Business Context and Reporting Period
Company: Air Products & Chemicals, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 6, 2016
Event: Entry into a Material Definitive Agreement to sell the Performance Materials division (PMD Business) of its Materials Technologies segment.
Key Financial Metrics
Transaction Value: $3.8 billion in cash plus assumption of certain liabilities by the buyer.
Termination Fee: $190 million payable by Evonik Industries AG under specific conditions (e.g., antitrust injunctions, failure to close by the Outside Date due to regulatory issues, or material breach of antitrust covenants).
Revenue/Profit/Cash Flow: The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period.
Material Changes and Transaction Details
- Buyer: Evonik Industries AG.
- Assets Sold: Certain subsidiaries and assets comprising the Performance Materials division (PMD Business).
- Post-Closing Restrictions:
- Two-year non-compete covenant regarding activities competing with the PMD Business.
- Eighteen-month non-solicitation and non-hire provisions regarding PMD Business employees.
- Outside Date: May 6, 2017 (subject to a three-month extension if all conditions except antitrust approvals are met).
Guidance, Risks, and Contingencies
Closing Conditions:
- Expiration or termination of the Hart-Scott-Rodino waiting period and receipt of required antitrust clearances.
- Absence of statutes or injunctions prohibiting the transaction.
- Completion of IT separation activities.
- Receipt of certain third-party approvals.
Risks and Contingencies:
- Regulatory Risk: The transaction is contingent on antitrust approvals; failure to obtain these may trigger the $190 million termination fee.
- Termination Rights: Either party may terminate for material breach (uncured within 30 days), mutual consent, or failure to close by the Outside Date.
- Indemnification: Air Products agreed to indemnify Evonik for certain environmental liabilities related to the PMD Business.
Investor Verification Checklist
- Verify the final purchase price adjustments and the specific liabilities assumed by Evonik.
- Monitor the status of antitrust approvals from the FTC and other governmental authorities.
- Review the transition services agreement and lease terms for sites owned by Air Products but leased to Evonik post-closing.
- Confirm the timeline for IT separation activities as a condition precedent to closing.
- Assess the impact of the divestiture on Air Products' future Materials Technologies segment revenue and strategic focus.