(Edgar Glimpses Via Acquire Media NewsEdge) Item 1.01-Entry into a Definitive Material Agreement.
Agreement and Plan of Merger and Reorganization
On March 16, 2014, Schawk, Inc., a Delaware corporation ("SGK"), entered into an
Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with
Matthews International Corporation, a Pennsylvania corporation ("Matthews"),
Moonlight Merger Sub Corp., a Delaware corporation and a wholly owned direct
subsidiary of Matthews ("Merger Sub"), and Moonlight Merger Sub LLC, a Delaware
limited liability company and a wholly owned direct subsidiary of Matthews
("Merger Sub 2").
Pursuant to the Merger Agreement and subject to the satisfaction or waiver of
certain conditions described below, Merger Sub will merge with and into SGK (the
"First Merger"), with SGK as the surviving corporation in the First Merger (the
"Surviving Corporation"). As part of a single integrated transaction and plan of
reorganization, the Surviving Corporation will be merged with and into Merger
Sub 2 (the "Second Merger," and together with the First Merger, the "Merger"),
with Merger Sub 2 as the surviving entity of the Second Merger. Pursuant to the
Merger Agreement, each share of common stock of SGK (each, an "SGK Share"),
issued and outstanding immediately prior to the consummation of the Merger
(other than shares held by stockholders who have exercised and not withdrawn
dissenters' rights for appraisal under Delaware law) will be converted into the
right to receive (i) an amount in cash equal to $11.80 and (ii) 0.20582 of a
share of Matthews' common stock (each, a "Matthews Share"). The ratio of the
cash consideration and the stock consideration to be received in the Merger is
subject to certain adjustments to ensure the tax-free status of the Merger with
respect to the stock consideration.
Matthews and SGK have made mutual customary representations, warranties and
covenants in the Merger Agreement, including covenants regarding the operation
of their respective businesses prior to the closing. SGK also made certain
additional representations and covenants, including agreeing to (i) cause a
stockholder meeting to be held for the purpose of voting upon the Merger
Agreement and (ii) refrain from any direct or indirect solicitation, initiation,
discussions or negotiations relating to an alternative acquisition proposal,
provided that, under limited circumstances as specified in the Merger Agreement,
SGK may enter into discussions or negotiations with a person who has made an
unsolicited alternative acquisition proposal. Matthews also made certain
additional representations and covenants with respect to the enforceability of
its financing commitment letter and agreed to cause a meeting of its
shareholders to be held, if it becomes necessary, for the purpose of voting upon
the issuance of the Matthews Shares pursuant to the Merger.
The consummation of the Merger is subject to certain conditions, including,
among other things, the approval of the Merger Agreement by stockholders of SGK
and the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act").
The Merger Agreement may be terminated by Matthews and SGK by mutual consent or
by either of them under certain circumstances, including if the Merger is not
consummated by September 30, 2014 (which date can be extended to October 31,
2014 to obtain regulatory approvals under the HSR Act). Under certain
circumstances, Matthews has the right to terminate the Merger Agreement and
receive a termination fee from SGK of $10.5 million plus up to $2.0 million of
expenses. Additionally, if SGK terminates the Merger Agreement due to Matthews'
failure to obtain, if necessary, the requisite approval of its shareholders to
the issuance of Matthews Shares, SGK has the right to receive a termination fee
of $3.0 million plus up to $5.0 million of expenses.
--------------------------------------------------------------------------------The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit 2.1 hereto and is incorporated into this Current
Report by reference.
As of March 14, 2014, the lenders under the Company's Second Amended and
Restated Credit Agreement, dated as of January 27, 2012, as subsequently amended
(the "Credit Agreement"), entered into a Consent Memorandum with SGK (the
"Consent Memorandum") pursuant to which the lenders agreed that the voting
arrangements described in Item 8.01 below would not constitute a "Change of
Control" as defined in the Credit Agreement. Contemporaneously with the entry
into the Consent Memorandum, the Company also received consents from the holders
of its senior notes, pursuant to which such noteholders consented to similar
actions under the applicable note purchase agreements in respect of the voting
arrangements described below.
The foregoing description of the consents does not purport to be complete and is
qualified in its entirety by reference to the consents, which are filed as
Exhibits 10.1, 10.2 and 10.3 hereto and are incorporated into this Current
Report by reference.
The Merger Agreement and the above description of the Merger Agreement have been
included to provide investors and security holders with information regarding
the terms of the Merger Agreement. They are not intended to provide any other
factual information about SGK, Matthews, or their respective subsidiaries and
affiliates or businesses. The Merger Agreement contains representations and
warranties of Matthews, Merger Sub and Merger Sub 2 solely for the benefit of
SGK and representations and warranties of the SGK solely for the benefit of
Matthews and Merger Sub. The assertions embodied in those representations and
warranties are qualified by information in confidential disclosure letters that
the parties have exchanged in connection with signing the Merger Agreement as of
a specific date. The disclosure letters contain information that modifies,
qualifies and creates exceptions to the representations and warranties set forth
in the Merger Agreement. Moreover, the representations and warranties in the
Merger Agreement were made solely for the benefit of the other parties to the
Merger Agreement and were used for the purpose of allocating risk among the
parties. Therefore, investors and security holders should not treat them as
categorical statements of fact. Moreover, these representations and warranties
may apply standards of materiality in a way that is different from what may be
material to investors and were made only as of the date of the Merger Agreement
or such other date or dates as may be specified in the Merger Agreement and are
subject to more recent developments. Accordingly, investors and security holders
should read the representations and warranties in the Merger Agreement not in
isolation but only in conjunction with the other information about SGK and
Matthews and their subsidiaries that the respective companies include in reports
and statements they file with the SEC.
