| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously reported on June 6, 2018, Fortive Corporation, a Delaware corporation (the “Company” or “Fortive”), entered into a binding offer letter (the “Offer Letter”) with Ethicon, Inc., a New Jersey corporation (“Ethicon”) and wholly owned subsidiary of Johnson & Johnson, a New Jersey corporation, pursuant to which the Company made a binding offer (the “Offer”) to acquire (the “Transaction”) certain equity interests and assets, and assume certain liabilities, of Johnson & Johnson’s sterilization solutions business used in the fields oflow-temperature terminal sterilization and high-level disinfection (the “Business”). The purchase price for the Transaction is $2.7 billion, subject to adjustments as set forth in the Purchase Agreement (as defined below) relating to the book value of inventory in the Business at the closing of the Transaction and the amount of certain prepaid taxes (as so adjusted, the “Purchase Price”).
Pursuant to the terms of the Offer Letter, following the conclusion of certain statutory information or consultation processes in connection with the Transaction by the employees’ representative bodies of Ethicon and its affiliates in specified jurisdictions (the “Specified Consultation Processes”), on September 20, 2018, Ethicon accepted the Company’s offer and countersigned the Stock and Asset Purchase Agreement (the “Purchase Agreement”) with respect to the Transaction, previously executed by the Company. Completion of the Transaction remains subject to the satisfaction or waiver of customary closing conditions, including, among other things, (i) obtaining certain antitrust approvals, (ii) the transfer of certain product registrations required for the operation of the Business, (iii) the absence of a material adverse effect regarding the Business, and (iv) customary conditions regarding the accuracy of the representations and warranties and material compliance by the parties with their respective obligations under the Purchase Agreement. The parties have received anti-trust clearance in the United States, Germany and Brazil and will apply for anti-trust clearance in Israel.
The Purchase Agreement contains customary representations, warranties and covenants related to the Business and the Transaction. Between the date of the Purchase Agreement and the completion of the Transaction, subject to certain exceptions, Ethicon will agree to use commercially reasonably efforts to operate the Business in the ordinary course of business consistent with past practice, and to use commercially reasonable efforts to, among other things, preserve intact the business relationships of the Business.
The Purchase Agreement includes customary termination provisions for both the Company and Ethicon. Both the Company and Ethicon will have the right to terminate the Purchase Agreement if the closing has not occurred by April 5, 2019.
The Purchase Agreement will provide that the Company and Ethicon will agree to indemnify the other party following the closing for losses arising from certain breaches of the Purchase Agreement and other liabilities, subject to certain limitations. In connection with the closing of the Transaction, the Company and Ethicon will enter into certain additional ancillary agreements, including transition services agreements, a transition manufacturing services agreement and certain other customary agreements.
The foregoing summary of the material terms of the Purchase Agreement and the transactions contemplated by the Purchase Agreement 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, which is attached as Exhibit 2.1 to this Current Report on Form8-K, the full text of which Purchase Agreement is incorporated herein by reference.
The representations, warranties and covenants of the parties contained in the Purchase Agreement have been made solely for the benefit of such parties. In addition, such representations, warranties and covenants are (i) made only for purposes of the Purchase Agreement, (ii) qualified by confidential disclosures made by the parties to each other in connection with the Purchase Agreement, (iii) subject to materiality qualifications contained in the Purchase Agreement which may differ from what may be viewed as material by investors, (iv) made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement and (v) included in the Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding the parties or their respective businesses. Investors should not rely on the representations, warranties or covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the parties or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. The Purchase Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the parties, the Transaction and other documents that the parties have filed and will file with the U.S. Securities and Exchange Commission.
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