METALDYNE PERFORMANCE GROUP INC. (NYSE:MPG) Files An 8-K Other Events
Item8.01
| Other Events. |
Update Regarding Litigation Related to the Proposed
Merger
On March22, 2017, a putative shareholder class action lawsuit,
captioned Brian Zimmer v. Metaldyne Performance Group Inc.,
et al., Case No. 2:17-cv-10911-MAG-DRG, was
filed in the United States District Court for the Eastern
District of Michigan (the District Court), against
Metaldyne Performance Group Inc. (the Company or
MPG) and the members of the Companys Board of Directors.
The complaint asserts claims under Sections 14(a) and 20(a) of
the Securities Exchange Act of 1934, and alleges, among other
things, that the definitive proxy statement on Schedule 14A filed
by the Company with the U.S. Securities and Exchange Commission
(the SEC) on March6, 2017 (the Definitive Proxy
Statement) in connection with the solicitation of proxies for
the special meeting of the Companys stockholders scheduled to be
held on April5, 2017 (the Special Meeting) contains
materially incomplete and misleading statements and/or omits
material information. The complaint seeks, among other things,
injunctive relief and an award of attorneys fees and expenses. On
March23, 2017, the plaintiff in the Zimmer action filed
a motion for preliminary injunction and a request for an
expedited hearing before the Special Meeting. On March24, 2017,
the District Court scheduled a hearing on such matter for April3,
2017. On March28, 2017, the Company filed this Current Report on
Form 8-K with the SEC making supplemental disclosures to the
Definitive Proxy Statement. Also on March28, 2017, the plaintiff
in the Zimmer action filed anotice with the District
Court voluntarily withdrawing his motion for preliminary
injunction as moot.
Supplemental
Definitive Proxy Statement Disclosure
On March6, 2017,
the Company filed the Definitive Proxy Statement for the Special
Meeting. At the Special Meeting, the Companys stockholders will
vote, among other things, on a proposal to adopt the Agreement
and Plan of Merger, dated as of November3, 2016 (as may be
amended from time to time, the Merger Agreement), by and
among the Company, American Axle Manufacturing Holdings, Inc.
(AAM) and Alpha SPV I, Inc. (Merger Sub), to which
Merger Sub will merge with and into the Company (the
Merger), with the Company surviving the Merger as a
wholly-owned subsidiary of AAM, and to approve the transactions
contemplated by the Merger Agreement. The Company is electing to
make the supplemental disclosures to the Definitive Proxy
Statement set forth below.
SUPPLEMENT
TO DEFINITIVE PROXY STATEMENT
This
supplemental information should be read in conjunction with the
Definitive Proxy Statement, which should be read in its entirety.
Page references in the below disclosures are to pages in the
Definitive Proxy Statement, and defined terms used but not
defined herein have the meanings set forth in the Definitive
Proxy Statement. Without admitting in any way that the
disclosures below are material or otherwise required by law, the
Company makes the following amended and supplemental
disclosures:
The
section of the Definitive Proxy Statement entitled THE
MERGERBackground to the Merger is amended and supplemented as
follows:
The disclosure on
page 61 of the Definitive Proxy Statement is amended and
supplemented by adding the following new sentence at the end of
the fifth full paragraph on such page:
In addition, none
of the potential counterparties contacted by BofA Merrill Lynch
(including Company A and Company B) entered into a
confidentiality agreement with MPG regarding a potential
strategic transaction with MPG.
