EMERGENT BIOSOLUTIONS INC. (NYSE:EBS) Files An 8-K Completion of Acquisition or Disposition of AssetsItem 2.01 Completion of Acquisition or Disposition of Assets.
Share Purchase Agreement
On October15, 2018, to the share purchase agreement, dated August28, 2018 (the “Share Purchase Agreement”), by and among Emergent BioSolutions Inc. (“Emergent”), Adapt Pharma Limited, an Irish private company limited by shares (“Adapt”), the shareholders of Adapt identified in the Share Purchase Agreement (the “Sellers”) and Seamus Mulligan, an individual, as the Sellers’ representative, Emergent completed the previously announced purchase of all of the issued and outstanding ordinary shares of Adapt from the Sellers (the “Acquisition”). As a result of the Acquisition, Emergent acquired 50% of the equity interests in Adapt, which owns and commercializes NARCAN® (naloxone hydrochloride) Nasal Spray and has a development pipeline of new treatment and delivery options to address opioid overdose.
Emergent paid approximately $575 million in cash and $60 million in stock at the closing of the Acquisition (exclusive of closing adjustments and other holdbacks). Emergent issued 733,309 shares of its common stock, par value $.001 per share (“Common Stock”), based on the volume-weighted average price per share of the Common Stock as reported on the New York Stock Exchange for the ten-trading day period ending two days before closing, or $65.28 per share (an aggregate total of $47,870,412, inclusive of adjustments and holdbacks). The remaining consideration payable for the Acquisition consists of up to $100 million in cash based on the achievement of certain sales milestones through 2022. Emergent funded the cash portion of the payments made at closing using a combination of cash-on-hand and borrowings under its Amended Credit Agreement, as described under “Financing of the Acquisition” below.
The descriptions of the Share Purchase Agreement herein and under Item 1.01 of the Form8-K filed by Emergent on August28, 2018 do not purport to be complete and are qualified in their entirety by reference to the full text of the Share Purchase Agreement, a copy of which is filed herewith as Exhibit2. The copy of the Share Purchase Agreement attached as an exhibit to this Form8-K is intended to provide investors with information regarding its material terms. It is not intended to provide any other financial information about Emergent or its subsidiaries or affiliates or about Adapt or its subsidiaries or affiliates. The representations, warranties, and covenants contained in the Share Purchase Agreement were made only for purposes of that agreement and as of specific dates, are solely for the benefit of the parties to the Share Purchase Agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Share Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations, warranties, or covenants or any description thereof as characterizations of the actual state of facts or condition of the entities being acquired or any of their subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties, and covenants may have changed after the date of the Share Purchase Agreement.
Financing of the Acquisition
On October15, 2018, (i)Emergent, Wells Fargo Bank, National Association, as administrative agent (the “Administrative Agent”), and the lenders party thereto (the “Lenders”), entered into an Amended and Restated Credit Agreement, dated as of October15, 2018 (the “Amended Credit Agreement”), which Amended Credit Agreement amended and restated Emergent’s existing Credit Agreement, dated as of September29, 2017, by and among Emergent, the Administrative Agent and certain of the Lenders.
The Amended Credit Agreement(i)increased the revolving credit facility (the “Revolving Credit Facility”) from $200 million to $600 million, (ii)extended the maturity of the Revolving Credit Facility from September29, 2022 to October13, 2023, (iii)provided for a term loan in the original principal amount of $450 million (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Senior Secured Credit Facility”), (iv)added several additional lenders, (v)amended the applicable margin such that borrowings with respect to the Revolving Credit Facility will bear interest at the annual rate described below, (vi)amended the provision relating to incremental credit facilities such that Emergent may request one or more incremental term loan facilities, or one or more increases in the commitments under the Revolving Credit Facility (each an “Incremental Loan”), in any amount if, on a pro forma basis, Emergent’s consolidated secured net leverage ratio does not exceed 2.50 to 1.00 after such incurrence, plus $200 million and (vii)amended the maximum consolidated net leverage ratio financial covenant from 3.50 to 1.0 (subject to 0.50% step up in connection with material acquisitions) to the maximum consolidated net leverage ratio described below.
Prior to entering into the Amended Credit Agreement, the outstanding principal balance under the Revolving Credit Facility was approximately $100 million.
