RAVN Merger Filing||Hopefully something like this from AJX. Background of the Merger
As part of the ongoing evaluation of the Company’s business, members of Raven’s senior management and the Board periodically review and assess the Company’s operations, financial performance and industry conditions as they may each impact the Company’s long-term strategic goals and plans, including reviewing potential opportunities to maximize shareholder value.
The Company and CNH Industrial previously entered into a mutual confidentiality agreement in May 2019 with respect to the sharing of confidential information about various technology partnerships between the two companies in the ordinary course of business. Commencing in October of 2020, representatives of the Company engaged in a series of discussions with CNH Industrial to explore a potential joint venture arrangement between the two companies regarding precision agriculture. These discussions did not relate to a potential acquisition of the Company by CNH Industrial. As part of this process, and pursuant to the mutual confidentiality agreement, the Company and CNH Industrial provided each other certain non-public due diligence information. The Company and CNH Industrial entered into an amended and restated mutual confidentiality agreement on March 11, 2021 (the “Confidentiality Agreement”). CNH Industrial also agreed to a customary standstill provision, expiring 90 days after the date of the Confidentiality Agreement.
In December 2020, a party (“Bidder 1”) contacted the Company to discuss strategic options, including whether the Company would be interested in a sale of the company to Bidder 1. In January of 2021, the Company communicated to Bidder 1 that it would not continue discussions regarding a possible sale of the Company to Bidder 1.
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On March 11, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan, who at the time was providing financial advisory services to the Company pursuant to a separate engagement, in attendance. The Board discussed an update on the discussions with CNH Industrial regarding a potential joint venture arrangement and the possibility of exploring other potential strategic alternatives.
On March 16, 2021, the Board engaged Davis Polk as outside legal counsel and met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. The Board reviewed with the representatives of J.P. Morgan and Davis Polk the substance of the discussions with CNH Industrial, as well as other potential strategic alternatives that might be available to the Company. Representatives of J.P. Morgan presented a proposed process and timeline with respect to the exploration of potential strategic alternatives for the Company, and representatives of Davis Polk provided an overview of the directors’ fiduciary duties. After discussion, the Board authorized the Company, under the direction of the Company’s management, to explore potential strategic alternatives in accordance with the proposed process and timeline presented at the Board meeting and to terminate the ongoing discussions with CNH Industrial regarding a possible joint venture arrangement.
On March 17, 2021, at the direction of the Board, representatives of the Company informed CNH Industrial of the Company’s decision to no longer pursue a possible joint venture arrangement with CNH Industrial and to instead initiate a process to explore strategic alternatives, including a potential sale of the entire company.
On March 18, 2021, the Company and CNH Industrial entered into a supplement to the Confidentiality Agreement, pursuant to which the parties agreed that, notwithstanding the standstill provision in the Confidentiality Agreement, CNH Industrial would be permitted to make confidential proposals to the Company’s Board concerning an acquisition of the entire company.
On March 30, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. Representatives of J.P. Morgan updated the Board on the status of the strategic alternatives process. The Board then discussed formally engaging J.P. Morgan as the Company’s financial advisor in connection with a potential strategic transaction. Following discussion, the Board authorized the engagement of J.P. Morgan for that purpose.
On April 8, 2021, the Company entered into an engagement letter with J.P. Morgan with respect to its retention as a financial advisor in connection with a possible strategic transaction.
On April 12, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. Representatives of J.P. Morgan updated the Board on the status of the strategic alternatives process and presented to the Board the list of potential counterparties that members of the Company’s senior management and representatives of J.P. Morgan planned to reach out to. Members of the Company’s senior management and representatives of J.P. Morgan also discussed with the Board an additional company (“Company X”) that members of the Company’s senior management, following discussions with representatives of Davis Polk and J.P. Morgan, determined not to include in the process due to competitive concerns and concerns regarding Company X’s ability to obtain regulatory approval for a transaction with the Company. Following discussion, the Board determined that management should proceed to contact the potential counterparties identified at the meeting, and agreed with the determination of management to not contact Company X.
