|
Item 1.01.
|
Entry into Material Definitive Agreement.
|
On June 23, 2016, Electro Rent Corporation, a
California corporation (the “Company”), entered into an Amended and Restated Agreement and Plan of Merger (the “Restated Merger Agreement”) with Elecor Intermediate Holding II Corporation, a Delaware corporation
(“Parent”), and Elecor Merger Corporation, a California corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub
will be merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of Platinum Equity, a Beverly Hills-based private equity firm
(“Platinum Equity”).
The Restated Merger Agreement amends the Agreement and Plan of Merger that the Company entered into with
Parent and Merger Sub on May 27, 2016 (which is described in the Form 8-K that the Company filed with the Securities and Exchange Commission (the “SEC”) on May 31, 2016) (the “Original Merger Agreement”) as follows:
|
|
•
|
|
The merger consideration payable pursuant to the Restated Merger Agreement with respect to each outstanding share of Company common stock (other than shares held by any person who properly asserts dissenters’
rights under California law) and each restricted stock unit (whether vested or unvested) that is outstanding at the effective time of the Merger is increased from $13.12 per share to $15.50 per share.
|
|
|
•
|
|
The termination fee that is payable by the Company to Parent in the event the Company terminates the Restated Merger Agreement in specified circumstances (generally in the event the board of directors of the Company
either (a) changes its recommendation that its shareholders approve the Restated Merger Agreement and the Merger or (b) elects to pursue a superior acquisition proposal from a third party) is increased from $11.3 million to $19.1 million.
|
The increase in the merger consideration was prompted by the Company’s receipt of an unsolicited offer from another
bidder. Under the terms of the Restated Merger Agreement, the Company has the right to solicit a superior proposal from that other bidder prior to the end of the day on June 28, 2016. After that time, the Company will be subject to customary no-shop
provisions, subject to the board of directors’ fiduciary obligation to evaluate unsolicited offers that would reasonably be expected to lead to a superior proposal.
Parent has obtained an updated equity financing commitment to fund the transactions contemplated by the Merger Agreement, the aggregate
proceeds of which, together with cash and cash equivalents available to Parent, will be sufficient for Parent to pay the aggregate Merger Consideration and all related fees and expenses.
A copy of the Restated Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing description
of the Restated Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated Merger Agreement.
-2-
The Restated Merger Agreement has been attached as an exhibit to provide investors and
shareholders with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent or Merger Sub. The representations, warranties and covenants contained in the Restated Merger Agreement were
made only for the purposes of the Restated Merger Agreement and as of specified dates, were solely for the benefit of the parties to the Restated Merger Agreement, and may be subject to limitations agreed upon by the contracting parties. The
representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Restated 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 and shareholders accordingly 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 Company, Parent, Merger Sub or any of their respective subsidiaries or affiliates. In addition, the assertions embodied in the representations and warranties contained in the Restated Merger Agreement are
qualified by information in confidential disclosure schedules that the Company exchanged with Parent and Merger Sub in connection with the Company entering into the Agreement and Plan of Merger with affiliates of Platinum Equity on May 27, 2016.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Restated Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public
disclosures. The Restated Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the parties to the Restated Merger Agreement and the Merger that will be contained in, or
incorporated by reference into, the proxy statement that the Company will be filing in connection with the Merger, as well as in the Forms 10-K, Forms 10-Q and other documents that the Company has filed or may file with the SEC.