Washington, D.C. 20549
Check the appropriate
box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following
provisions:
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On November 21, 2022, AgroFresh Solutions, Inc.
(the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Project Cloud
Holdings, LLC (“Parent”), Project Cloud Merger Sub, Inc. (“Merger Sub”) and the Company. Parent and Merger Sub
are affiliates of investment funds managed by Paine Schwartz Partners, LLC (“Paine Schwartz”). Upon the terms and subject
to the conditions set forth in the Merger Agreement, among other things, Merger Sub will merge with and into the Company (the “Merger”),
with the Company surviving the Merger (the “Surviving Corporation”). As a result of the Merger, the Company will cease to
be a publicly traded company, and investment funds managed by Paine Schwartz will become the indirect owner of all the Company’s
outstanding capital stock.
Pursuant to the Merger Agreement, at the effective
time of the Merger (the “Effective Time”), and as a result of the Merger, (x) each share of the Company’s common stock,
par value $0.0001 per share (the “Shares”), issued and outstanding immediately prior to the Effective Time, will be converted
into the right to receive $3.00 in cash per share, without interest (collectively, the “Merger Consideration”) and (y) the
share of the Company’s Series A preferred stock, par value $0.0001 per share (“Series A Share”), issued and outstanding
immediately prior to the Effective Time, will be converted into the right to receive $3.00 in cash per share, without interest. Such conversion
of Shares and the Series A Share is subject to certain exceptions, including, as applicable, for (i) Shares owned by stockholders of the
Company who did not vote in favor of the Merger Agreement and have perfected and not withdrawn a demand for appraisal rights pursuant
to Section 262 of the General Corporation Law of the State of Delaware, (ii) Shares owned by the Company and not held on behalf of third
parties and (iii) Shares owned by Parent or Merger Sub.
Pursuant to the Merger Agreement, at the Effective
Time, and as a result of the Merger, each share of Series B preferred stock, par value $0.0001 per share, of the Company (“Series
B Shares”) will be (x) converted into one share of Series B convertible preferred stock, par value $0.0001 per share, of the Surviving
Corporation or (y) if so elected by Parent and, in addition to the amount required to fund the Merger Consideration, Parent has secured
additional financing sufficient to (i) pay the Change of Control Redemption Price (as defined in the Certificate of Designation of Series
B Convertible Preferred Stock of the Company) and (ii) repay all indebtedness for borrowed money of the Company that becomes due and payable
as a result of the Merger, converted into the right to receive an amount in cash equal to the Change of Control Redemption Price.
Pursuant to the Merger Agreement, at the Effective
Time:
| (i) | each outstanding Company stock option and Company stock appreciation right, in each case, will be cancelled and converted into the
right to receive an amount in cash (without interest and less applicable Tax withholdings) equal to the product of (x) the number of Shares
subject to such option or right, as applicable, immediately prior to the Effective Time and (y) the excess, if any, of (A) the Merger
Consideration over (B) the exercise price per Share of such option or the base price per Share of such right, as applicable; |
| (ii) | each outstanding Company stock option and Company stock appreciation right, in each case, for which the exercise price per Share or
the base price per Share, as applicable, is equal to or greater than the Merger Consideration shall be cancelled without
payment of any consideration; |
| |
(iii) |
each outstanding Company restricted stock unit and each outstanding Company phantom stock unit will be cancelled and converted into the right to receive (without interest and less applicable Tax withholdings) a payment in cash in an amount equal to (x) the number of Shares or phantom Shares subject to such restricted stock unit or phantom stock unit, as applicable, multiplied by (y) the Merger Consideration; |
| (iv) | each outstanding unvested Company restricted share shall be cancelled and converted into the right to receive an amount in cash equal
to the Merger Consideration, less applicable Tax withholdings; |
| (v) | the number of performance-based restricted stock units and performance-based phantom stock units, as applicable, earned with
respect to each outstanding Company performance stock unit and phantom performance stock unit, in each case, granted in
2020 (the “2020 Company Performance Awards”), shall be determined based on actual performance through the end of the
performance period applicable to such 2020 Company Performance Awards and paid in accordance with the terms of the applicable award
agreement; provided, however, that (x) performance in respect of the total shareholder return metric shall be determined using a per
share price equal to the Merger Consideration and (y) if the Effective Time occurs before payment has occurred with respect to the
2020 Company Performance Awards, at the Effective Time, each then outstanding 2020 Company Performance Award shall be cancelled and
converted into the right to receive an amount in cash (without interest and less applicable Tax withholdings), equal to (A) the
number of performance-based restricted stock units or the number of performance-based phantom stock units, as applicable, earned
under the terms of the applicable 2020 Company Performance Award, multiplied by (B) the Merger Consideration; and |
| (vi) | each outstanding Company performance stock unit and phantom performance stock unit, in each case, granted in 2021 or
2022 (the “Post-2020 Company Performance Awards”), shall be cancelled and converted into the contractual right to receive
a cash payment (without interest and less applicable Tax withholdings) in an amount equal to (A) the “target” number of performance-based
restricted stock units or the “target” number of performance-based phantom stock units, as applicable, awarded pursuant to
the terms of the applicable Post-2020 Company Performance Award (without proration for any portion of the performance period that has
not yet been completed), multiplied by (B) the Merger Consideration. |
A special committee (the “Special Committee”)
of the board of directors of the Company (the “Board”), consisting solely of non-management independent members of the Board
not affiliated with Paine Schwartz, has unanimously recommended that the Board approve and authorize the Merger Agreement and the Merger
and recommend that the Company stockholders vote to adopt and approve the Merger Agreement, and the Board, acting on the Special Committee’s
recommendation, resolved by the unanimous vote of the members of the Board present at the meeting to recommend that the stockholders of
the Company vote to adopt and approve the Merger Agreement and the consummation of the transactions contemplated thereby.
