TAYLOR MORRISON HOME CORPORATION (NYSE:TMHC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On June7, 2018, Taylor Morrison Home Corporation, a Delaware corporation (the “Company”), Taylor Morrison Communities, Inc. a Delaware corporation and an indirect subsidiary of the Company (the “Intermediate Parent”), and Thor Merger Sub, Inc., a Delaware corporation and an indirect subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AV Homes, Inc., a Delaware corporation (“AV Homes”), to which Merger Sub will be merged with and into, AV Homes (the “Merger”), with AV Homes continuing as the surviving entity in the Merger as an indirect subsidiary of the Company.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock, par value $1.00 per share, of AV Homes (the “Target Common Shares”) (excluding any shares (i)subject to vesting, repurchase or other lapse restriction granted under an AV Homes equity plan that is outstanding immediately prior to the Effective Time; (ii)held by any stockholder who properly demands and perfects his, her or its appraisal rights with respect to such shares; or (iii)owned directly by AV Homes (or any wholly owned subsidiary of AV Homes, the Company or Merger Sub immediately prior to the Effective Time) will be converted into the right to receive and become exchangeable for (A) 0.9793 validly issued, fully paid and nonassessable shares of ClassA common stock, $0.00001 par value per share, of the Company (“Company Shares”), to applicable election procedures (subject to the pro ration as described below, “Stock Election Consideration”); (B) $21.50 in cash, without any interest thereon, to applicable election procedures (subject to the pro ration as described below, the “Cash Election Consideration”); or (C) $12.64 in cash, without any interest thereon and 0.4034 validly issued, fully paid and nonassessable Company Shares (the “Mixed Election Consideration” and, together with the Cash Election Consideration and the Stock Election Consideration, “Merger Consideration”). The per share Cash Election Consideration and Stock Election Consideration are subject to adjustment to the terms of the Merger Agreement such that the aggregate Merger Consideration will consist of approximately 58.8% cash and approximately 41.2% Company Shares. No fractional Company Shares will be issued in the Merger, and AV Homes stockholders will receive cash in lieu of any fractional shares.

The Merger Agreement provides that, at the Effective Time, (a)each outstanding stock option to purchase Target Common Shares and (b)each restricted stock unit or deferred stock unit award corresponding to Target Common Shares (each, a “Target RSU Award”) that is held by a non-employee director will vest (to the extent unvested) and be cancelled and converted into the right to receive an amount in cash equal to the Cash Election Consideration in respect of each share of Target Common Shares underlying such award (less the applicable exercise price, in the case of stock options). In addition, each (i)award of restricted Target Common Shares (“Target Restricted Stock Award”) and (ii)each Target RSU Award held by an employee will be assumed by the Company and converted into a corresponding award in respect of Company Shares (a “Company Award”), with the number of shares underlying each such Company Award to equal the product of (A)the number of Target Common Shares subject to the Target Restricted Stock Award (assuming applicable performance conditions are fully achieved) or Target RSU Award (assuming applicable performance conditions are achieved at target levels) immediately prior to the Effective Time and (B)the Stock Election Consideration. Each such Company Award will have the same vesting and acceleration of vesting terms and conditions (other than any performance-based vesting conditions) as, and other terms and conditions that are substantially similar to, those that applied to the corresponding Target Restricted Stock Award or Target RSU Award, as applicable, prior to the Effective Time.

The Company will file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (the “Form S-4”) in connection with the issuance of Company Shares in the Merger, which will include a prospectus and a proxy statement relating to the meeting of AV Homes’ stockholders to be held to vote on the adoption of the Merger Agreement and approval of the Merger.

The completion of the Merger is subject to the satisfaction or waiver of certain customary conditions, including (i)the adoption of the Merger Agreement by AV Homes’ stockholders, (ii)the absence of any law or order prohibiting the Merger, (iii)the effectiveness of the Form S-4 and the approval for listing on the NYSE of the Company Shares to be issued to the Merger; (iv)the absence of a material adverse effect on AV Homes and (v)certain other customary conditions relating to the parties’ representations and warranties in the Merger Agreement and the performance of their respective obligations. The Merger is not subject to approval by the stockholders of the Company or to any financing condition, and the Company represents and warrants in the Merger Agreement that it will have at the Effective Time cash on hand and available borrowing capacity sufficient in the aggregate to fund all of its payment obligations under the Merger Agreement and in connection with the transactions contemplated thereby, including the Merger.

The Merger Agreement contains customary representations and warranties made by each of AV Homes and the Company, and also contains customary pre-closing covenants, including covenants, among others, (i)by AV Homes to operate its businesses in the ordinary course consistent with past practice and to refrain from taking certain actions without the Company’s consent, (ii)by AV Homes not to initiate, solicit, knowingly facilitate or knowingly encourage and, subject to certain exceptions, not to participate in any discussions or negotiations with, any person making any proposal for an alternative transaction, (iii)by AV Homes to call and hold a special stockholders meeting and, subject to certain exceptions, require the board of directors of AV Homes (the “Target Board”) to recommend to AV Homes’ stockholders that they vote in favor of the adoption of the Merger Agreement and approval of the Merger and (iv)by each of the Company, Merger Sub and AV Homes to use reasonable best efforts to obtain governmental and third party approvals.