The
section of the Definitive Proxy Statement entitled THE
MERGEROpinion of MPGs Financial AdvisorSummary of Material
Financial Analyses of MPG is amended and supplemented as
follows:
The disclosure on
page 89 of the Definitive Proxy Statement is amended and
supplemented by deleting the phrase to have similar or reasonably
comparable operations to MPG after the word considered in the
first sentence of the sub-section titled Selected Publicly Traded
Companies Analysis on such page and replacing such phrase with
the following new phrase:
, based on, among
other things, their respective customer bases, growth profiles,
manufacturing operations and profit and cash flow margins, to be
relevant to an analysis with respect to MPG:
The disclosure on
page 89 of the Definitive Proxy Statement is amended and
supplemented by adding columns for 2016 and 2017 EBITDAP
multiples to the list of selected publicly traded companies on
such page as follows:
| 2016EBITDAP multiple | 2017EBITDAP multiple | |||||||
|
American Axle Manufacturing Holdings,Inc. |
4.2x | 3.9x | ||||||
|
BorgWarner Inc. |
6.4x | 6.2x | ||||||
|
Cooper-Standard AutomotiveInc. |
5.2x | 4.9x | ||||||
|
Dana Incorporated |
5.1x | 4.9x | ||||||
|
GKNplc |
7.3x | 6.7x | ||||||
|
Lear Corporation |
5.2x | 5.1x | ||||||
|
Linamar Corporation |
4.7x | 4.4x | ||||||
|
Magna InternationalInc. |
5.2x | 4.7x | ||||||
|
Martinrea InternationalInc. |
4.2x | 3.8x | ||||||
|
TennecoInc. |
5.0x | 4.7x | ||||||
|
The Schaeffler Technologies AGCo. KG |
5.6x | 5.3x |
The disclosure on
page 90 of the Definitive Proxy Statement is amended and
supplemented by adding a column to the table on such page for the
individual Transaction Multiple under the sub-section titled
Selected Precedent Transactions Analysis as follows:
| Acquiror |
Target |
Announcement MonthandYear | Transaction Multiple | |||||
|
ValeoSA |
FTE Automotive GmbH |
June 2016 | 8.0x | |||||
|
Musashi Seimitsu IndustryCo.,Ltd. |
Hay Holding GmbH |
May 2016 | 7.0x | |||||
|
The Riberas family |
Gestamp Automocin,S.A. (35.0%) |
February2016 | 6.4x | |||||
|
Linamar Corporation |
MontupetS.A. |
October 2015 | 8.8x | |||||
|
Johnson Electric Holdings Limited |
Stackpole International |
August 2015 | 10.6x | |||||
|
BorgWarnerInc. |
Remy International,Inc. |
July 2015 | 10.2x | |||||
|
Magna InternationalInc. |
GETRAG Group of Companies |
July 2015 | 8.8x | |||||
|
MahleGmbH |
Delphi AutomotivePlc. |
February 2015 | 6.8x | |||||
|
Bain Capital,L.P. |
TI AutomotiveLtd. |
January 2015 | 6.0x | |||||
|
ZF Friedrichshafen AG |
TRW Automotive Holdings Corp. |
September2014 | 7.4x | |||||
|
Clearlake Capital Group |
Sage Automotive Interiors,Inc. |
September2014 | 6.3x | |||||
|
Lear Corporation |
Eagle Ottawa,LLC |
August 2014 | 6.0x | |||||
|
Hitachi Metals Automotive ComponentsUSA,LLC |
Waupaca Foundry,Inc. |
August 2014 | 6.0x | |||||
|
AVIC Electromechanical SystemsCo.,Ltd. |
Hilite International,Inc. |
May 2014 |
8.0x
9.9x |
(1)
(2) |
||||
|
American SecuritiesLLC |
Grede HoldingsLLC |
April 2014 | 5.3x | |||||
|
American SecuritiesLLC |
MD Investors Corporation |
December2012 | 4.8x | |||||
|
American SecuritiesLLC |
HHI Group HoldingsLLC |
October 2012 | 5.3x | |||||
|
KPS Capital PartnersLP |
Waupaca Foundry,Inc. |
May 2012 | 6.1x |
| (1) | IFRS multiple (13A) |
| (2) | USGAAP multiple (13A). |
The disclosure on
page 90 of the Definitive Proxy Statement is amended and
supplemented by adding the following new parenthetical at the end
of the first sentence in the last paragraph on such page after
the word EBITDA:
(which we refer to
in this section of this joint proxy statement/prospectus as
Transaction Multiple).
