| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 23, 2021, ManpowerGroup Inc., a Wisconsin corporation (the “Company”), and its wholly owned subsidiaries ManpowerGroup Global Inc., a Wisconsin corporation (“MPGG”), and Longhorn 2021 LP, a Delaware limited partnership (“Merger Sub”), entered into an Equity Purchase and Merger Agreement, dated as of August 23, 2021 (the “Purchase Agreement”), by and among AMCP Staffing Holdings, LP, a Delaware limited partnership (“Holdings” or “ettain”), AMCP II Staffing Corp Holdings Holdco, LLC, a Delaware limited liability company (“Blocker Seller”), which is the owner of all the issued and outstanding equity interests in AMCP II Staffing Corp Holdings, LP, a Delaware limited partnership (“Blocker”), solely in its capacity as the representative of the various other seller entities (the “Sellers”), AMCP Staffing Holdings GP, LLC, a Delaware limited liability company (the “Representative”), MPGG, Merger Sub and, solely for purposes of its obligations as a guarantor pursuant to Section 10.20 of the Purchase Agreement, the Company.
The Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Purchase Agreement, (a) at the closing, MPGG will purchase, acquire and accept from Blocker Seller, and Blocker Seller will sell, assign, transfer, convey and deliver to MPGG, all of the issued and outstanding equity interests in Blocker (the “Equity Purchase”) and (b) as of the effective time of the Merger (as defined below), Merger Sub will merge with and into Holdings, with Holdings continuing as the surviving entity and a wholly owned subsidiary of MPGG (the “Merger” and, together with the Equity Purchase, collectively, the “Acquisition”). Subject to the terms and conditions set forth in the Purchase Agreement, MPGG has agreed to pay $925,000,000 in cash, subject to certain working capital, debt and other adjustments as set forth in the Purchase Agreement (the “Consideration”). At the closing of the Acquisition, MPGG will deposit $12,238,000 of the Consideration with an escrow agent to (x) fund the Sellers’ payment obligations with respect to the working capital and other post-closing adjustments, (y) reimburse MPGG for any amounts to be paid after the closing in connection with existing earn-out obligations related to the prior acquisitions of two indirect subsidiaries of Holdings and (z) support certain post-closing indemnification obligations of the Sellers as described in more detail in the Purchase Agreement.
Under the Purchase Agreement, MPGG, Merger Sub, Holdings and Blocker Seller 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 (“HSR Act”). The representations and warranties will not survive the closing of the Acquisition. Instead, to provide for coverage against any breaches by Holdings or Blocker Seller with respect to each of their respective representations, warranties and covenants, the Company has obtained a representation and warranty insurance policy. The policy is subject to a retention amount, exclusions, policy limits and certain other terms and conditions.
In connection with the entry into the Purchase Agreement, certain of the Sellers’ affiliates have also entered into a restrictive covenant agreement (the “AMCP Restrictive Covenant Agreement”) committing to, among other things, maintain confidentiality with respect to the target business and to be prohibited from soliciting or hiring employees of the target business for a period of two years following the Acquisition.
The completion of the Acquisition is subject to customary closing conditions, including, among others: (a) the absence of certain legal impediments to the consummation of the Acquisition; (b) the expiration or termination of the applicable waiting period under the HSR Act; and (c) the AMCP Restrictive Covenant Agreement remaining in force and effect.
The Acquisition is not subject to any financing condition. The Company plans to fund the Consideration and transaction expenses with cash on hand and borrowings from the Company’s senior revolving credit facility.
The Purchase Agreement contains customary termination rights for the parties thereto, including (a) the right of MPGG or the Representative to terminate if the Acquisition is not consummated on or before November 23, 2021 (which date will be automatically extended by an additional three months if the HSR Act approval condition has not been satisfied at the end of such first three-month period); (b) (i) the right of MPGG to terminate (subject to certain conditions) if Holdings or Blocker Seller is in breach of the Purchase Agreement and (ii) the right of the Representative to terminate (subject to certain conditions) if MPGG is in breach of the Purchase Agreement (in the case of each of the foregoing clauses (i) and (ii), to the extent that the breach would cause the applicable closing condition related to the accuracy of any of the applicable party’s representations and warranties or the performance of such applicable party’s obligations under the Purchase Agreement not to be met); and (c) the right of MPGG or the Representative to terminate in the event of a final and non-appealable order by a court or other governmental entity prohibiting the Acquisition.
The foregoing description of the Purchase Agreement is a summary of the material terms of the Purchase Agreement, does not purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