On April 12, 2021, at the direction of the Company, J.P. Morgan and members of the Company’s management contacted six parties, including CNH Industrial, to assess their level of interest in pursuing a potential strategic transaction with the Company. Of those six parties, two parties executed confidentiality agreements with the Company on April 16, 2021, and one party executed a mutual confidentiality agreement with the Company on April 19, 2021. All of the confidentiality agreements contained a customary standstill provision. The Company and CNH Industrial also amended the Confidentiality Agreement on April 15, 2021 to add a conflicts waiver with respect to the Company’s outside legal counsel.
At the direction of the Company, between April 12, 2021 and April 19, 2021, J.P. Morgan sent process letters to the four parties that had executed confidentiality agreements with the Company, including CNH Industrial, inviting them to submit first-round, non-binding proposals for an acquisition of the Company by May 4, 2021. The letters stated that all first-round proposals should include an indication of the total price the bidder would be prepared to pay to acquire 100% of the Company and to specify the bidder’s proposed form of consideration, key conditions and assumptions, intended business and management strategy for the Company, financing sources, required approvals, anticipated timing, due diligence requirements and proposed transaction structure.
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On April 22, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. Representatives of J.P. Morgan updated the Board on the status of the strategic alternatives process.
On April 26, 2021, a representative of Company X contacted representatives of J.P. Morgan who historically have served as relationship bankers to Company X, which individuals subsequently contacted members of the Raven coverage team at J.P. Morgan (who are also members of the Raven deal team) to inquire whether there was an ongoing process by the Company to explore a sale. After speaking with the Company, based on the discussion previously held at the April 12 Board meeting, at the direction of the Company, the representatives of J.P. Morgan serving on the Raven coverage team (who are also members of the Raven deal team) did not provide information to Company X or its relationship bankers concerning whether or not a process was ongoing.
On April 30, 2021, Bidder 1 submitted a non-binding proposal to acquire the Company for consideration per share in a range of between $47.00 to $51.00.
On May 4, 2021, the Company received additional non-binding proposals to acquire the Company from another party (“Bidder 2”) and CNH Industrial, resulting in a total of three first-round proposals. CNH Industrial offered to purchase the Company for consideration per share of $48.00. Bidder 2 offered to purchase the Company for consideration per share in a range of between $45.00 to $49.00.
On May 7, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. The Board discussed with representatives of J.P. Morgan and Davis Polk the details of the three first-round proposals that were received and potential next steps. The advisors then left the meeting and the Board went into executive session. Following additional discussion, the Board determined that each of the three bidders should be requested to reconsider their proposals and provide indications of interest at an increased price.
Following the May 7, 2021 Board meeting, at the direction of the Company, representatives of J.P. Morgan informed each of CNH Industrial, Bidder 1 and Bidder 2 that such bidder was invited to submit a revised indication of interest at an increased price by May 13, 2021 and that, following the submission of such revised indication of interest, the Board would determine whether to admit such bidder into the second and final round of the bidding process.
On May 11, 2021, Bidder 1 submitted a revised non-binding proposal to acquire the Company for consideration per share of $54.00.
On May 13, 2021, CNH Industrial submitted a revised non-binding proposal to acquire the Company for consideration per share of $51.50, and Bidder 2 submitted a revised non-binding proposal to acquire the Company for consideration per share in a range of between $48.00 to $52.00.
On May 13, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan in attendance. Representatives of J.P. Morgan provided an update to the Board regarding the sale process, including the revised proposals submitted by CNH Industrial, Bidder 1 and Bidder 2. Following discussion, the Board approved the invitation of all three companies to the second round of the bidding process.
