Item 1.01 Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On January 4, 2021, FLIR Systems, Inc. ("FLIR") entered into an Agreement and
Plan of Merger (the "Merger Agreement"), by and among Teledyne Technologies
Incorporated, a Delaware corporation ("Teledyne"), Firework Merger Sub I, Inc.,
a Delaware corporation and a wholly owned subsidiary of Teledyne ("Merger Sub
I"), Firework Merger Sub II, LLC, a Delaware limited liability company and a
wholly owned subsidiary of Teledyne ("Merger Sub II"), and FLIR. Pursuant to the
Merger Agreement, (i) Merger Sub I will be merged with and into FLIR ("Merger
I"), with FLIR continuing as the surviving entity and a wholly owned subsidiary
of Teledyne (the "Surviving Corporation"), and (ii) immediately thereafter, the
Surviving Corporation will be merged with and into Merger Sub II, with Merger
Sub II continuing as the surviving entity ("Merger II" and, together with Merger
I, the "Mergers").
Merger Consideration. Subject to the terms and conditions set forth in the
Merger Agreement, at the effective time of Merger I (the "Effective Time"), each
share of common stock, $0.01 par value per share, of FLIR ("FLIR Common Stock")
issued and outstanding immediately prior to the Effective Time (other than FLIR
Common Stock owned or held (x) in treasury or otherwise by FLIR or any of its
subsidiaries, (y) by Teledyne or any of its subsidiaries or (z) by any person
who is entitled to demand and properly demands appraisal of such shares under
Delaware law) will be converted into the right to receive the merger
consideration (the "Merger Consideration"), which will consist of (i) $28.00 in
cash, without interest, and (ii) 0.0718 validly issued, fully paid and
non-assessable shares of common stock of Teledyne, par value $0.001 per share
("Teledyne Common Stock"), and, if applicable, cash in lieu of fractional
shares.
FLIR Stock Options. At the Effective Time, each FLIR stock option outstanding
immediately prior to the Effective Time will be cancelled and converted into the
right to receive a cash payment equal to (x) the excess of $56.00 over the
exercise price per share of such stock option, multiplied by (y) the number of
shares of FLIR Common Stock subject to such stock option, less applicable tax
withholdings.
FLIR Service-based Restricted Stock Units. At the Effective Time, each FLIR
restricted stock unit subject solely to service-based vesting requirements
("RSU") granted prior to the date of the Merger Agreement that is outstanding
immediately prior to the Effective Time will automatically vest and be cancelled
and converted into the right to receive $56.00 per share of FLIR Common Stock
subject to such RSU.
In addition, at the Effective Time, each RSU granted after the date of the
Merger Agreement that is outstanding immediately prior to the Effective Time and
is held by (i) any FLIR director, (ii) any FLIR officer who is subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), with respect to FLIR or (iii) an executive of
FLIR who has a "change of control" agreement (in each case, an "Accelerated RSU
Holder") will automatically vest and be cancelled and converted into the right
to receive $56.00 per share of FLIR Common Stock subject to such RSU. Each RSU
granted after the date of the Merger Agreement that is outstanding immediately
prior to the Effective Time and is held by any individual who is not an
Accelerated RSU Holder will be assumed and converted automatically into a
restricted stock unit with respect to a number of shares of Teledyne Common
Stock (each, an "Adjusted RSU") equal to the product obtained by multiplying
(i) the total number of shares of FLIR Common Stock subject to such RSU
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immediately prior to the Effective Time by (ii) 0.1436. Each such Adjusted RSU
shall otherwise be subject to the same terms and conditions applicable to the
corresponding RSU under the applicable FLIR equity plan and the applicable award
agreement under which the FLIR RSUs were issued, including vesting terms.
FLIR Performance-based Restricted Stock Units At the Effective Time, each FLIR
restricted stock unit subject to service-based and performance-based vesting
requirements ("PRSU") granted prior to the date of the Merger Agreement that is
outstanding immediately prior to the Effective Time will automatically vest and
be cancelled and converted into the right to receive $56.00 per share of FLIR
Common Stock subject to such PRSU. The number of shares of FLIR Common Stock
underlying each PRSU that will become vested will be equal to the greater of
(i) the target number of shares set forth in the award agreement for such PRSU
and (ii) the number of shares that would be achieved based on the actual
achievement of the applicable performance goals if the applicable performance
period ended on the last day of FLIR's calendar quarter immediately preceding
the first public announcement of the transactions contemplated by the Merger
Agreement.
