| Item 1.01. |
Entry into a Material Definitive Agreement. |
On April 22, 2022, Allegion US Holding Company Inc., a subsidiary of Allegion plc (such subsidiary, the “Company”) entered into a Transaction Agreement (the “Transaction Agreement) with Stanley Black & Decker, Inc., a Connecticut corporation (“Stanley Parent”), Stanley Black & Decker Canada Corporation, an unlimited liability company incorporated under the laws of the province of Nova Scotia, various other selling entities and Stanley Access Technologies LLC, a Delaware limited liability company (“Stanley”), pursuant to which the Company will acquire the automatic door business, operations and assets owned by Stanley Parent and its affiliates (the “Transaction”), including Stanley (the “Business”). Stanley is a leading manufacturer, installer and service provider of automatic doors in North America, primarily in the United States and Canada.
Pursuant to the Transaction Agreement, the Company agreed to purchase the Business for an aggregate initial purchase price of $900 million and assume certain liabilities in connection with the Transaction Agreement, subject to certain adjustments for cash, indebtedness, and normalized working capital. In connection with the Transaction, Stanley Parent will and will cause its affiliates to sell, assign, transfer, convey and deliver to the Company all right, title and interest in and to the assets, properties and rights primarily used or primarily held for use in connection with the Business.
The Transaction Agreement contains customary representations and warranties of a transaction of this type that the parties made to, and are solely for the benefit of, each other. Each party has agreed to customary covenants, including, among others, covenants relating to: (i) the conduct of Stanley’s businesses during the interim period between the execution of the Transaction Agreement and the completion of the Transaction, (ii) Stanley’s obligation to afford the Company reasonable access to the properties, offices, plants and other facilities, books and records of Stanley and the Business for any reasonable purpose related to the Transaction, (iii) compliance with any confidentiality agreements entered into in connection with the Transaction, (iv) the continuation of certain indemnification provisions agreed in connection with certain Stanley personnel, (v) restrictive covenants relating to Stanley and Stanley Parent’s ability to transact Business in the United States, Canada or any other country in which any other selling party conducts the Business, and (vi) Stanley and Stanley Parent’s obligation to use commercially reasonable efforts to provide such cooperation as is customarily provided in connection with arranging and obtaining, and satisfying the conditions to the availability of, any debt financing undertaken by the Company.
The Transaction Agreement is included with this filing only to provide investors with information regarding the terms of the Transaction Agreement, and not to provide investors with any other factual information regarding the Company or Stanley, their respective affiliates or their respective businesses. Investors and security holders should not rely on the representations and warranties as characterizations of the actual facts because they were made only as of the date of the Transaction Agreement. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Transaction Agreement, which subsequent information may or may not be fully reflected in public disclosures.
The Transaction is expected to close in the third quarter of 2022, subject to regulatory approval and customary closing conditions. The foregoing description of the Transaction Agreement does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Additionally, in connection with the Transaction, the Company entered into a commitment letter with Goldman Sachs Banks USA (“Goldman Sachs”), pursuant to which Goldman Sachs committed to provide a $900 million senior unsecured bridge term loan facility (the “Bridge Facility”). Upon the closing of the Transaction, the Company and certain of its affiliates may enter into a credit agreement in the terms substantially consistent with the Bridge Facility.