On May 14, 2021, at the direction of the Company, J.P. Morgan sent process letters to CNH Industrial, Bidder 1 and Bidder 2 describing the requirements for the second round of the bidding process. The letters instructed bidders to submit a final definitive and binding offer by June 15, 2021 specifying the bidder’s proposed form of consideration, key conditions and assumptions, intended business and management strategy for the Company, financing sources, required approvals, anticipated timing and certainty of closing (including confirmation of the completion of substantive due diligence), closing conditions and proposed transaction structure. The letters also instructed bidders to submit a mark-up by June 8, 2021 of the bid draft merger agreement that would be provided by Davis Polk.
Also on May 14, 2021, the three bidders received access to a virtual data room that contained detailed and confidential business, financial, operational, legal and other information concerning the Company. The due diligence process with each of the bidders continued through June 14, 2021. During this period, representatives of the Company and its advisors responded to numerous diligence requests from, and conducted several diligence calls with, each of the bidders and their respective advisors.
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Between May 18, 2021 and May 20, 2021, members of the Company’s senior management team hosted a management presentation with each of the three bidders in Sioux Falls, South Dakota.
On May 19, 2021, at the direction of the Company, representatives of J.P. Morgan shared a bid draft merger agreement with each bidder. The bid draft merger agreement furnished to each bidder was identical, except that with respect to CNH Industrial, the draft incorporated provisions concerning regulatory approvals that would apply to a non-U.S. buyer.
On June 8, 2021, CNH Industrial and Bidder 2 each submitted mark-ups of the merger agreement.
On June 9, 2021, at the direction of the Company, representatives of J.P. Morgan shared an initial draft of the Company’s disclosure schedules to the bid draft merger agreement with each bidder.
On June 9, 2021, Bidder 1 submitted a mark-up of the merger agreement.
On June 10, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. The Board discussed with representatives of Davis Polk the terms of the bid draft merger agreement and the key issues raised in the mark-ups received from each of the bidders. In particular, Davis Polk reviewed with the Board each bidder’s proposed revisions to the regulatory efforts covenant and regulatory termination fee. All three bidders proposed limiting the buyer’s obligation under the regulatory efforts covenant to “reasonable best efforts” with an additional proviso (i) in the case of CNH Industrial, that the buyer was under no obligation to (a) divest any material portion of the assets of the Applied Technology operating segment of the Company (the “Applied Technology Division”) or agree to any restrictions on the business operations of the buyer with respect to the Applied Technology Division in any material respect or (b) take any action that would have a material adverse effect on CNH Industrial and its subsidiaries, taken as a whole (measured on a scale relative to Raven and its subsidiaries, taken as a whole), and (ii) in the case of each of Bidder 1 and Bidder 2, that the buyer was under no obligation to (a) agree to any divestiture or restrictions on business operations or (b) contest any proceeding relating to the proposed transaction. Coupled with these proposed revisions to the regulatory efforts covenant, CNH Industrial proposed a 5% regulatory termination fee, Bidder 1 did not make a proposal regarding the size of the regulatory termination fee, and Bidder 2 proposed a 3% regulatory termination fee. Following discussion of these and other terms in the bidders’ mark-ups, the Board determined that the Company should provide feedback to each of the bidders with respect to the key issues raised in such bidder’s mark-up and invite each bidder to submit a revised mark-up with its final bid.
On June 11, 2021, at the direction of the Company, representatives of Davis Polk held teleconference calls with the legal advisors of CNH Industrial and Bidder 1 to communicate the Company’s feedback on key issues raised in each bidder’s mark-up. Davis Polk also contacted the legal advisor of Bidder 2 to schedule a teleconference call to discuss the key issues raised in Bidder 2’s mark-up. Bidder 2’s legal advisor indicated to Davis Polk that the legal advisor would need to consult with Bidder 2 prior to scheduling a call, but there was no further contact between the legal advisors following that communication.
On June 14, 2021, Bidder 2 communicated to the Company that it would not be submitting a final offer.
