| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 23, 2021, Compass Minerals do Brasil Ltda., a Brazil limited liability company (“Compass Minerals Brazil”), which is a subsidiary of Compass Minerals International, Inc. (the “Company”), entered into a quotas purchase and sale agreement (the “Purchase Agreement”) with ICL Brasil Ltda., a Brazil limited liability company (“ICL Brazil”), which is a subsidiary of ICL Group Ltd.
Pursuant to the Purchase Agreement, Compass Minerals Brazil agreed to sell 100% of the issued and outstanding quotas of Compass Minerals América do Sul Indústria e Comércio Ltda., a Brazilian limited liability company and subsidiary of the Company (the “Target”), which operates a specialty plant nutrition business, to ICL Brazil in exchange for total potential cash proceeds of R$2.21 billion Brazilian reais payable at the closing of the transactions (the “Closing”) and subject to certain adjustments for net debt and working capital. In addition, the terms of the Purchase Agreement provide for an additional earn-out payment of up to R$88 million Brazilian reais, payable in 2022 and calculated on a sliding scale, if the Target achieves certain full-year 2021 EBITDA performance targets as compared to full-year 2020 EBITDA. Moreover, the payment and performance obligations of Compass Minerals Brazil and ICL Brazil under the Purchase Agreement have been guaranteed by Compass Minerals America Inc., a subsidiary of the Company, and Amsterdam Fertilizers B.V., a subsidiary of ICL Group Ltd., respectively. In accordance with the Purchase Agreement, prior to the Closing, the water treatment and chemical solutions businesses of Target will be carved out and retained by Compass Minerals Brazil.
The Closing is expected to occur during the third quarter of 2021, subject to the satisfaction or waiver of customary closing conditions, including, among others, (i) the accuracy of representations and warranties, (ii) compliance with agreements and covenants, and (iii) receipt of necessary governmental approvals.
The Purchase Agreement contains customary representations, warranties, and covenants of Compass Minerals Brazil and ICL Brazil. Subject to certain limitations, Compass Minerals Brazil and ICL Brazil are also obligated to indemnify each other for breaches of representations, warranties, and covenants made in the Purchase Agreement.
Compass Minerals Brazil and ICL Brazil have also agreed to enter into additional agreements, including:
| | • | | A Reverse Transition Services Agreement, which will govern the parties respective rights and obligations with respect to the provision of certain transition services; and |
| | • | | An intellectual property license. |
The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, a copy of which is attached as Exhibit 2.1 and is incorporated by reference herein.