Parent and Merger Sub have secured committed equity
financing to be provided by an investment fund affiliated with Paine Schwartz, the aggregate proceeds of which will be sufficient for
Parent and Merger Sub to fund any and all amounts required to be paid by them in connection with the Merger Agreement at Closing including
any and all related fees and expenses. The Company is a third-party beneficiary of such equity financing.
Assuming satisfaction or waiver (to the
extent permitted) of the conditions set forth in the Merger Agreement, the Company currently expects the transactions contemplated
thereby to close in the first quarter of 2023.
The stockholders of the Company will be asked to
vote on the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated thereby at a meeting
of the Company’s stockholders. The Merger is subject to certain closing conditions, including:
| |
· |
the approval by holders of a majority of the aggregate voting power of (i) the outstanding Shares (including those held by Paine Schwartz and its affiliates) and the outstanding Series B Shares, voting together as a single class, and (ii) the outstanding Shares held by stockholders who are not affiliated with Paine Schwartz, members of the Board, certain officers of the Company, or any of their respective associates or members of their immediate family (clauses (i) and (ii), the “Requisite Stockholder Approvals”); |
| · | the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended; |
| · | the absence of an injunction or law restraining, enjoining, rendering illegal or otherwise prohibiting consummation of the Merger; |
| · | subject to customary materiality qualifiers, the accuracy of the representations and warranties contained in the Merger Agreement,
including the representation that the Company has not suffered a “Material Adverse Effect” (as defined in the Merger Agreement)
between December 31, 2021 and the date of the Merger Agreement; |
| · | material performance by the parties of their respective covenants under the Merger Agreement; and |
| · | there having been no “Material Adverse Effect” (as defined in the Merger Agreement) since the date of the Merger
Agreement that is continuing. |
The Merger Agreement contains customary representations,
warranties and covenants, including, among others, covenants by the Company to use its reasonable best efforts to conduct its business
in the ordinary course between execution of the Merger Agreement and the Effective Time, not to engage in certain kinds of transactions
(including paying dividends) during such period and to convene a meeting of the Company’s stockholders to consider and vote upon
the adoption and approval of the Merger Agreement. Additionally, the Company is bound by a covenant not to initiate, solicit, propose,
knowingly induce, knowingly encourage, knowingly assist or knowingly facilitate any competing acquisition proposals. However, at any time
before receiving the Requisite Stockholder Approvals, if the Board (acting on the recommendation of the Special Committee) or the Special
Committee determines in good faith, after consultation with its financial advisor and outside legal counsel, that an unsolicited competing
acquisition proposal is or is reasonably likely to result in a “Superior Proposal” (as defined in the Merger Agreement), then
the Company is permitted to engage in discussions or negotiations with the third party with respect to such third party’s unsolicited
competing acquisition proposal, subject to certain requirements set forth in the Merger Agreement. If, prior to receiving the Requisite
Stockholder Approvals, the Company receives an unsolicited competing acquisition proposal that the Board (acting on the recommendation
of the Special Committee) or the Special Committee determines in good faith to be a Superior Proposal, after consultation with its financial
advisors and outside legal counsel, and that the failure to terminate the Merger Agreement or change its recommendation that the Company’s
stockholders vote in favor of the Merger would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable
law, the Board (acting on the recommendation of the Special Committee) or the Special Committee may terminate the Merger Agreement and
enter into an agreement providing for such competing acquisition proposal or change its recommendation that the Company’s stockholders
vote in favor of the Merger, subject in each case to the Company fulfilling certain requirements before taking such action.