Item 5.02-Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the entry into the Merger Agreement, Clarence W. Schawk,
Chairman of the Board of Directors, and David A. Schawk, Chief Executive
Officer, each entered into agreements to terminate their employment agreements
with SGK (collectively, the "Termination Agreements") effective as of March 16,
2014. The Termination Agreements did not terminate their employment with SGK or
modify their current compensation, and each continues to hold their respective
positions and responsibilities with SGK.
The foregoing description of the Termination Agreements does not purport to be
complete and is qualified in its entirety by reference to the Termination
Agreements, which are filed as Exhibits 10.4 and 10.5 hereto, respectively, and
are incorporated into this Current Report by reference.
Item 8.01-Other Events
Voting and Support Agreements
Concurrently with the execution of the Merger Agreement, certain members of the
Schawk family, both individually and on behalf of trusts for the benefit of
certain Schawk family members (collectively, the "Family Shareholders"), who
hold or control in the aggregate approximately 61% of the outstanding SGK common
stock each entered into a Voting and Support Agreement with Matthews
(collectively, the "Voting Agreements"), pursuant to which the Family
Shareholders agreed to vote in favor of the approval of the Merger
Agreement. The Voting Agreements also prohibit the Family Shareholders from
selling or otherwise transferring their SGK Shares, subject to certain
exceptions, and from soliciting or entering into discussions or negotiations
concerning alternative acquisition proposals.
Each Voting Agreement provides that in the event SGK, a Family Shareholder or
any of their respective affiliates enters into an alternative transaction within
18 months following the termination of the Merger Agreement, the Family
Shareholder will be obligated to pay to Matthews an amount equal to the amount,
if any, received by the Family Shareholder in excess of the amount that would
have been received pursuant to the Merger, provided that the total payments by
the Family Shareholders collectively may not exceed $3.0 million.
The Voting Agreements terminate upon the termination of the Merger
Agreement, the closing of the Merger, or on the date of any amendment or
modification to the Merger Agreement that decreases or changes the form of the
stock merger consideration to be paid to the stockholders of SGK in connection
with the Merger.
The foregoing description of the Voting Agreements does not purport to be
complete and is qualified in its entirety by reference to the form of Voting
Agreement, which is filed as Exhibit 99.1 hereto and is incorporated into this
Current Report by reference.
Concurrently with the execution of the Merger Agreement, the Family Shareholders
also entered into a Shareholders' Agreement with Matthews (the "Shareholders'
Agreement"), pursuant to which the Family Shareholders agreed, from and after
the closing of the Merger, to vote (i) in favor of all director nominees that
have been nominated by the Matthews' board of directors and (ii) in accordance
with the Matthews' board of directors with respect to any other proposal to be
voted on by shareholders of Matthews, in each case until the one-year
anniversary of the closing date of the Merger. Subject to the certain
exceptions, the Shareholders' Agreement also prohibits the Family Shareholders
from selling or otherwise transferring their Matthews Shares for a period of
180 days after the closing date of the Merger, except that Matthews Shares owned
or controlled by David A. Schawk will be subject to a prohibition on transfer
for a period of one-year following the closing of the Merger (or earlier to the
extent Mr. Schawk is no longer a director or senior executive officer of
Under the Shareholders' Agreement, Matthews agreed to take all actions necessary
to appoint a designee of the Family Shareholders, which initially will be David
A. Schawk, to the Matthews board of directors effective as of the closing of the
Merger. Subject to certain terms and conditions, Matthews agreed to continue to
nominate and use its reasonable best efforts to cause the shareholders of
Matthews to elect to the Matthews board of directors the Family Shareholders'
designee until the Family Shareholders collectively own less than 7.5% of the
outstanding Matthews Shares. The Shareholders' Agreement also provides the
Family Shareholders with certain resale registration rights with respect to
their Matthews Shares after the first anniversary of the closing of the Merger.
--------------------------------------------------------------------------------The foregoing description of the Shareholders' Agreement does not purport to be
complete and is qualified in its entirety by reference to the Shareholders'
Agreement, which is filed as Exhibit 99.2 hereto and is incorporated into this
Current Report by reference.
Item 9.01-Financial Statements and Exhibits.
Exhibit 2.1- Agreement and Plan of Merger and Reorganization among Schawk, Inc.,
Matthews International Corporation, Moonlight Merger Sub Corp. and Moonlight
Merger Sub LLC, dated as of March 16, 2014.