The Merger Agreement contains certain termination rights, including (i)in the event that the parties mutually agree to termination, (ii)for either of AV Homes or the Company, if the Merger is not consummated on or before December7, 2018 (the “Outside Date”), (iii) for either of AV Homes or the Company, if any law or order permanently prohibits consummation of the Merger, (iv)for either of AV Homes or the Company, if the requisite approval of AV Homes’ stockholders is not obtained, (v)for either of AV Homes or the Company, if the other party is in breach of its respective representations and warranties or covenants under the Merger Agreement such that a closing condition is not satisfied (subject to notice and cure and other customary exceptions), (vi) for the Company, if the Target Board changes its recommendation to AV Homes’ stockholders or (vii)for AV Homes, in order to enter into an agreement providing for a superior alternative transaction.

The Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, AV Homes may be required to pay to the Company a termination fee equal to $18,472,000 in cash. However, the termination fee payable by AV Homes to the Company will be $10,000,000 in cash if the Merger Agreement is terminated prior to the “Window Period End Time” by (a)the Company in response to the AV Homes board of directors change in its recommendation with respect to a superior proposal by a “Qualified Bidder” or (b)by AV Homes in order for AV Homes to accept a superior proposal by a “Qualified Bidder.” Under the terms of the Merger Agreement, a “Qualified Bidder” is a bidder that shall have delivered an acquisition proposal on or prior to 11:59p.m. (New York time) on July7, 2018 with respect to which, on or prior to such date, the AV Homes board of directors determined in good faith (after consultation with its outside legal counsel and its financial advisors) constituted or would reasonably be expected to lead to a superior proposal. In addition, the term “Window Period End Time” in the Merger Agreement means, with respect to a Qualified Bidder, the later of (i)11:59p.m. (New York time) on July22, 2018 and (ii)one day after the end of a required notice period with respect to a superior proposal (or new notice periods in respect thereof) by such Qualified Bidder, provided that such initial notice period began on or prior to 11:59p.m. (New York time) on July22, 2018.

The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or AV Homes. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure schedules provided by each of the Company and AV Homes in connection with the signing of the Merger Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the Company and AV Homes rather than establishing matters as facts. Accordingly, the representations and warranties in the Merger Agreement should not be relied upon as characterizations of the actual state of facts about the Company or AV Homes.

Voting Agreement

Concurrently with the execution and delivery of the Merger Agreement, on June7, 2018, the Company and TPG Aviator LP (“TPG”) entered into a voting agreement (the “Voting Agreement”) to become effective immediately following approval from AV Homes’ board of directors of the Voting Agreement and the Merger Agreement. to the terms of the Voting Agreement, TPG agreed, among other things, to vote all outstanding Target Common Shares currently held or thereafter acquired by TPG (the “TPG Shares”) in favor of the adoption of the Merger Agreement and against any proposal by third parties to acquire AV Homes, and to take certain other actions in furtherance of the transactions contemplated by the Merger Agreement, including electing to receive solely Stock Election Consideration, in each case subject to the limitations set forth in the Voting Agreement.

Subject to certain exceptions, the Voting Agreement prohibits certain transfers by TPG of any of the TPG Shares and certain other actions that would impair the ability of TPG to fulfill its obligations under the Voting Agreement. The Voting Agreement also contains non-solicitation covenants with respect to alternative transactions generally similar to those contained in the Merger Agreement with respect to AV Homes.

The Voting Agreement will terminate automatically on the first to occur of (i)a change in the recommendation of the Target Board, (ii)certain amendments or waivers of the Merger Agreement without TPG’s prior consent, (iii)the Effective Time and (iv)the termination of the Merger Agreement.

The foregoing description of the Voting Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 1.01 Other Events.

Debt Financing

In connection with financing the Merger Consideration, on June7, 2018, certain subsidiaries of the Company entered into a debt financing commitment letter (the “Debt Commitment Letter”) with Citigroup Global Markets Inc. (the “Lender”). to the Debt Commitment Letter, the Lender has committed to arrange and provide the Company withup to $200.0million aggregate principal amount of unsecured term loans with a 364 day maturity (the “Bridge Facility”). The commitment in respect of the Bridge Facility will be reduced by the amount of certain indebtedness incurred by the Company (other than indebtedness under the Company’s existing revolving credit facility) and the net cash proceeds of certain equity issuances.

The proceeds of the Bridge Facility may be used to finance the Merger and certain related transactions. The availability of the borrowings under the Bridge Facility is subject to the satisfaction of certain customary conditions, including the consummation of the Merger.