Board Recommendation. The respective boards of directors of FLIR and Teledyne
have approved the Merger Agreement, and the board of directors of FLIR (the
"FLIR Board") has agreed to recommend that FLIR's stockholders adopt and approve
the Merger Agreement and the transactions contemplated thereby, including Merger
I. In addition, the board of directors of Teledyne (the "Teledyne Board") has
agreed to recommend that Teledyne's stockholders approve the issuance by
Teledyne of shares of Teledyne Common Stock forming part of the Merger
Consideration (the "Share Issuance").
Conditions to Closing of the Mergers. The consummation of the Mergers is subject
to customary closing conditions, including, among other things: (i) approval by
FLIR's stockholders of the Merger Agreement; (ii) approval by Teledyne's
stockholders of the Share Issuance; (iii) effectiveness of a registration
statement on Form S-4 filed by Teledyne registering the shares of Teledyne
Common Stock issuable to FLIR's stockholders pursuant to the Merger Agreement;
(iv) approval of the listing of such shares on the New York Stock Exchange;
(v) the receipt of certain regulatory approvals, including the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; (vi) the absence of injunctions or legal restraints
that have the effect of preventing the consummation of the Mergers; (vii) the
absence of a material adverse effect (as defined in the Merger Agreement) with
respect to FLIR or Teledyne after the date of the Merger Agreement; and (viii)
as a condition to FLIR's obligations to close, the receipt by FLIR of the
opinion of counsel to the effect that Merger I and Merger II, taken together,
will qualify as a reorganization for U.S. federal income tax purposes.
Representations, Warranties and Covenants. The Merger Agreement contains
representations, warranties and covenants of the parties customary for a
transaction of this type, including, among others, covenants by each of FLIR and
Teledyne regarding the conduct of its respective business during the pendency of
the transactions contemplated by the Merger Agreement. The Merger Agreement
permits FLIR, in the discretion of the FLIR Board, to declare and pay up to two
quarterly cash dividends on FLIR Common Stock consistent with past practice, but
in each case in an amount not to exceed $0.17 per share of FLIR Common Stock.
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Non-Solicitation. FLIR has agreed, subject to certain exceptions, not to solicit
alternative acquisition proposals and not to engage in discussions or
negotiations regarding any alternative acquisition proposals. However, the FLIR
Board may withdraw, qualify or modify its recommendation in favor of adoption of
the Merger Agreement or terminate the Merger Agreement prior to receipt of
stockholder approval if, in connection with the receipt of an alternative
proposal, the FLIR Board determines that such alternative proposal constitutes a
superior proposal, or in other circumstances where the FLIR Board determines
that the failure to take such an action would be inconsistent with the FLIR
Board's fiduciary duties.
Termination of the Merger Agreement. The Merger Agreement provides each of FLIR
and Teledyne with certain termination rights and, under certain circumstances,
may require FLIR or Teledyne to pay a termination fee.
Subject to the terms and conditions of the Merger Agreement, FLIR would be
required to pay to Teledyne a termination fee of $250 million if the Merger
Agreement is terminated: (i) by FLIR or Teledyne because approval of FLIR's
stockholders was not obtained and an alternative proposal for FLIR has been
publicly disclosed and has not been withdrawn, and within twelve months of such
termination, FLIR enters into a definitive agreement with respect to an
alternative proposal that is subsequently consummated or otherwise the
transactions contemplated by an alternative proposal are consummated; (ii) by
Teledyne because FLIR materially breaches the Merger Agreement and an
alternative proposal for FLIR has been publicly disclosed and has not been
withdrawn, and within twelve months of such termination, FLIR enters into a
definitive agreement with respect to such alternative proposal that is
subsequently consummated or otherwise the transactions contemplated by an
alternative proposal are consummated; (iii) by Teledyne because, prior to
obtaining approval of FLIR's stockholders, the FLIR Board changes its
recommendation to its stockholders or fails to include its recommendation in the
joint proxy statement; (iv) by Teledyne because FLIR willfully and materially
breaches the non-solicitation covenant and within twelve months of such
termination, FLIR enters into a definitive agreement with respect to an
alternative proposal or otherwise consummates an alternative proposal; or (v) by
FLIR to enter into a definitive agreement to effect a superior proposal.