The disclosure on
page 91 of the Definitive Proxy Statement is amended and
supplemented by adding the following new parenthetical after the
phrase MPG forecasts and before the phrase to be approximately
$81 million in the first sentence of the sub-section titled
Discounted Cash Flow Analysis on such page:
(by, among other
things, making certain adjustments to EBITDA)
The disclosure on
page 91 of the Definitive Proxy Statement is amended and
supplemented by adding the following new phrase after the phrase
capital asset pricing model at the end of the third sentence of
the sub-section titled Discounted Cash Flow Analysis on such
page:
, which took into
account the risk free rate, the levered beta of MPG, the
appropriate equity market risk premium, the size premium of MPG
and MPGs estimated cost of debt.
The
section of the Definitive Proxy Statement entitled THE
MERGEROpinion of MPGs Financial AdvisorSummary of Material
Financial Analyses of AAM is amended and supplemented as
follows:
The disclosure on
page 91 of the Definitive Proxy Statement is amended and
supplemented by deleting the phrase to have similar or reasonably
comparable operations to AAM in the first sentence of the
sub-section titled Selected Publicly Traded Companies Analysis on
such page and replacing such phrase with the following new
phrase:
, based on, among
other things, their respective customer bases, growth profiles,
manufacturing operations and profit and cash flow margins, to be
relevant to an analysis with respect to AAM:
The disclosure on
pages 91-92 of the Definitive Proxy Statement is amended and
supplemented by adding columns for 2016 and 2017 EBITDAP
multiples to the list of selected publicly traded companies on
such pages as follows:
| 2016EBITDAP multiple | 2017EBITDAP multiple | |||||||
|
BorgWarner Inc. |
6.4x | 6.2x | ||||||
|
Cooper-Standard AutomotiveInc. |
5.2x | 4.9x | ||||||
|
Dana Incorporated |
5.1x | 4.9x | ||||||
|
GKNplc |
7.3x | 6.7x | ||||||
|
Lear Corporation |
5.2x | 5.1x | ||||||
|
Linamar Corporation |
4.7x | 4.4x | ||||||
|
Magna InternationalInc. |
5.2x | 4.7x | ||||||
|
Martinrea InternationalInc. |
4.2x | 3.8x | ||||||
|
Metaldyne Performance GroupInc. |
5.6x | 5.3x | ||||||
|
TennecoInc. |
5.0x | 4.7x | ||||||
|
The Schaeffler Technologies AGCo. KG |
5.6x | 5.3x |
The disclosure on
page 93 of the Definitive Proxy Statement is amended and
supplemented by adding the following new phrase at the end of the
second full sentence on such page following the phrase capital
asset pricing model:
, which took into
account the risk free rate, the levered beta of AAM, the
appropriate equity market risk premium, the size premium of AAM
and AAMs estimated cost of debt.
