Fortive Corp current report, 07 March 2018

Vollständiges Dokument

Business Context and Reporting Period

Company: Fortive Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: March 7, 2018
Event: Entry into a Material Definitive Agreement regarding the separation of its Automation & Specialty (A&S) platform and a subsequent merger with Altra Industrial Motion Corp.

Key Financial Metrics and Transaction Structure

This filing details a complex transaction rather than standard periodic financial results. Key financial terms include:

  • Transaction Components: Fortive will transfer the A&S Business (excluding Hengstler and Dynapar) to a new subsidiary (Newco), distribute Newco stock to Fortive shareholders, and merge Newco into Altra.
  • Ownership Stake: Fortive shareholders are expected to own approximately 54% of Altra's outstanding common stock immediately following the merger.
  • Cash Dividend: Newco will distribute $150 million in cash to Fortive prior to the distribution of Newco stock.
  • Debt Exchange: Newco will distribute debt instruments valued at approximately $250 million (to reach a total distribution value of $400 million) to Fortive for exchange against Fortive's outstanding debt.
  • Direct Sales: Fortive will transfer certain non-U.S. assets of the A&S Business to Altra subsidiaries for a purchase price of $1.0 billion.
  • Financing: Goldman Sachs Bank USA has committed to provide up to $400 million in bridge loans to Newco to fund the cash payment and transaction expenses.
  • Termination Fees: Both Fortive and Altra are subject to termination fees of $40 million under specific conditions outlined in the Merger Agreement.

Material Changes Versus Prior Period

The filing does not report operational financial changes (revenue, profit, margins) for a specific reporting period. The material change is the strategic restructuring of Fortive's portfolio through the divestiture of the A&S Business and the creation of a new combined entity with Altra. The filing notes that the transaction is expected to be tax-free to Fortive's stockholders, except for cash paid in lieu of fractional shares.

Guidance, Outlook, Risks, and Contingencies

Management Commentary and Outlook:

  • The transaction is expected to close subject to various conditions, including shareholder approval, regulatory approvals (Hart-Scott-Rodino and foreign antitrust), and tax rulings.
  • The Merger Agreement includes a termination date of December 7, 2018, extendable to February 12, 2019, if regulatory or debt exchange conditions are not met.
  • One individual selected by Fortive will be appointed to Altra's Board of Directors.
Risks and Contingencies:
  • Forward-Looking Statements: The filing contains forward-looking statements regarding the timing, completion, and effects of the transaction, which are subject to risks and uncertainties.
  • Conditions Precedent: Closing is contingent on the Debt Exchange being consummated, receipt of the Cash Dividend, and satisfaction of antitrust and tax conditions.
  • Employee Matters: An Employee Matters Agreement allocates liabilities and ensures compensation and benefits for A&S employees remain substantially similar for a period following the closing.
  • Integration Risks: Risks include the ability to integrate the A&S Business successfully and achieve anticipated synergies.
Unusual Items:
  • The transaction involves a "Direct Sales" component where non-U.S. assets are sold for $1.0 billion prior to the merger.
  • Unvested equity awards held by Newco employees will be cancelled and replaced with Altra equity awards.

Important Facts for Investor Verification

  • Verify the final ownership percentage of Fortive shareholders in the combined Altra entity (currently estimated at 54%).
  • Confirm the successful consummation of the $400 million Debt Exchange and the $150 million Cash Dividend.
  • Monitor the status of regulatory approvals, specifically under the Hart-Scott-Rodino Act and foreign jurisdictions.
  • Review the upcoming proxy statement and prospectus for detailed financial projections and risk factors.
  • Track the $1.0 billion Direct Sales transaction for non-U.S. assets as a condition of the merger.
  • Assess the impact of the $40 million termination fees on both parties if the deal fails to close by the End Date.