On June 15, 2021, CNH Industrial submitted a final offer to acquire the Company for $58.00 per share in cash. The final offer from CNH Industrial was accompanied by a revised mark-up of the draft merger agreement. Among other things, in the revised mark-up CNH Industrial (i) agreed to take all actions required by a governmental entity to consummate the Merger so long as such action would not have a material adverse effect on the Applied Technology Division or on CNH Industrial and its subsidiaries, taken as a whole (measured on a scale relative to Raven and its subsidiaries, taken as a whole) and (ii) proposed a 6% regulatory termination fee (approximately $120 million).
Also on June 15, 2021, Bidder 1 submitted a final offer to acquire the Company for an implied value of $55.50 per share, with such consideration to be comprised of (i) $37.00 per share in cash and (ii) a fixed number of shares of Bidder 1’s common stock equivalent to $18.50 per share (based on the volume-weighted average price of Bidder 1’s common stock, measured over the five-day trading period prior to announcement of the transaction). The final offer from Bidder 1 was also accompanied by a revised mark-up of the draft merger agreement. Among other things, the revised mark-up (i) did not reflect any changes to the regulatory efforts covenant proposed in Bidder 1’s initial mark-up but indicated in a footnote that Bidder 1 would be open to removing the proviso that the buyer is under no obligation to contest any proceedings relating to the proposed transaction if the Company agreed to extend the outside date until any such litigation is resolved and (ii) proposed a $100 million regulatory termination fee.
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On June 15, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. The Board discussed with the representatives of J.P. Morgan and Davis Polk the details of the two final offer packages that were received and potential next steps. Following discussion, the Board authorized the Company to continue discussions with each of CNH Industrial and Bidder 1.
On June 16, 2021, at the direction of the Company, Davis Polk sent Sullivan & Cromwell LLP, legal counsel to CNH Industrial, a mark-up of the draft merger agreement that was submitted with CNH Industrial’s final bid. From June 16, 2021 until the execution of the Merger Agreement on June 20, 2021, the parties and their respective legal advisors exchanged several drafts of, and engaged in numerous discussions and negotiations concerning the terms of, the Merger Agreement and the Company’s disclosure schedules to the Merger Agreement. Primary areas of discussion and negotiation included the scope of CNH Industrial’s undertaking to obtain required regulatory approvals, the “no-shop” provisions, and various employee-related and intellectual property-related matters. In connection with these negotiations, on June 17, 2021, CNH Industrial agreed to increase its regulatory termination fee to $200 million. During this time, representatives of CNH Industrial and its advisors also performed additional confirmatory due diligence.
On June 17, 2021, at the direction of the Company, Davis Polk held a teleconference call with the legal advisors of Bidder 1 to communicate the Company’s feedback on key issues in the revised mark-up of the draft merger agreement that was submitted with Bidder 1’s final bid. Significant areas of discussion included the scope of Bidder 1’s undertaking to obtain required regulatory approvals, each party’s assessment of the antitrust risk associated with a combination of the parties, the size of the proposed regulatory termination fee, the requirement proposed by Bidder 1 that the Company cooperate with Bidder 1 to facilitate the sale of certain assets or ownership interests held by the Company following the signing of a definitive merger agreement, the status of Bidder 1’s financing arrangements and Bidder 1’s anticipated timing to reach a position to sign a definitive merger agreement. In connection with those conversations, representatives of Bidder 1’s legal counsel informed representatives of Davis Polk that Bidder 1 would need approximately seven to ten days before Bidder 1 would be in a position to sign a definitive merger agreement.
On June 18, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. Representatives of Davis Polk and J.P. Morgan provided an update to the Board on their respective conversations with the legal and financial advisors of CNH Industrial and Bidder 1.