Prior to the receipt of the Requisite
Stockholder Approvals, the Board (acting on the recommendation of the Special Committee) or the Special Committee may also change
its recommendation that the Company’s stockholders vote in favor of the Merger in response to an “Intervening
Event” (as defined in the Merger Agreement), if the Board (acting on the recommendation of the Special Committee) or the
Special Committee determines in good faith, after consultation with its financial advisors and outside legal counsel, that the
failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law,
subject in each case to the Company fulfilling certain requirements before taking such action.
The Merger Agreement may be terminated by mutual
written consent of the Company and Parent. Either party may terminate the Merger Agreement if:
| · | the Merger has not been consummated on or before 180 days after November 21, 2022 (the “Outside Date”), provided, however,
that, such right to terminate the Merger Agreement shall not be available to any party whose material breach or failure to comply in any
material respect with its obligations under the Merger Agreement was the primary cause of, or primarily resulted in, the failure of the
Closing to occur on or prior to such date; |
| · | the Requisite Stockholder Approvals are not obtained if a vote has been taken thereon at a meeting of the Company’s stockholders
or any postponement, recess or adjournment thereof taken in accordance with the Merger Agreement; |
| · | if any court or other Governmental Authority of competent jurisdiction enacts, issues, promulgates or enters any final and non-appealable
order that permanently restrains, enjoins, renders illegal or otherwise permanently prohibits the consummation of the Merger except the
right to terminate shall not be available to any party whose failure to comply in any material respects with its obligations under the
Merger Agreement has been the primary cause of, or has primarily resulted in, such order; or |
| · | if the other party materially breaches any of its representations, warranties or covenants that would cause certain closing conditions
not to be satisfied, and the breach is not curable or, if curable, is not cured within the time period set forth in the Merger Agreement. |
Further, subject to the terms and conditions of
the Merger Agreement, prior to the receipt of the Requisite Stockholder Approvals, (x) the Company may terminate the Merger Agreement
in connection with entering into an alternative acquisition agreement with respect to a Superior Proposal, and (y) Parent may terminate
the Merger Agreement if the Board or Special Committee changes its recommendation that the Company’s stockholders vote in favor
of the Merger and, in each case, the Company would be required to pay to Parent a termination fee of $15,000,000 in connection with such
termination. In addition, any monetary damages payable by either the Company or Parent for any breach of the Merger Agreement or any document executed
in connection therewith (including for any willful and material breach, but excluding fraud) cannot exceed, in the aggregate, $43,000,000
plus up to $2,500,000 of reimbursable costs of enforcement (plus, in the case of damages payable by Parent, any reimbursable costs that
the Company incurs in assisting Parent in arranging debt financing).
If the Merger is consummated, the Shares will be
delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934, as amended.
A copy of the Merger Agreement is attached hereto
as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement is only a summary, does not
purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.
The Merger Agreement has been attached as an exhibit
to provide investors and stockholders with information regarding its terms. It is not intended to provide any other factual information
about the Company, Parent or Merger Sub. The representations, warranties and covenants contained in the Merger Agreement were made only
for the purposes of the Merger Agreement and as of specified dates, were solely for the benefit of the parties to the Merger Agreement
and may be subject to limitations agreed upon by the contracting parties. The representations and warranties contained in the Merger Agreement
have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement, do not establish these matters
as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors and stockholders accordingly should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the Company, Parent, Merger Sub or any of their respective subsidiaries
or affiliates. In addition, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified
by information in confidential disclosure schedules that the Company exchanged with Parent and Merger Sub in connection with the execution
of the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the parties
to the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, the proxy statement that the Company
will be filing in connection with the Merger (the “Proxy Statement”), the transaction statement on Schedule 13e-3 that the
Company and Parent will be filing in connection with the Merger (the “Schedule 13e-3”), as well as in the Company’s
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents that the Company has filed
or may file with the Securities and Exchange Commission (the “SEC”).
Voting and Support Agreement
Concurrently with the execution of the Merger Agreement
and as a condition and inducement to the Company’s willingness to enter into the Merger Agreement, the Company, Paine Schwartz and
certain affiliates of Paine Schwartz entered into a Voting and Support Agreement (the “Voting and Support Agreement”) with
respect to all Shares and Series B Shares owned by affiliates of Paine Schwartz, as set forth in the Voting and Support Agreement (collectively,
the “Owned Shares”).
The Paine Schwartz affiliates collectively hold approximately 39% of the voting power, on an as-converted basis, of the issued
and outstanding Shares, and have agreed to vote all of their Series B Shares and Shares:
| · | in favor of the Merger, the adoption of the Merger Agreement, each of the other actions contemplated by the Merger Agreement or necessary
or desirable in furtherance of the Merger and the other transactions contemplated by the Merger Agreement and the adjournment of any meeting
of the Company’s stockholders in accordance with the Merger Agreement; and |
| · | against any action or agreement that would reasonably be expected to result in any of the conditions to the consummation of the Merger
under the Merger Agreement not being fulfilled. |
The Voting and Support Agreement will terminate
upon the earlier to occur of the Effective Time and the valid termination of the Merger Agreement in accordance with its terms.