The
section of the Definitive Proxy Statement entitled THE
MERGEROpinion of MPGs Financial AdvisorOther Factors is amended
and supplemented as follows:
The disclosure on
page 95 of the Definitive Proxy Statement is amended and
supplemented by deleting the word and after the end of the first
bulleted item appearing on such page, deleting the period at the
end of the second bulleted item appearing on such page and
replacing it with the new phrase ; and and by adding the
following new bulleted phrase at the end of the bulleted list
appearing on such page:
|
in relation to the selected publicly traded companies in the automotive supplier industry analyzed by BofA Merrill Lynch (with respect to both MPG and AAM), BofA Merrill Lynch also observed (i)annual revenue growth rates of between 2% and 7% for calendar years 2016 through 2018, (ii) annual adjusted EBITDA growth rates of between 3% and 10% for calendar years 2016 through 2018, (iii) adjusted EBITDA margins and adjusted EBITDA-capital expenditure margins of between 8% and 18% and between 3% and 11%, respectively, for calendar year 2016, and (iv)return on invested capital (calculated as tax-effected EBIT divided by the sum of total assets less goodwill, intangibles, net non-debt current liabilities and cash), of between 10% and 32% for calendar year 2016, assuming a marginal tax rate of 35%. |
The
section of the Definitive Proxy Statement entitled THE
MERGERCertain Unaudited Prospective Financial Information of AAM
and MPG is amended and supplemented as follows:
The disclosure on
page 99 of the Definitive Proxy Statement is amended and
supplemented by adding the following new rows to the table on
such page titled MPG forecasts:
| Year Ended December31, | ||||||||||||||||||||
| 2016E | 2017E | 2018E | 2019E | 2020E | ||||||||||||||||
| (in millions) | ||||||||||||||||||||
|
Net Income |
$ | $ | $ | $ | $ | |||||||||||||||
|
Free Cash Flow |
The disclosure on
page 99 of the Definitive Proxy Statement is amended and
supplemented by adding the following new sentence and table on
such page following the table titled MPG forecasts:
The following
tables provide a reconciliation of certain non-GAAP financial measures
included in the MPG forecasts to the closest GAAP financial
measure:
Reconciliation of
Non-GAAP Information – Adjusted
EBITDA
| 2016E | 2017E | 2018E | 2019E | 2020E | ||||||||||||||||
| (in millions) | ||||||||||||||||||||
|
Income before tax |
$ | $ | $ | $ | $ | |||||||||||||||
|
Addbacks to Arrive at Unadjusted |
||||||||||||||||||||
|
Interest expense, net |
||||||||||||||||||||
|
Depreciation and amortization |
||||||||||||||||||||
|
Unadjusted EBITDA |
$ | $ | $ | $ | $ | |||||||||||||||
|
Adjustments to Arrive at Adjusted |
||||||||||||||||||||
|
Stock-based compensation expense |
||||||||||||||||||||
|
Non-recurring acquisition and purchase accounting items |
||||||||||||||||||||
|
Non-recurring operational items |
||||||||||||||||||||
|
Adjusted EBITDA |
$ | $ | $ | $ | $ | |||||||||||||||
|
Reconciliation of Non-GAAP Information – Free
|
||||||||||||||||||||
| 2016E | 2017E | 2018E | 2019E | 2020E | ||||||||||||||||
| (in millions) | ||||||||||||||||||||
|
Net cash provided by operating activities |
$ | $ | $ | $ | $ | |||||||||||||||
|
Less: Capital expenditures |
(209 | ) | (229 | ) | (217 | ) | (197 | ) | (194 | ) | ||||||||||
|
Free Cash Flow |
$ | $ | $ | $ | $ | |||||||||||||||
The section of the
Definitive Proxy Statement entitled THE MERGERInterests of MPG
Directors and Executive Officers in the Merger is amended and
supplemented as follows:
The disclosure on page 103 of
the Definitive Proxy Statement is amended and supplemented by
adding the following new paragraph immediately preceding the
sub-section titled Change in Control Severance Plan on such
page:
Other than the AS designees,
none of MPGs directors will continue to serve as directors of the
combined company (or of MPG as the surviving corporation in the
merger). As of the date hereof, it is not expected that any of
MPGs executive officers will be employed by MPG or AAM following
the effective time of the merger.
Cautionary Note
Regarding Forward-Looking Statements
Certain information set forth
in this communication, including statements as to the expected
timing, completion and effects of the proposed transaction,
constitutes forward-looking statements within the meaning of the
federal securities laws, including the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by words such as expects, intends, anticipates, plans,
projects, believes, seeks, targets, forecasts, will, would, or
similar expressions, and variations or negatives of these words,
and often address, but are not limited to, statements regarding
expected future business, prospects and financial performance and
financial condition. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, such
as statements about the consummation of the proposed merger and
the anticipated benefits thereof (including future financial and
operating results) and statements based on managements current
expectations and assumptions (including expectations and
intentions with respect to the combined company), which are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and that are outside
of the control of AAM and MPG. These and other forward-looking
statements are not guarantees of future results and are subject
to risks, uncertainties and assumptions that could cause actual
results to differ materially from those expressed in any
forward-looking statements.
