UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): December 13, 2019
Balchem Corporation
(Exact name of registrant as specified in its charter)
Maryland
| 001-13648
| 13-2578432
|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
52 Sunrise Park Road, New Hampton, NY 10958
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (845) 326-5600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock
| BCPC
| NASDAQ
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | Balchem Corporation |
| | |
| | By:/s/ Mark Stach |
| | Mark Stach, General Counsel and Secretary |
| | |
| Dated: December 16, 2019 | |
| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 13, 2019, SensoryEffects, Inc, a Delaware corporation (“SensoryEffects”), which is a wholly owned subsidiary of Balchem Corporation, a Maryland corporation (“Balchem”), entered into an agreement for and completed its acquisition of all the: (i) issued and outstanding shares (the “Shares”) of Zumbro River Brand, Inc. (“Zumbro”), a company that specializes in developing, marketing, and manufacturing agglomerated and extruded products for the food and beverage industry and (ii) membership interests in Prairie Resources LLC (“Prairie”), which owns one of the locations at which Zumbro operates (the “Membership Interests”) (with the Shares and the Membership Interests being hereinafter referred to as the “Equity Interests” and the acquisition by SensoryEffects of the Equity Interests being hereinafter referred to as the “Acquisition”).
The Acquisition was completed pursuant to Equity Purchase Agreement (the “Agreement”) among (a) and among SensoryEffects, as the buyer, and (a) Pamela A. Sander, (b) The Vela Trust, (c) Elizabeth Simpson and (d) David Sander and (e) Pamela A. Sander, in her capacity as Sellers’ Representative. (The individuals referred to in (b) through (d) being hereinafter referred to as as “Sellers”).
The following is a summary of the terms and conditions of the Agreement and certain ancillary agreements contemplated therein:
| • | The purchase price for the Equity Interests on a cash-free, debt-free basis (the “Purchase Price”) is $52,000,000 in cash, subject to certain adjustments as provided in the Agreement. The purchase price was determined as a result of arms’ length negotiation among SensoryEffects and the Sellers. |
| • | SensoryEffects made customary representations and warranties pursuant to the Agreement. |
| • | The Sellers made customary representations and warranties pursuant to the Agreement. Such representations and warranties generally survive for 18 months after the closing date, subject to certain exceptions. |
| • | The Agreement also includes customary covenants, including certain non-competition and non-solicitation covenants by the Sellers. |
| • | The Sellers, on a joint and several basis, have agreed, subject to limitations set forth in the Agreement, to indemnify and hold SensoryEffects harmless from and against, among other things, various losses that may be incurred by SensoryEffects as a result of (i) any breach of any representation or warranty of the Sellers contained in the Agreement, (ii) any breach of any covenant or agreement to be performed by the Sellers pursuant to the Agreement and (iii) certain other matters, including certain losses related to certain environmental conditions. |
| • | SensoryEffects has obtained representation and warranty insurance, subject to exclusions, policy limits and certain other terms and conditions, designed to provide coverage for any loss resulting from any breach of certain representations and warranties made by the Sellers pursuant to the Agreement. |
The foregoing summary of the Agreement and the Acquisition and the other transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement attached hereto as Exhibit 2.1 and incorporated herein by reference.
The Agreement has been included to provide investors with information regarding its terms. The Agreement is not intended to provide any factual information about SensoryEffects or Zumbro. The representations, warranties and covenants contained in the Agreement were made only for purposes of the Agreement, were solely for the benefit of the parties to the Agreement and are subject to limitations agreed upon by the parties to the Agreement, including being qualified by information that was disclosed in the data room provided by the Sellers in respect of the transaction. Moreover, the representations and warranties contained in the Agreement were made for the purpose of allocating contractual risk between the parties to the Agreement instead of establishing matters as facts and may be subject to standards of materiality applicable to the parties to the Agreement that differ from those applicable to investors. Investors are not third-party beneficiaries under the Agreement and should not rely on the representations, warranties and covenants contained therein or any descriptions thereof as characterizations of the actual state of facts or condition of SensoryEffects, Zumbro, or any of their respective subsidiaries or affiliates. Additionally, information concerning the subject matter of the representations and warranties contained in the Agreement may change after the date of the Agreement, which subsequent information may or may not be fully reflected in Balchem’s public disclosures.
Prior to the Closing, neither SensoryEffects, any of its affiliates (including Balchem), any of its directors or officers, nor any associate of any of its directors or officers had any material relationship with any of the other parties to the Agreement, other than with respect to the acquisition.
| Item 7.01. | Regulation FD Disclosure. |
On December 16, 2019, Balchem issued a press release announcing the completion of the Acquisition, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Item 7.01 and in Exhibit 99.1 attached hereto is being furnished to the Securities and Exchange Commission pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall any such information or exhibits be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”).
| Item 9.01. | Financial Statements and Exhibits. |
| | Exhibit Number | | Description |
| | | | Equity Purchase Agreement dated as of December 13, 2019, is entered into by and among SensoryEffects, Inc., Pamela A. Sander, The Vela Trust, Elizabeth Simpson and David Sander (and Pamela A. Sander, in her capacity as Sellers’ Representative. Portions of the Exhibit have been been omitted. |
| | | | Press release dated December 16, 2019. |
| * | Certain exhibits and schedules to the Securities Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. These exhibits and schedules consist of: (i) the Names and Addresses of Sellers and Allocable Portions; (ii) Aggregate Seller Closing Payments; (iii) Estimated Closing Statement; (iv) Albert Lea lease; (v) Approvals or grants of bonuses (vi) list of Bank Accounts; Letters of Credit; Powers of Attorney (vii) list of Customers and Suppliers; (viii) list of Insurance; (ix) Escrow Agreement; (x) Employment Matters; (xi) the Representations and Warranties Insurance; (xii) List of Environmental Reports; (xiii) List of Employees that were Hired and Terminated since January 1, 2019; and (xiv) Phantom Stock Payments. |
| ** | This exhibit is furnished as part of this Current Report on Form 8-K. |
Cautionary Note Regarding Forward-Looking Statements
This report, including the exhibits filed and furnished herewith, contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements generally can be identified because they relate to the topics set forth above or by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “project,” “foresee,” “likely,” “may,” “will,” “would” or other words or phrases with similar meanings, and include the statements regarding Zumbro’s revenues and growth prospects, as well as the impact of the transaction on Balchem’s earnings per share. Similarly, statements that describe the Balchem’s objectives, plans or goals, are, or may be, forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Some of the factors that could cause actual results to differ include, but are not limited to, the following: any delay or failure to complete the acquisition of Zumbro on the terms previously agreed or difficulty in integrating the acquisition if closed or realizing on the anticipated business from the acquisition; changes to Balchem’s business, its industry, or the overall economic climate, general industry conditions and competition; product or other liability risk inherent in the design, development, manufacture and marketing of its offerings; inability to enhance Balchem’s existing or introduce new products or services in a timely manner; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; and difficulty in integrating other acquisitions into Balchem’s existing business, thereby reducing or eliminating the anticipated benefits of the acquisition of Zumbro. For a more detailed discussion of these and other factors, see the information under the caption “Risk Factors” in Balchem’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the Securities and Exchange Commission. All forward-looking statements in this report speak only as of the date of this report or as of the date they are made and are qualified in their entirety by the above
cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date, except as required by law.
