| Item 1.01. | Entry Into a Material Definitive Agreement. |
Agreement and Plan of Merger
On April 1, 2019, AmeriGas Partners, L.P., a Delaware limited partnership (the “Partnership”), UGI Corporation, a Pennsylvania corporation (“UGI”), AmeriGas Propane Holdings, Inc., a Delaware corporation, AmeriGas Propane Holdings, LLC, a Delaware limited liability company (“Merger Sub”), and AmeriGas Propane, Inc., a Pennsylvania corporation and the general partner of the Partnership (the “General Partner”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub, an indirect, wholly owned subsidiary of UGI, will merge with and into the Partnership, with the Partnership surviving as an indirect, wholly owned subsidiary of UGI (the “Merger”).
Under the terms of the Merger Agreement, at the effective time of the Merger, each outstanding common unit of the Partnership (each, a “Partnership Common Unit”) other than Partnership Common Units owned by UGI and its subsidiaries, including the General Partner (each, a “Public Common Unit”), will be converted into the right to receive, at the election of each holder of Public Common Units (each, an “Unaffiliated Partnership Unitholder”), subject to proration as described in the Merger Agreement, one of the following forms of merger consideration (subject to applicable withholding tax): (i) 0.6378 shares of UGI common stock, no par value (“UGI Shares”); (ii)(A) $7.63 in cash, without interest, and (B) 0.500 UGI Shares; or (iii) $35.325 in cash, without interest. In connection with the Merger, the General Partner’s interest, including its right to incentive distributions, will convert into Partnership Common Units, which will remain outstanding after the Merger, and anon-economic general partner interest in the Partnership. The Partnership Common Units owned by UGI or its subsidiaries, excluding the General Partner, will automatically be cancelled and cease to exist following the Merger.
The Audit Committee (the “GP Audit Committee”) of the Board of Directors of the General Partner (the “GP Board”) has, by unanimous vote, determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to, and in the best interests of, the Partnership and the Unaffiliated Partnership Unitholders, approved, and recommended that the GP Board approve, the Merger Agreement, the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommended that the GP Board submit the Merger Agreement to a vote of the holders of Partnership Common Units, and resolved, and recommended that the GP Board resolve, to recommend approval of the Merger Agreement by the holders of Partnership Common Units.
The GP Board (acting upon the recommendation of the GP Audit Committee) has, by unanimous vote, determined that the terms of the Merger Agreement and the Merger are fair and reasonable to, and in the best interests of, the Partnership and the Unaffiliated Partnership Unitholders, approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and resolved to recommend that the holders of the Partnership Common Units approve the Merger Agreement. The Board of Directors of UGI has also approved the Merger Agreement and the transactions contemplated thereby, including the Merger.
The Partnership has agreed not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative business combinations, subject to certain exceptions with respect to unsolicited proposals received by the Partnership. In addition, the Partnership has agreed to call a special meeting of the holders of Partnership Common Units (the “Special Meeting”) to approve the Merger Agreement. However, the GP Audit Committee may, subject to certain conditions, change its recommendation in favor of approval of the Merger Agreement and the Merger if, in connection with receipt of a superior proposal or in response to an intervening event, it determines in good faith that failure to take such action would be inconsistent with its duties under applicable law, as modified by the Partnership’s agreement of limited partnership.
The Merger Agreement contains customary representations and warranties from the parties, and each party has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of business during the interim period between the execution of the Merger Agreement and the effective time of the Merger and (2) the obligation to use reasonable best efforts to cause the Merger to be consummated.
Completion of the Merger is subject to certain customary conditions, including, among others: (1) approval of the Merger Agreement by holders of a majority of the outstanding Partnership Common Units; (2) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (3) the effectiveness of a registration statement on FormS-4 relating to the issuance of UGI Shares pursuant to the Merger Agreement; (4) approval for listing on the New York Stock Exchange of the UGI Shares issuable pursuant to the Merger Agreement; (5) subject to specified materiality standards, the accuracy of certain representations and warranties of the other party; and (6) compliance by the respective parties in all material respects with their respective covenants.
The Merger Agreement provides for certain termination rights for both the Partnership and UGI. The Merger Agreement provides that upon termination of the Merger Agreement under certain circumstances, the Partnership will be obligated to (1) pay UGI a termination fee equal to $20 million and/or (2) reimburse UGI for its expenses in an amount not to exceed $5 million. The Merger Agreement also provides that upon termination of the Merger Agreement under certain circumstances, UGI will be obligated to reimburse the Partnership for its expenses in an amount not to exceed $5 million.
The Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated into this Item 1.01 by reference. The foregoing summary has been included to provide investors and security holders with information regarding the terms of the Merger Agreement and is qualified in its entirety by the terms and conditions of the Merger Agreement. It is not intended to provide any other factual information about UGI, the Partnership or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement, which were made only for purposes of the Merger Agreement and as of specified dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of UGI, the Partnership or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in UGI’s or the Partnership’s public disclosures.
Support Agreement
In connection with execution of the Merger Agreement, the Partnership and the General Partner entered into a Support Agreement, dated as of April 1, 2019 (the “Support Agreement”), pursuant to which the General Partner has agreed to vote all Partnership Common Units that it or its affiliates beneficially own as of the record date of the Special Meeting in favor of the Merger Agreement and the Merger at the Special Meeting. The Support Agreement is attached hereto as Exhibit 10.1 and is incorporated into this Item 1.01 by reference.
