Item 1.01. Entry into a Material Definitive Agreement.
On
Following the consummation of the Offer, Merger Sub will merge with and into HD
Supply (the "Merger") in accordance with the Merger Agreement and Section 251(h)
of the General Corporation Law of the
The board of directors of HD Supply (the "HD Supply Board") has approved the Merger Agreement and determined that the Offer, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to the stockholders of HD Supply and in the best interests of HD Supply, and has recommended that the stockholders of HD Supply accept the Offer and tender their Shares to Merger Sub pursuant to the Offer.
The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to customary closing conditions, including, among other things, (i) that at the expiration of the Offer a simple majority of all of the outstanding Shares (determined on a fully diluted basis, which assumes conversion or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof) be validly tendered and not withdrawn in accordance with the terms of the Offer (the "Minimum Condition") and (ii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").
The Merger Agreement includes representations, warranties and covenants of the parties customary for a transaction of this nature. Among them, HD Supply has agreed to conduct its operations in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time. Pursuant to the "no-shop" provisions in the Merger Agreement, HD Supply has also agreed to customary "no-shop" restrictions on its and its representatives' ability to solicit, discuss or negotiate alternative acquisition proposals from third parties, subject to exceptions for acquisition proposals that the HD Supply Board determines in good faith constitutes or could reasonably be expected to result in a "Superior Proposal" (as defined in the Merger Agreement) (the "No-Shop Provisions").
The Merger Agreement also includes customary termination rights for both the
Company and HD Supply, including, among others, the right to terminate in the
event the closing of the Offer has not occurred on or before
Under the terms of the Merger Agreement, immediately prior to the Effective Time, each then-outstanding HD Supply equity or equity-based award will be automatically converted into the right to receive the Offer Price (less the applicable exercise price per Share with respect to HD Supply stock options), without any interest thereon and less any required withholding taxes.
The foregoing description of the Merger Agreement and the transactions contemplated thereby as set forth in this Item 1.01 does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement has been included to provide investors and stockholders with information regarding its terms and is not intended to provide any factual information about the Company, HD Supply or Merger Sub. The representations, warranties and covenants contained in the Merger Agreement have been made solely for the purposes of the Merger Agreement and as of
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specific dates; were solely for the benefit of the parties to the Merger Agreement; are not intended as statements of fact to be relied upon by the Company's stockholders or other security holders, but rather as a way of allocating the risk between the parties to the Merger Agreement in the event the statements therein prove to be inaccurate; have been modified or qualified by certain confidential disclosures that were made between the parties in connection with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself; may no longer be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed as material by the Company's stockholders or other security holders. The Company's stockholders or other security holders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or circumstances of the Company, HD Supply or Merger Sub. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company's or HD Supply's public disclosures.
Additional Information and Where to Find It
The tender offer referenced herein has not yet commenced. This document is for
informational purposes only and is neither an offer to purchase nor a
solicitation of an offer to sell securities, nor is it a substitute for the
tender offer materials that the Company and Merger Sub will file with the
THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL CONTAIN IMPORTANT
INFORMATION. HD SUPPLY STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT
HOLDERS OF HD SUPPLY SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION
REGARDING TENDERING THEIR SECURITIES. The Offer to Purchase, the related Letter
of Transmittal and certain other tender offer documents, as well as the
Solicitation/Recommendation Statement, will be made available to all holders of
HD Supply stock at no expense to them. The tender offer materials and the
Solicitation/Recommendation Statement will be made available for free at the
In addition to the Offer to Purchase, the related Letter of Transmittal and
certain other tender offer documents, as well as the Solicitation/Recommendation
Statement, the Company and HD Supply each file annual, quarterly and current
reports and other information with the
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained herein constitute "forward-looking statements" as defined in the federal securities laws. Forward-looking statements may relate to, among other things, the proposed acquisition of HD Supply that involves substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements (the "potential acquisition"); statements about the potential benefits of the potential acquisition; HD Supply's plans, objectives, expectations and intentions; the anticipated timing of closing of the potential acquisition (including failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, including uncertainties as to how many of HD Supply's stockholders will tender their shares in Offer and the possibility that the potential acquisition does not close; risks related to the ability to realize the anticipated benefits of the potential acquisition, including the possibility that the expected benefits from the proposed transaction will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption from the potential acquisition making it more difficult to maintain business and operational relationships; negative effects of this announcement or the consummation of the potential acquisition on the market price of our or HD Supply's common stock, credit ratings or operating results; significant costs associated with the potential acquisition; unknown liabilities; the risk of litigation and/or regulatory actions related to the potential acquisition; the impact on our business, operations and financial results of the COVID-19 pandemic (which, among other things, may affect many of the items listed below); the demand for our products and services; net sales growth; comparable sales; effects of competition; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; state of the economy; state of the housing and home improvement markets; state of the credit markets, including mortgages, home equity loans and consumer credit; impact of tariffs; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our
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associates, suppliers and vendors; international trade disputes, natural
disasters, public health issues (including pandemics and related quarantines,
shelter-in-place and other governmental orders, and similar restrictions), and
other business interruptions that could disrupt supply or delivery of, or demand
for, the Company's products or services; continuation of share repurchase
programs; net earnings performance; earnings per share; dividend targets;
capital allocation and expenditures; liquidity; return on invested capital;
expense leverage; stock-based compensation expense; commodity price inflation
and deflation; the ability to issue debt on terms and at rates acceptable to us;
the impact and expected outcome of investigations, inquiries, claims and
litigation; the effect of accounting charges; the effect of adopting certain
accounting standards; the impact of regulatory changes; store openings and
closures; guidance for fiscal 2020 and beyond; financial outlook; and the
integration of acquired companies into our organization and the ability to
recognize the anticipated synergies and benefits of those acquisitions.
Forward-looking statements are based on currently available information and our
current assumptions, expectations and projections about future events. You
should not rely on our forward-looking statements. These statements are not
guarantees of future performance and are subject to future events, risks and
uncertainties - many of which are beyond our control, dependent on the actions
of third parties, or are currently unknown to us - as well as potentially
inaccurate assumptions that could cause actual results to differ materially from
our expectations and projections. These risks and uncertainties include, but are
not limited to, those described in Item 1A, "Risk Factors," and elsewhere in our
Annual Report on Form 10-K for our fiscal year ended
Forward-looking statements speak only as of the date they are made, and we do
not undertake to update these statements other than as required by law. You are
advised, however, to review any further disclosures we make on related subjects
in our periodic filings with the
Item 9.01. Financial Statements and Exhibits.
Exhibit Description 2.1 Agreement and Plan of Merger, dated as ofNovember 15, 2020 , by and amongThe Home Depot, Inc. ,Coronado Acquisition Sub Inc. and HD Supply Holdings, Inc.* 104 The cover page from this Current Report on Form 8-K formatted in Inline XBRL (included as Exhibit 101).
* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of
Regulation S-K.
the
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