Business Context and Reporting Period
On September 21, 2014, TTM Technologies, Inc. (the "Company") filed a Form 8-K to announce the entry into a definitive Agreement and Plan of Merger with Viasystems Group, Inc. ("Viasystems"). Under the agreement, a wholly-owned subsidiary of TTM Technologies will merge with and into Viasystems, with Viasystems surviving as a wholly-owned subsidiary of TTM Technologies. The transaction was unanimously approved by the boards of directors of both companies.
Key Financial Metrics and Transaction Terms
This filing details the terms of the merger rather than periodic financial performance metrics such as revenue or cash flow. Key financial terms include:
- Merger Consideration: Viasystems shareholders will receive 0.706 shares of TTM Technologies common stock and $11.33 in cash per share of Viasystems common stock.
- Debt Financing: TTM Technologies secured a commitment for $1,265 million in aggregate debt financing to fund the cash consideration and refinance existing indebtedness. This includes a $150 million senior secured asset-based revolving facility and a $1,115 million senior secured term loan B facility.
- Termination Fees: Viasystems may be required to pay a termination fee of $12.8 million under specific conditions (e.g., superior proposal, change in recommendation). TTM Technologies may be required to pay a reverse breakup fee of $40.0 million if the deal fails due to antitrust or CFIUS approval issues after the outside date.
- Expense Reimbursement: Viasystems agreed to reimburse TTM Technologies for up to $4 million in out-of-pocket expenses if the merger is not approved by stockholders and a bona fide proposal is made public.
Material Changes and Conditions
The completion of the merger is subject to several material conditions, including:
- Adoption of the Merger Agreement by Viasystems stockholders.
- Expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of other required antitrust approvals.
- Receipt of approval from the Committee on Foreign Investment in the United States (CFIUS).
- Effectiveness of the registration statement on Form S-4 filed with the SEC.
- Absence of legal restraints or prohibitions on the consummation of the merger.
The agreement includes a "no-shop" provision, though Viasystems retains a fiduciary out to consider superior proposals under specific circumstances. Voting agreements have been executed with the HM Funds and BD Funds, which collectively own approximately 67% of Viasystems' outstanding common stock, to vote in favor of the merger.
Guidance, Outlook, and Risks
Management commentary indicates the transaction is expected to create a combined entity with expanded capabilities. The filing includes standard forward-looking statements regarding the expected benefits of integration, timing of consummation, and future performance, noting these are subject to significant risks and uncertainties.
Key risks identified include:
- Failure to obtain necessary regulatory approvals (antitrust, CFIUS) in a timely manner or at all.
- Failure of Viasystems stockholders to adopt the Merger Agreement.
- Challenges in integrating operations, product lines, and employees.
- Adverse changes in global economic conditions or demand for electronic products and printed circuit boards.
- Potential disruption to relationships with customers, suppliers, and employees.
The filing does not provide specific numerical guidance on future revenue or earnings for the combined entity.
Important Facts for Investor Verification
- Verify the final approval status of the merger by Viasystems stockholders and the receipt of CFIUS and antitrust clearances.
- Review the definitive loan documentation for the $1,265 million credit facilities to understand covenants and interest rate structures.
- Monitor the filing of the Form S-4 registration statement and the accompanying Proxy Statement/Prospectus for detailed financial data and risk factors.
- Assess the impact of the $11.33 per share cash consideration and the 0.706 stock exchange ratio on the combined company's capital structure and dilution.
- Confirm the status of the Voting Agreements with the HM Funds and BD Funds (67% ownership) to gauge the likelihood of stockholder approval.