Subject to the terms and conditions of the Merger Agreement, Teledyne would be
required to pay to FLIR a termination fee of $250 million if the Merger
Agreement is terminated: (i) by FLIR or Teledyne because approval of Teledyne's
stockholders was not obtained and an alternative proposal for Teledyne has been
publicly disclosed and has not been withdrawn, and within twelve months of such
termination, Teledyne enters into a definitive agreement with respect to an
alternative proposal that is subsequently consummated or otherwise the
transactions contemplated by an alternative proposal are consummated; (ii) by
FLIR because Teledyne materially breaches the Merger Agreement and an
alternative proposal for Teledyne has been publicly disclosed and has not been
withdrawn, and within twelve months of such termination, Teledyne enters into a
definitive agreement with respect to such alternative proposal that is
subsequently consummated or otherwise the transactions contemplated by an
alternative proposal are consummated; or (iii) by FLIR because the Teledyne
Board changes its recommendation to its stockholders or fails to include its
recommendation in the joint proxy statement.
Financing. Teledyne intends to pay the cash portion of the consideration for the
Mergers and other fees and expenses required to be paid in connection with the
Mergers from cash on hand and borrowings. On January 4, 2021, in connection with
the execution of the Merger Agreement, Teledyne
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entered into a commitment letter with BofA Securities, Inc. and Bank of America,
N.A. ("Lender") pursuant to which the Lender has committed to provide Teledyne
with a $4.5 billion senior 364-day bridge term loan facility (the "Bridge
Facility"). There can be no assurance that the permanent financing will be
completed, and the actual terms may differ from the description of such terms in
the commitment letter. Teledyne's obtaining of the Bridge Facility is not a
condition to the closing of the Mergers.
Tax Matters. For U.S. federal income tax purposes, it is intended that Merger I
and Merger II, taken together, shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The foregoing description of the Merger Agreement is qualified in its entirety
by the full text of the Merger Agreement, which is attached hereto as Exhibit
2.1 and incorporated herein by reference. The Merger Agreement has been attached
to provide investors with information regarding its terms. It is not intended to
provide any other factual information about FLIR or Teledyne. In particular, the
assertions embodied in the representations and warranties contained in the
Merger Agreement are qualified by information in confidential disclosure letters
provided by each of FLIR and Teledyne in connection with the signing of the
Merger Agreement or in filings and reports of the parties with the Securities
and Exchange Commission (the "SEC"). These confidential disclosure letters
contain information that modifies, qualifies and creates exceptions to the
representations and warranties and certain covenants set forth in the Merger
Agreement. Moreover, certain representations and warranties in the Merger
Agreement were used for the purpose of allocating risk between FLIR and Teledyne
rather than establishing matters as facts and were made only as of the date of
the Merger Agreement (or such other date or dates as may be specified in the
Merger Agreement). Accordingly, the representations and warranties in the Merger
Agreement should not be relied upon as characterizations of the actual state of
facts about FLIR or Teledyne.
Additional Information and Where to Find It
This communication relates to a proposed transaction between Teledyne and FLIR.
In connection with the proposed transaction, Teledyne will file a registration
statement on Form S-4 with the SEC, which will include a document that serves as
a joint proxy statement/prospectus of Teledyne and FLIR. A joint proxy
statement/prospectus will be sent to all Teledyne stockholders and all FLIR
stockholders. Each party also will file other documents regarding the proposed
transaction with the SEC. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SECURITY HOLDERS OF TELEYDNE AND INVESTORS AND SECURITY HOLDERS OF FLIR ARE
URGED TO READ THE REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND
ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC IN
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
2.1* Agreement and Plan of Merger, dated as of January 4, 2021, by and
among Teledyne Technologies Incorporated, Firework Merger Sub I, Inc.,
Firework Merger Sub II, LLC and FLIR Systems, Inc.
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document)
* Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar
attachments have been omitted. The registrant hereby agrees to furnish a copy
of any omitted schedule or similar attachment to the SEC upon request.
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