Item 1.01.
Entry into a Material Definitive Agreement.
On October 17, 2016, Coty Inc. (“Coty”) announced that it entered into a definitive agreement to acquire ghd (“ghd”), a premium brand in high-end hair styling appliances, for approximately ₤420 million (approximately $510 million).
Coty entered into a Sale and Purchase Agreement for the purchase of ghd, dated as of October 17, 2016 (the “SPA”), with the management sellers named therein (the “Management Sellers”), Gloria Coinvest 1 L.P. (“Coinvest 1”), Lion Capital Fund III L.P. (“Lion”), Lion Capital Fund III SBS L.P. (“Lion SBS”), Lion Capital Fund III (USD) L.P. (“Lion Capital”), Lion Capital Fund III SBS (USD) L.P. (“Lion Capital SBS”, and along with Lion, Lion SBS and Lion Capital, the “Lion Sellers”), Ghd Nominees Limited (“GHD”), and certain other former employee sellers named in the SPA (the “Other Sellers” and, together with the Management Sellers and Lion Sellers, the “Sellers”).
In accordance with the terms of the SPA, at closing, Coty will acquire all of the issued shares in Lion/Gloria TopCo Limited, a private limited company organized under the laws of Jersey, and assume certain intercompany notes. The purchase price is subject to certain adjustments, including for net indebtedness at closing, certain transaction and other costs and the timing of closing of the transaction.
Pursuant to the SPA, the Sellers have generally agreed to conduct the ghd business in the ordinary course consistent with past practice, and to not take certain specified actions with respect to the ghd business without Coty’s consent, during the period between the execution of the SPA and the closing of the transaction. The SPA contains certain customary warranties by the Lion Sellers and Coty, and certain of the Management Sellers have given warranties regarding the ghd business pursuant to certain ancillary agreements. In addition, subject to certain exceptions, the Lion Sellers have agreed to not solicit certain employees or key suppliers of ghd for a period of time after closing. The SPA does not does not provide either party with indemnification rights.
The transaction is expected to be funded with a combination of cash on hand and available debt facilities. The closing of the transaction is subject to certain regulatory clearances and is expected to close by the end of calendar year 2016. If the required regulatory clearances are not obtained by the date that is five months following the execution date of the SPA (the “Long-Stop Date”), the SPA will automatically terminate and Coty will pay the Sellers a break fee.
In addition to the automatic termination of the SPA in the event that required regulatory clearances are not obtained by the Long Stop Date, Coty may terminate the SPA in the event of a fundamental breach by any of the Lion Sellers of certain fundamental warranties set forth in the SPA.
The summary set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the SPA, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.