Item 1.01. Entry into a Material Definitive Agreement.
On June 20, 2021, Royal Building Products (USA) Inc. (the “Purchaser”), a wholly owned subsidiary of Westlake Chemical Corporation, a Delaware corporation (“Westlake”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) by and among Boral Building Products Inc., a Michigan corporation (“Boral Building Products”), Boral Stone Products LLC, a Delaware limited liability company (“Boral Stone”), Boral Lifetile Inc., a California corporation (“Boral Lifetile”), Boral Windows LLC, a Utah limited liability company (“Boral Windows”), Boral Industries Inc., a California corporation (the “Seller” and, collectively with Boral Building Products, Boral Stone, Boral Lifetile and Boral Windows, the “Seller Parties”), the Purchaser and, solely for the limited purposes set forth therein, Boral Limited, an Australian corporation (“Boral”), and, solely for the limited purposes set forth therein, Westlake. Pursuant to the terms of the Purchase Agreement, the Purchaser has agreed to acquire (the “Acquisition”) from the Seller 100% of the issued and outstanding equity interests of certain subsidiaries of the Seller engaged in Boral’s North American building products businesses in roofing, siding, trim and shutters, decorative stone and windows (the “Target Companies”) for a purchase price of $2.15 billion in cash. The purchase price is subject to certain closing date adjustments as set forth in the Purchase Agreement. The Purchase Agreement also includes a potential earn-out payment from the Purchaser to the Seller of up to $65 million if Boral’s windows business generates EBITDA in excess of a specified target in its fiscal year ending June 30, 2024.
The Acquisition has been unanimously approved by the boards of directors of both Boral and Westlake. The closing of the Acquisition is currently expected to occur in the second half of 2021, subject to the receipt of certain regulatory approvals and other customary closing conditions as described below.
The obligations of the parties to consummate the Acquisition is subject to various customary closing conditions, including, among other things, (i) the absence of an order, judgment, injunction or law prohibiting the transactions contemplated by the Purchase Agreement, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), (iii) the accuracy of each party’s representations and warranties contained in the Purchase Agreement and (iv) each party’s compliance with or performance of its covenants and obligations contained in the Purchase Agreement in all material respects. The consummation of the Acquisition is not subject to a financing condition.
The Purchase Agreement contains customary representations and warranties made by the parties, and also contains customary covenants and agreements, including, among other things, agreements by the Target Companies to conduct their respective businesses in the ordinary course consistent with past practice during the period between the execution of the Purchase Agreement and the closing of the Acquisition, to not engage in certain kinds of transactions or take certain actions during this period unless consented to in writing by Westlake, to suspend any discussions relating to any acquisition proposal with respect to any of the Target Companies and to not directly or indirectly solicit, encourage or facilitate, or enter into discussions concerning, any such acquisition proposal. In addition, on the terms and subject to the conditions set forth in the Purchase Agreement, each party has agreed to use their best efforts to obtain all required regulatory approvals, and the Purchaser has agreed to take all necessary action to avoid the commencement of any action by any governmental authority to prohibit the transactions contemplated by the Purchase Agreement on the basis of antitrust laws with respect to the Acquisition, so as to enable the closing of the Acquisition to occur as soon as reasonably possible and in any event no later than June 20, 2022 (subject to a 90-day extension), including negotiating, committing to and effecting by consent decree, hold separate orders or otherwise the sale, divestiture or disposition of such assets or businesses of the Purchaser and its affiliates.
The Purchase Agreement contains certain termination rights for both the Seller and the Purchaser, including, among other things: (i) by mutual written consent of the Seller and the Purchaser; (ii) by the Seller or the Purchaser, if the Acquisition is not consummated on or prior to June 20, 2022, provided, however, that if all closing conditions (other than the condition pertaining to the termination of regulatory waiting periods) are satisfied or are capable of being satisfied at such time, such date may be extended to September 18, 2022 by either the Seller or the Purchaser by written notice on or prior to June 20, 2022; (iii) by the Seller or the Purchaser, if a governmental authority shall have issued an order or taken any other action permanently enjoining, restraining or otherwise prohibiting the closing of the Acquisition; (iv) by the Seller, in the case of certain breaches of representations, warranties, covenants or agreements on the part of the Purchaser set forth in the Purchase Agreement; and (v) by the Purchaser, in the case of certain breaches of representations, warranties, covenants or agreements on the part of the Seller Parties set forth in the Purchase Agreement.
