OneWater Marine Inc. Form 8-K Summary
Business Context and Reporting Period
OneWater Marine Inc. filed a Form 8-K dated June 21, 2022, signed June 22, 2022, reporting agreements related to its proposed acquisition of Ocean Bio-Chem, Inc., a manufacturer and distributor of marine, automotive, power sports, recreational vehicle, home care and outdoor power equipment products.
Transaction and Key Financial Terms
- OneWater’s subsidiary, OBCMS, Inc., agreed to merge with Ocean Bio-Chem, with Ocean Bio-Chem surviving as a wholly owned subsidiary.
- Ocean Bio-Chem shareholders will receive approximately $13.08 per share in cash, without interest, subject to the merger agreement’s terms and adjustments.
- OneWater intends to finance the merger consideration with debt. Truist Bank issued a commitment for $125.0 million of debt financing, subject to customary conditions, executed loan documents and consummation of the acquisition.
- OneWater agreed to acquire all outstanding shares of Star Brite Europe, Inc. for $7.0 million, subject to adjustments. Closing of this acquisition is a condition to the Ocean Bio-Chem merger.
- OneWater also agreed to purchase Ocean Bio-Chem’s executive offices and warehouse facilities in Fort Lauderdale, Florida, for $3.6 million, subject to adjustments. Closing or satisfaction or waiver of the real estate transaction’s conditions is also a condition to the merger.
- The filing provides no revenue, profit, cash-flow, margin, debt-balance, liquidity or other operating metrics for OneWater or Ocean Bio-Chem.
Material Changes and Transaction Status
- The acquisition is expected to close during OneWater’s fiscal fourth quarter ending September 30, 2022.
- Ocean Bio-Chem shareholder written consent approving the merger was obtained on June 21, 2022. The consent restricts further discussions or solicitations regarding alternative acquisitions, subject to applicable terms and exceptions.
- Closing remains subject to, among other matters, expiration or termination of applicable Hart-Scott-Rodino waiting periods, delivery of Ocean Bio-Chem’s information statement and a minimum 20-day period after mailing, absence of legal restraints, satisfaction of customary closing conditions, and completion or satisfaction or waiver of the Star Brite Europe and real estate transactions.
- Supporting shareholders, including Ocean Bio-Chem Chairman, President and CEO Peter G. Dornau, agreed to vote in favor of the merger and against competing proposals or actions that could impede the transaction.
Outlook, Risks and Unusual Items
- Either party may terminate if the acquisition is not completed by September 30, 2022, subject to the agreement’s provisions.
- Ocean Bio-Chem may owe OneWater a $3.375 million termination fee under specified circumstances.
- OneWater may owe Ocean Bio-Chem a $5.0 million reverse termination fee under specified circumstances, including failure to confirm that sufficient cash and committed debt financing are available to fund the merger consideration.
- The Star Brite Europe and real estate transactions involve parties affiliated with Peter G. Dornau, who is also OneWater’s Chairman, President and CEO, creating related-party transaction considerations.
- Management identifies risks involving failure to satisfy closing conditions, inability to realize expected transaction benefits, integration challenges, supply-chain constraints, inventory availability, demand changes, seasonality and volatility in the boat industry, credit-facility covenant compliance, cash flow and access to capital, economic and market conditions, weather, COVID-19 effects and other acquisition-related risks.
Important Facts for Investors to Verify
- Whether all regulatory, financing and other closing conditions were satisfied and whether the Ocean Bio-Chem acquisition closed by September 30, 2022.
- The final number of Ocean Bio-Chem shares acquired and total merger consideration paid.
- Final debt financing terms, including interest rates, maturities, covenants, collateral and resulting leverage.
- Completion and final purchase prices of the Star Brite Europe and Fort Lauderdale real estate transactions.
- Related-party disclosures, valuation support and board or committee approval processes for the transactions involving Mr. Dornau and affiliated entities.
- Post-closing financial results, purchase-accounting adjustments, integration costs and evidence of expected operating synergies.