Merger, and (7) the Merger Agreement not having been terminated in accordance with its terms.
Following the consummation of the Offer, and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, the Merger will be effected pursuant to the procedure provided for by Section 302A.613(4) of the Minnesota Business Corporation Act (“MBCA”) without a meeting or vote of the Company’s shareholders. The Merger will be effected as soon as practicable following the acceptance of shares representing at least the Minimum Condition validly tendered and not validly withdrawn pursuant to the Offer (the “Offer Acceptance Time”).
At the effective time of the Merger (the “Effective Time”), each share of Common Stock issued and outstanding immediately before the Effective Time (other than shares (1) owned by the Company as treasury stock, (2) owned by Merger Sub, including any shares irrevocably accepted for purchase by Merger Sub in the Offer or (3) owned by any shareholder who is entitled to demand and properly demands the appraisal of such shares in accordance with, and in compliance in all respects with, the MBCA) will be automatically cancelled and converted into the right to receive the Offer Price (the “Merger Consideration”), without interest and subject to any required withholding taxes.