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Item 1.01. |
Entry into a Material Definitive Agreement. |
On May 15, 2023, HEICO Corporation, a Florida
corporation (the “Company” or “HEICO”), entered into an agreement to acquire Wencor Group (“Wencor”) from
affiliates of Warburg Pincus LLC and Wencor’s management for $1.9 billion in cash and $150 million in HEICO Class A Common
Stock to be paid at closing, or $2.05 billion in the aggregate. Wencor is a large commercial and military aircraft aftermarket
company offering factory-new FAA-approved aircraft replacement parts, value-added distribution of high-use commercial & military
aftermarket parts and aircraft & engine accessory component repair and overhaul services.
Merger Agreement
On May 15, 2023, the Company and its newly
formed wholly owned subsidiary Magnolia MergeCo Inc., a Delaware corporation (“Merger Sub”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”) to acquire Jazz Parent, Inc., a Delaware corporation, the owner of Wencor (the
“Target”), with the Target and Jazz Topco GP LLC, a Delaware limited
liability company (the “Representative”), solely in its capacity as Representative for purposes of
certain provisions of the Merger Agreement. Under the Merger Agreement Merger Sub will merge with and into the Target, with the Target
continuing as the surviving entity and a wholly owned subsidiary of the Company (the “Merger”), for an aggregate
purchase price of $1.9 billion in cash, subject to certain working capital, debt and other customary adjustments set forth in the
Merger Agreement (the “Cash Consideration”), and 1,137,656 shares of HEICO Class A Common Stock (the
“Stock Consideration”).
The Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the Merger Agreement, at the closing of the transactions contemplated thereby, the Company will
deposit $20 million of the Cash Consideration with an escrow agent to fund the Target’s payment obligations with respect to the
working capital, debt and other customary post-closing adjustments contained in the Merger Agreement.
Under the Merger Agreement, the Company and the Target
have made customary representations and warranties and have agreed to be bound to customary covenants for transactions of this type, including
committing to use reasonable best efforts to obtain necessary approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the “HSR Act”) and certain other regulatory approvals.
The completion of the Merger is subject to
customary closing conditions, including, among others: (a) the absence of certain legal impediments to the consummation of the
Merger; (b) the expiration or termination of the applicable waiting period under the HSR Act, and the receipt of certain other
regulatory approvals; (c) in the case of the Company’s and the Target’s obligations to complete the transaction, the
accuracy of the Target’s and the Company’s, respectively, representations and warranties contained in the Merger
Agreement subject to customary materiality standards; (d) material compliance by the Company, the Target and the Representative with certain pre-closing covenants; and (e) no
material adverse change in the Target’s business since the date of the Merger Agreement. Subject to the satisfaction of the
closing conditions, the Merger is expected to close by the end of calendar 2023.
The Merger Agreement contains customary registration rights with respect to the Stock Consideration, including
that the Company will file a registration statement to allow the resale of the Stock Consideration by the holders thereof.
The Merger Agreement contains customary
termination rights for the parties thereto, including by mutual consent of the Company and Representative and under certain other
circumstances, including by the Company or Representative if the Merger has not occurred on or before the nine-month anniversary of
the signing of the Merger Agreement subject to up to two 90-day extensions if on such date a closing condition related to regulatory
approvals has not been satisfied or waived. The Company is required to pay Target a termination fee of $143,500,000 in cash upon
termination of the Merger Agreement under specified circumstances, including the failure to obtain regulatory approvals or, among
others, if the Company materially breaches its regulatory covenants such that there is a failure of certain conditions to the
Merger.
The Merger Agreement also provides that, in certain
circumstances, either party may seek to compel the other party to specifically perform its obligations under the Merger Agreement.
The foregoing description of the Merger Agreement does
not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is
attached as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated herein by reference.
Commitment Letter
In connection with the foregoing, on May 14, 2023, the
Company entered into an engagement letter with Truist Securities, Inc. (the “Engagement Letter”) to, among other things,
increase the commitments under its existing credit facility from $1.5 billion to $2.0 billion and to extend the maturity date thereunder
to a date that is five years from the closing date, and has also entered into a commitment letter (the “Commitment Letter”)
with Truist Bank (the “Bridge Lender”) and Truist Securities, Inc., pursuant to which the Bridge Lender has committed to provide
a senior unsecured credit facility to the Company, as the borrower, in an aggregate amount of up to $1.5 billion (the “Bridge Facility”),
with a maturity date of 364 days following the closing date. The obligation to fund the Bridge Facility is subject to the satisfaction
of certain conditions set forth in the Commitment Letter. The Company intends to finance the purchase price through a mix of cash, debt
and/or equity. The Merger Agreement is not subject to any financing condition. The Company’s currently committed credit facilities
(including the Bridge Facility), together with cash on hand, are sufficient to fund the purchase price. The Bridge Lender and other arrangers
and lenders providing the Bridge Facility or providing financing or other services in connection with the financing of the purchase price
have received, or may receive in the future, customary fees for such transactions. The foregoing description of the Commitment Letter
does not purport to be complete and is qualified in its entirety by reference to the full text of the Commitment Letter, a copy of which
is attached as Exhibit 10.1 to this Current Report on Form 8-K and which is incorporated herein by reference.