Important risk factors that
may cause actual results to differ from those described in the
forward-looking statements include the following: (i)the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement or otherwise
affect the completion of the proposed transaction on the
anticipated terms and timing, including the risk that MPGs
stockholders may not approve the proposed merger or that AAMs
stockholders may not approve the share issuance in connection
with the proposed merger, that the necessary regulatory approvals
may not be obtained or may be obtained subject to conditions that
are not anticipated, that AAM might fail to obtain alternative
financing in the event of any failure of its existing financing
commitments for the transaction, or that any of the closing
conditions to the proposed merger may not be satisfied in a
timely manner; (ii)the ability of AAM and MPG to integrate their
businesses successfully and to realize the anticipated benefits
of the proposed merger; (iii)potential litigation relating to the
proposed merger; (iv)risks related to disruptions to ongoing
business operations, including disruptions to management time,
related to the proposed merger; (v)the effect of the announcement
of the proposed merger on the ability of MPG or AAM to retain and
hire key personnel; (vi)potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the proposed merger; (vii)legislative, regulatory
and economic developments
(including those resulting
from the United Kingdoms vote to exit the European Union) and the
potential incurrence of significant costs, liabilities and
obligations in connection therewith; (viii)volatility in the
global economy impacting demand for new vehicles and automotive
products; (ix)a decline in vehicle production levels,
particularly with respect to platforms for which AAM or MPG is a
significant supplier, or the financial distress of any of AAMs or
MPGs major customers; (x)cyclicality and seasonality in the light
vehicle, industrial and commercial vehicle markets; (xi)the
performance and results of operations of AAMs and MPGs
significant competitors; (xii)AAMs and MPGs dependence on
large-volume customers for current and future sales and their
ability to attract new customers and programs for new products;
(xiii)a reduction in outsourcing by AAMs or MPGs customers, the
loss or discontinuation of material production or programs, or
AAMs or MPGs failure to secure sufficient alternative programs;
(xiv)AAMs or MPGs inability to realize all of the sales expected
from awarded business or to fully recover pre-production costs,
their inability to achieve cost reductions required to sustain
cost competitiveness, or their failure to increase production
capacity or over-expanding its production in times of
overcapacity; (xv)a disruption in AAMs or MPGs supply or delivery
chains which causes one or more of its customers to halt
production; (xvi)work stoppages or production limitations at one
or more of AAMs or MPGs customers facilities; (xvii)a
catastrophic loss of one of AAMs or MPGs key manufacturing
facilities or the incurrence of significant costs if AAM or MPG
closes any of its manufacturing facilities; (xviii)AAMs or MPGs
failure to protect its know-how and intellectual property;
(xix)supply shortages or significant increases in the prices of
the raw materials and commodities AAM and MPG use; (xx)the risk
of the incurrence of material costs related to legal proceedings
or regulatory matters, including liabilities arising from
warranty claims, product recall or field actions, and risks of
noncompliance with environmental laws and regulations or risks of
environmental issues that could result in unforeseen costs at
AAMs or MPGs facilities; (xxi)any failure to maintain
satisfactory labor relations and potential liabilities associated
with pension and other postretirement benefit obligations;
(xxii)risks related to AAMs and MPGs global operations, including
exposure to foreign exchange rate fluctuations, threats posed by
entering new markets, and AAMs and MPGs exposure to a number of
different tax uncertainties, including the impact of the mix of
AAMs and MPGs profits and losses in various jurisdictions
affecting its tax rate; (xxiii)AAMs or MPGs inability, or the
inability of their respective customers or suppliers, to obtain
and maintain sufficient debt financing, including working capital
lines, (xxiv)AAMs and MPGs reliance on key machinery and tooling
to manufacture components that cannot be easily replicated and
(xv)program launch difficulties.