In the event the Merger Agreement is terminated
in accordance with its terms and damages become payable by any Parent Related Party (as defined in the Merger Agreement) in connection
with any fraud or willful and material breach of the Merger Agreement, the Paine Schwartz affiliates have agreed that (i) the Company
may use the proceeds of such damages in its sole discretion (as determined by the Special Committee), including to declare or pay any
dividend on the Shares or redeem any of the Series B Shares and (ii) the Company may effectuate a refinancing of its indebtedness.
The foregoing description of the Voting and Support
Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, the full text of the Voting and Support
Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated by reference herein.
Cautionary Statement Regarding Forward-Looking Statements
This communication includes forward-looking statements.
These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,”
“foresees,” “forecasts,” “estimates” or other words or phrases of similar import. These statements
are based on current expectations, estimates and projections about the industry and markets in which the Company operates and management’s
beliefs and assumptions as to the timing and outcome of future events, including the transactions described in this communication. While
the Company’s management believes the assumptions underlying the forward-looking statements are reasonable, such information is
necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are beyond management’s
control. These risks and uncertainties include, but are not limited to: the expected timing and likelihood of completion of the proposed
transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Merger;
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the outcome
of any legal proceedings that may be instituted against the parties and others following announcement of the entry into the Merger Agreement;
the inability to consummate the Merger due to the failure to obtain the requisite stockholder approvals or the failure to satisfy other
conditions to completion of the Merger; risks that the proposed Merger disrupts current plans and operations of the Company; the amount
of the costs, fees, expenses and charges related to the transaction; and the other risks and important factors contained and identified
in the Company’s filings with the SEC, such as the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2021, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, any of which could cause actual results to differ
materially from the forward-looking statements in this communication.
There can be no assurance that the proposed transaction will in fact
be consummated. We caution investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as
of the date of this communication. The Company is not under any duty to update any of these forward-looking statements after the date
of this communication, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do
Important Information for Investors and Stockholders
In
connection with the proposed Merger, the Company will file relevant materials with the SEC, including a proxy statement, and the Company
and affiliates of Paine Schwartz will jointly file a transaction statement on Schedule 13E-3. This communication is not a substitute for
the proxy statement or any other document that the Company may file with the SEC or send to its stockholders in connection with the Merger.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT, THE SCHEDULE 13E-3 AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY
IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT AGROFRESH, THE MERGER AND RELATED MATTERS.
Investors
and securityholders will be able to obtain a free copy of the proxy statement and the Schedule 13E-3 (if and when available) and other
related documents filed by the Company with the SEC at the SEC’s website at www.sec.gov.
Copies of the documents filed by the Company will be available free of charge on its website at https://agrofreshsolutionsinc.gcs-web.com/.
Participants in the Solicitation
The Company
and certain of its directors, executive officers and employees may be considered to be participants in the solicitation of proxies from
the Company’s stockholders in connection with the Merger. Information regarding the persons who may, under the rules of the SEC,
be deemed participants in the solicitation of the stockholders of the Company in connection with the Merger, including a description of
their respective direct or indirect interests, by security holdings or otherwise, will be included in the proxy statement when it is filed
with the SEC. You may also find additional information about the Company’s directors and executive officers in the Company’s
definitive proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on June 24, 2022, or in its Annual
Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 9, 2022, and in other documents filed
by the Company with the SEC. These documents can be obtained free of charge from the sources indicated above.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. |
|
Description |
| 2.1 |
|
Agreement and Plan of Merger, dated as of November 21, 2022, by and among Project Cloud Holdings, LLC, Project Cloud Merger Sub, Inc. and AgroFresh Solutions, Inc.* |
| 10.1 |
|
Voting and Support Agreement, dated as of November 21, 2022, by and among AgroFresh Solutions, Inc., Paine Schwartz Partners, LLC, Paine Schwartz Food Chain Fund V GP, L.P., Paine Schwartz Food Chain Fund V GP, Ltd., PSP AGFS Holdings, L.P., Kevin Schwartz and, solely for purposes of Section 10(b) and Sections 12 through 23 thereof, Paine Schwartz Food Chain Fund V, L.P. |
| 104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation
S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| |
AGROFRESH SOLUTIONS, INC. |
| |
|
|
| |
By: |
/s/ Thomas Ermi |
| |
|
Name: Thomas Ermi |
| |
|
Title: Vice President and General Counsel |
Date: November 23, 2022