Exhibit 10.1- Second Amended and Restated Credit Agreement Consent Memorandum
dated as of March 14, 2014.
Exhibit 10.2-Consent among Schawk, Inc. and each of the Noteholders signatory
thereto dated as of March 14, 2014.
Exhibit 10.3- Consent among Schawk, Inc. and each of the Noteholders signatory
thereto dated as of March 14, 2014.
Exhibit 10.4- Termination of Employment and Deferred Compensation Agreements and
General Release between Clarence W. Schawk and Schawk, Inc. dated March 16,
Exhibit 10.5- Termination of Employment Agreement between David A. Schawk and
Schawk, Inc. dated March 16, 2014.
Exhibit 99.1- Form of Voting Agreement and Support Agreement by and among
certain stockholders of Schawk, Inc. party thereto and Matthews International
Corporation dated March 16, 2014.
Exhibit 99.2- Shareholders' Agreement by and among certain stockholders of
Schawk, Inc. party thereto and Matthews International Corporation dated March
Additional Information and Where To Find It
This report, including the exhibits, relates to a proposed transaction between
Matthews and SGK that will become the subject of a registration statement on
Form S-4, including a proxy statement/prospectus forming a part thereof, to be
filed with the Securities and Exchange Commission ("SEC"). This document is not
a substitute for the registration statement and proxy statement/prospectus
expected to be filed with the SEC or any other document that Matthews or SGK may
file with the SEC or send to stockholders of SGK in connection with the proposed
transaction. BEFORE MAKING ANY VOTING DECISION, SGK INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS
AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED BY MATTHEWS OR SGK
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
RELATED MATTERS. Investors and security holders will be able to obtain free
copies of the registration statement and the proxy statement/prospectus, when
available, and other relevant documents filed or that will be filed by Matthews
and SGK with the SEC through the website maintained by the SEC at
www.sec.gov. Copies of the registration statement, proxy statement/prospectus
and other relevant documents filed by Matthews with the SEC will be available
free of charge on its
--------------------------------------------------------------------------------internet website at www.matw.com. Copies of the proxy statement/prospectus and
other relevant documents filed by SGK with the SEC will be available free of
charge on SGK's internet website at www.sgkinc.com.
No Offer or Solicitation
This document does not constitute an offer to sell, or an invitation to
subscribe for, purchase or exchange, any securities or the solicitation of any
vote or approval in any jurisdiction, nor shall there be any sale, issuance,
exchange or transfer of the securities referred to in this announcement in any
jurisdiction in contravention of applicable law.
Participants in the Solicitation
Matthews, SGK and their respective directors and executive officers may be
considered participants in the solicitation of proxies from stockholders of SGK
in connection with the proposed transaction. Information about the directors and
executive officers of SGK is currently set forth in its proxy statement for its
2013 annual meeting of stockholders, which was filed with the SEC on April 12,
2013. Information about the directors and executive officers of Matthews is set
forth in its proxy statement for its 2014 annual meeting of shareholders, which
was filed with the SEC on January 21, 2014. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statement/prospectus and other relevant materials to be filed with the SEC
when they become available.
Use of Forward-Looking Statements
This report and accompanying exhibits include certain "forward-looking
statements" within the meaning of, and subject to the safe harbor created by,
Section 21E of the Securities Exchange Act of 1934, as amended. Statements that
are not historical facts, including statements about SGK's managements' beliefs
and expectations, are forward-looking statements. Words such as "believes",
"anticipates", "estimates", "expects", "intends", "aims", "potential", "will",
"would", "could", "considered", "likely", "estimate" and variations of these
words and similar future or conditional expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements. While SGK believes its expectations, assumptions, estimates and
projections are reasonable, such forward-looking statements are only predictions
and involve known and unknown risks and uncertainties, many of which are beyond
SGK's control. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend upon future circumstances
that may or may not occur. Actual results may differ materially from those
contained in the forward-looking statements because of factors such as, among
others, the occurrence of an event, change or other circumstance that could give
rise to the termination of the merger agreement; failure or delay in receiving
the approval of antitrust authorities necessary to complete the proposed
transaction and other required regulatory approvals; any potential need to
adjust the purchase price components in order to maintain the tax-free status of
the reorganization with respect to the stock consideration; the ability of
Matthews to implement plans for the integration of the proposed transaction,
including with respect to cost containment and other key strategies; the ability
of Matthews to recognize the anticipated synergies and benefits of the proposed
transaction; and such other risks and uncertainties detailed in SGK's periodic
public filings with the SEC, including but not limited to those discussed under
"Risk Factors" in SGK's Form 10-K for the fiscal year ended December 31, 2013,
and in SGK's subsequent filings with the SEC and in other investor
communications of SGK from time to time. SGK does not undertake to and
specifically declines any obligation to update publicly any of these
forward-looking statements to reflect future events or circumstances after the
date of such statement or to reflect the occurrence of anticipated or
unanticipated events, and undue reliance should not be placed on such