FORWARD-LOOKING STATEMENTS

Some of the statements in this Current Report on Form 8-K are forward-looking statements (or forward-looking information) within the meaning of applicable U.S. securities laws. These include statements using the words “believe,” “target,” “outlook,” “may,” “will,” “should,” “could,” “estimate,” “continue,” “expect,” “intend,” plan,” “predict,” “potential,” “project,” “intend,” “estimate,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “seek,” “would,” “upside,” “increases,” “goal,” “guidance” and “anticipate,” and similar statements (including where the word “could,” “may,” or “would” is used rather than the word “will”) and the negative of such words and phrases, which do not describe the present or provide information about the past. There is no guarantee that the expected events or expected results will actually occur. Such statements reflect the current views of management of the Company and are subject to a number of risks and uncertainties. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, operational and other factors. Any changes in these assumptions or other factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to the Company, or persons acting on its behalf, and are expressly qualified in their entirety by the cautionary statements set forth in this paragraph. Undue reliance should not be placed on such statements. In addition, material risks that could cause actual results to differ from forward-looking statements include: the inherent uncertainty associated with financial or other projections; the integration of the Company and AV Homes and the ability to recognize the anticipated benefits from the combination of the Company and AV Homes; the risk associated with AV Homes ability to obtain the shareholder approval required to consummate the merger and the timing of the closing of the merger, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all and the failure of the transaction to close for any other reason; the outcome of any legal proceedings that may be instituted against the parties and others related to the merger agreement; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; risks relating to the value of the Company common stock to be issued in connection with the transaction; the anticipated size of the markets and continued demand for the Company’s and AV Homes’ homes and the impact of competitive responses to the announcement of the transaction; access to available financing on a timely basis and on reasonable terms, including the refinancing of the Company and AV Homes debt to fund the cash portion of the consideration in connection with the transaction. Additional risks are described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December31, 2017, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February21, 2018 and in AV Homes’ Annual Report on Form 10-K for the year ended December31, 2017 filed with the SEC on February23, 2018. Forward-looking statements speak only as of the date they are made. Except as required by law, neither the Company nor AV Homes has any intention or obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements.

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. In connection with the proposed transaction between the Company and AV Homes, the Company will file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a Proxy Statement of AV Homes that also constitutes a Prospectus of the Company (the “Proxy Statement/Prospectus”). AV Homes plans to mail to its shareholders the definitive Proxy Statement/Prospectus in connection with the transaction. INVESTORS AND SECURITY HOLDERS OF AV HOMES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, AV HOMES, THE TRANSACTION AND RELATED MATTERS. Investors and security holders will be able to obtain free copies of the Proxy Statement/Prospectus (when available) and other documents filed with the SEC by the Company and AV Homes through the website maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the documents filed with the SEC by the Company in the Investor Relations section of the Company’s website at http://investors.taylormorrison.com or by contacting the Company’s Investor Relations at [email protected] or by calling (480) 734-2060, and will be able to obtain free copies of the documents filed with the SEC by AV Homes in the Investor Relations section of AV Homes’ website at http://investors.avhomesinc.com or by contacting AV Homes’ Investor Relations at [email protected] or by calling (480) 214-7408.

PARTICIPANTS IN THE MERGER SOLICITATION

The Company, AV Homes and certain of their respective directors, executive officers and employees may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of AV Homes in connection with the transaction, including a description of their respective direct or indirect interests, by security holdings or otherwise, will be included in the Proxy Statement/Prospectus described above when it is filed with the SEC. Additional information regarding the Company’s directors and executive officers is also included in the Company’s proxy statement for its 2018 Annual Meeting of Shareholders, which was filed with the SEC on April17, 2018, or its Annual Report on Form 10-K for the year ended December31, 2017, which was filed with the SEC on February21, 2018, and information regarding AV Homes’ directors and executive officers is also included in AV Homes’ proxy statement for its 2018 Annual Meeting of Stockholders, which was filed with the SEC on April18, 2018, or its Annual Report on Form 10-K for the year ended December31, 2017, which was filed with the SEC on February23, 2018. These documents are available free of charge as described above.

Item 1.01 Financial Statements and Exhibits

(d) Exhibits

Taylor Morrison Home Corp Exhibit
EX-2.1 2 d588008dex21.htm EX-2.1 EX-2.1 Exhibit 2.1 EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and among TAYLOR MORRISON HOME CORPORATION,…
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About TAYLOR MORRISON HOME CORPORATION (NYSE:TMHC)

Taylor Morrison Home Corporation is a real estate development company, with a portfolio of lifestyle and master-planned communities. The Company is engaged in the business of residential homebuilding and the development of lifestyle communities with operations geographically focused in Arizona, California, Colorado, Florida, Texas and its acquired divisions in Georgia, Illinois and North Carolina. The Company operates under the Taylor Morrison and Darling Homes brand names. It also provides financial services to customers through its mortgage subsidiary, Taylor Morrison Home Funding, LLC (TMHF) and title insurance and closing settlement services through its title company, Inspired Title Services, LLC (Inspired Title). The Company’s business is organized into over 15 operating divisions aggregated into three homebuilding segments, East, Central and West, and its Mortgage Operations segment, which includes the activities of TMHF and Inspired Title.