On June 19, 2021, the Board received a letter from Bidder 1 reaffirming its interest in acquiring the Company and communicating certain changes that Bidder 1 was willing to make to its final offer package in an effort to address the concerns, as communicated between the parties’ legal advisors, with respect to the potential antitrust risk associated with a combination of the Company with Bidder 1, including an increase in the regulatory termination fee proposed by Bidder 1 from $100 million to $150 million and certain revisions to the scope of Bidder 1’s undertaking to obtain required regulatory approvals. There was no change in Bidder 1’s previously communicated offer price of $55.50 per share. In its June 19 letter, Bidder 1 reiterated that announcement of a transaction with the Company would not occur prior to one week from its June 19 letter.
On June 20, 2021, the Board met virtually, with certain members of the Company’s senior management and representatives of J.P. Morgan and Davis Polk in attendance. Prior to the meeting, the directors had received (i) a substantially final draft of the Merger Agreement negotiated with CNH Industrial, together with a summary thereof prepared by Davis Polk, and (ii) a financial presentation prepared by J.P. Morgan. Representatives of Davis Polk reviewed with the directors the fiduciary duties applicable to the Board’s consideration of the Merger Agreement and the Merger. The Board then discussed the June 19 letter received from Bidder 1 with representatives of J.P. Morgan and Davis Polk. Following those discussions, the Board determined to proceed with a discussion of the CNH Industrial transaction because it had both a superior price and superior terms compared to the proposal of Bidder 1 and could be executed immediately. Representatives of J.P. Morgan then reviewed with the Board the strategic review process it had undertaken at the request of the Board and its financial analyses of the Merger Consideration in the proposed transaction with CNH Industrial. J.P. Morgan then rendered to the Board its oral opinion, which was subsequently confirmed by the delivery of J.P. Morgan’s written opinion addressed to the Board dated June 20, 2021 to the effect that, as of such date, and based upon and subject to the assumptions made, matters considered, qualifications and limitations set forth therein, the Merger Consideration of $58.00 per share to be paid to the holders of the Company’s common stock in the proposed merger was fair, from a financial point of view, to such shareholders. Representatives of Davis Polk then reviewed with the directors the terms of the Merger Agreement. Based on the discussions and deliberations at this meeting and prior meetings, the various discussions and reviews with representatives of Davis Polk and J.P. Morgan, and various other factors, including those described in “The Merger (Proposal 1)—Raven’s Reasons for the Merger; Recommendation of the Raven Board of Directors,” the Board unanimously (1) determined that the Merger Agreement, the Merger and the other transactions contemplated thereby were fair to, and in the best interests of, the
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Company and its shareholders, (2) approved the execution and delivery of the Merger Agreement and (3) recommended that the Company’s shareholders approve the Merger Agreement, the Merger and the other transactions contemplated thereby.
Shortly after the Board meeting on June 20, 2021, the Company, CNH Industrial and Merger Subsidiary finalized the Company’s disclosure schedules to the Merger Agreement and entered into the Merger Agreement.
Shortly after the execution of the Merger Agreement on June 20, 2021, the Company sent a letter to Bidder 1 communicating its decision to terminate further discussions with Bidder 1.
Later on June 20, 2021, after the execution of the Merger Agreement, the Board received a letter from Bidder 1 reaffirming its interest in acquiring the Company and revising the proposed purchase price from its letter on June 19, 2021 from $55.50 per share in cash and stock to $59.00 per share in cash. The letter also requested exclusivity through the end of the day on June 28, 2021.
On June 21, 2021, the Company and CNH Industrial issued a joint press release before markets in the U.S. and Europe opened announcing their execution of the Merger Agreement.
Also on June 21, 2021, the Company sent a letter to Bidder 1 informing Bidder 1 of the Company’s entry into the Merger Agreement with CNH Industrial prior to its receipt of the letter from Bidder 1 on June 20, 2021. The Company’s response noted that the Company’s ability to discuss the revised offer from Bidder 1 was limited by the terms of the Merger Agreement, which was also publicly filed on June 21, 2021 as an exhibit to a Form 6-K filed by CNH Industrial. There has been no further contact between the Company and Bidder 1 regarding the acquisition of the Company since the Company’s June 21, 2021 letter.