Additional risks and
uncertainties are contained in MPGs and AAMs filings with the
SEC, including in the joint proxy statement/prospectus. While the
list of factors presented here is considered representative, no
such list should be considered to be a complete statement of all
the potential risks, uncertainties or assumptions that could have
a material adverse effect on MPGs or AAMs consolidated financial
condition or results of operations or cause MPGs or AAMs current
expectations or beliefs to change. Persons reading this
communication are cautioned against relying on any
forward-looking statements, which speak only as of the date
hereof and should be read in conjunction with the other
cautionary statements that are included elsewhere herein, in the
joint proxy statement/prospectus and in MPGs and AAMs public
filings, including those described under Risk Factors in their
respective Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q. Neither MPG nor AAM assumes any obligation, and each
expressly disclaims any obligation, to publicly provide revisions
or updates to any forward-looking statements, except as otherwise
required by securities and other applicable
laws.
Additional
Information and Where to Find
It
This communication is not
intended to and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer
to buy any securities or a solicitation of any vote or approval.
This communication may be deemed to be solicitation material in
connection with the proposed merger of MPG with Merger Sub, to
which MPG would become a wholly-owned subsidiary of AAM. In
connection with the proposed merger, AAM has filed with the SEC a
registration statement on FormS-4 (File No.333-215161) (as
amended, the Registration Statement) that includes a joint
proxy statement of MPG and AAM and also constitutes a prospectus
of AAM. The Registration Statement was declared effective by the
SEC on March6, 2017. On March6, 2017, MPG also filed with the SEC
the Definitive Proxy Statement in connection with the proposed
merger and MPG mailed the Definitive Proxy Statement to its
stockholders beginning on or around March7, 2017. MPG and AAM may
also file other documents with the SEC regarding the proposed
merger. INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL
BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS
THERETO, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED
MERGER AND RELATED MATTERS. Investors and security holders may
obtain free copies of the Registration Statement and Definitive
Proxy Statement and other documents filed with the SEC by MPG and
AAM free of charge through the website maintained by the SEC at
www.sec.gov. Copies of documents filed with the SEC by MPG
will also be made available free of charge on MPGs investor
relations website. Copies of documents filed with the SEC by AAM
will also be made available free of charge on AAMs investor
relations website.
Participants in the
Solicitation
MPG and its directors and
executive officers may be deemed to be participants in the
solicitation of proxies from MPGs stockholders in respect of the
proposed merger. Information regarding MPGs directors and
executive officers is contained in the Companys proxy statement
for its 2016 Annual Meeting of Stockholders, which was filed with
the SEC on April11, 2016. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
are contained in the Registration Statement and Definitive Proxy
Statement and may also be contained in other relevant materials
to be filed with the SEC when they become
available.
About METALDYNE PERFORMANCE GROUP INC. (NYSE:MPG)
Metaldyne Performance Group Inc. provides components for use in engine, transmission and driveline (Powertrain) and chassis, suspension, steering and brake component (Safety-Critical) Platforms for the global light, commercial and industrial vehicle markets. The Company produces these components using complex metal-forming manufacturing technologies and processes for a customer base of vehicle original equipment manufacturers (OEMs) and Tier I suppliers. The Company operates through three segments: HHI, Metaldyne and Grede. The Company’s HHI segment manufactures metal-based components for the North American light vehicle market. The Company’s Metaldyne segment manufactures metal-based Powertrain products for the global light vehicle markets. The Company’s Grede segment manufactures cast, machined and assembled components for the light, commercial and industrial (agriculture, construction, mining, rail, wind energy and oil field) vehicle and equipment end-markets. METALDYNE PERFORMANCE GROUP INC. (NYSE:MPG) Recent Trading Information
METALDYNE PERFORMANCE GROUP INC. (NYSE:MPG) closed its last trading session up +0.10 at 22.80 with 73,087 shares trading hands.
