| Item 1.01 | Entry into a Material Definitive Agreement |
The Merger Agreement
On April 12, 2019, HomeFed Corporation, a Delaware corporation (“HomeFed”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Jefferies Financial Group Inc., a New York corporation (“Jefferies”) and Heat Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of Jefferies (“Merger Sub”). Pursuant to the Merger Agreement, HomeFed will be merged with and into Merger Sub (the “Merger”) with Merger Sub surviving the Merger as a wholly-owned subsidiary of Jefferies (the “Surviving Company”).
If the Merger is completed, each share of common stock, par value $0.01, of HomeFed (the “HomeFed Common Stock”) issued and outstanding immediately prior to the effective time of the merger (the “Effective Time”), other than Excluded Shares (as defined below), will be converted into the right to receive either: (i) $38.00 in cash, without interest (the “Cash Consideration”), or (ii) a number of validly issued, fully paid and nonassessable shares of common stock, par value $1.00 per share, of Jefferies (“Jefferies Common Stock”), equal to the Exchange Ratio (as defined below), (the “Stock Consideration”, referred together with the Cash Consideration, the “Merger Consideration”). “Excluded Shares” include shares owned by: (i) HomeFed (as treasury stock), (ii) Jefferies or any of its subsidiaries (including Merger Sub) or (iii) holders of shares of HomeFed Common Stock (“HomeFed Stockholders”) who have perfected and have not withdrawn a demand for appraisal rights pursuant to Section 262 of the Delaware General Corporation Law (the “DGCL”) immediately prior to the Effective Time.
The Exchange Ratio contemplated by the Merger Agreement is 2.0, provided that, if the volume weighted average trading price (rounded to the nearest $0.01) of one share of Jefferies common stock on the New York Stock Exchange (“NYSE”) as reported on Bloomberg L.P. under the function “VWAP” (or, if not reported therein, in another authoritative source mutually selected by the parties) for the ten consecutive trading days on which shares of Jefferies Common Stock are traded on the NYSE (“Trading Days”) ending on (and including) the Trading Day that is three Trading Days prior to the date of the special meeting of HomeFed Stockholders in connection with the Merger (the “Average Jefferies Stock Price”), is greater than $21.00, then the Exchange Ratio will be decreased to equal the quotient (rounded to the nearest 0.0001) obtained by dividing (i) $42.00 by (ii) the Average Jefferies Stock Price (the “Exchange Ratio”). In the event that neither an election for Stock Consideration nor Cash Consideration has properly been made with respect to shares of HomeFed Common Stock, then (x) if the Average Jefferies Stock Price is greater than $19.00, such shares shall be treated as if an election for Stock Consideration had been made with respect thereto and (y) if the Average Jefferies Stock Price is less than or equal to $19.00, such shares shall be treated as if an election for Cash Consideration had been made with respect thereto.
On a date to be announced, HomeFed Stockholders will be asked to vote on the adoption of the Merger Agreement. The Merger cannot be completed unless HomeFed Stockholders adopt the Merger Agreement, which requires the affirmative vote of (i) the holders of a majority of the outstanding shares of HomeFed Common Stock entitled to vote at the special meeting and (ii) the holders of a majority of the outstanding shares of HomeFed Common Stock entitled to vote at the special meeting not owned, directly or indirectly, by (x) Jefferies or any of its affiliates or (y) any director of HomeFed who is a director or employee of Jefferies or any Section 16 officer (pursuant to Rule16a-1(f) of the Exchange Act) of HomeFed (such holders, the “Public Stockholders”) at the special meeting of HomeFed Stockholders in connection with the Merger (collectively, the “Requisite Stockholder Approvals”).
The Merger Agreement provides that, subject to certain exceptions with respect to unsolicited proposals, HomeFed will not, and will cause its and the HomeFed subsidiaries’ directors, officers and employees not to, and will instruct its representatives not to, directly or indirectly, solicit acquisition proposals or participate in any discussions concerning, or providenon-public information concerning HomeFed or any of its subsidiaries in connection with any acquisition proposal. However, prior to the receipt of the Requisite Stockholder Approvals, the board of directors of HomeFed (the “HomeFed Board”), upon recommendation of the special committee of independent and disinterested directors of HomeFed who are not affiliated with Jefferies (the “Special Committee”) may, subject to certain conditions, change its recommendation in favor of approval of the Merger Agreement, if and only if, in connection with the receipt of a superior proposal or occurrence of an intervening event, it determines in good faith after consultation with its financial advisor and outside legal counsel, that failure to make such change in
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