The split-off transaction is in connection with the previously announced combination of the ChampionX Business with Apergy Corporation in a Reverse Morris Trust transaction
Ecolab launches split-off exchange offer for upstream energy business. (Crdit: Gerd Altmann from Pixabay)
Ecolab Inc. announced the commencement of an exchange offer related to the split-off of its Upstream Energy business (the “ChampionX Business”). The split-off transaction is in connection with the previously announced combination of the ChampionX Business with Apergy Corporation in a Reverse Morris Trust transaction.
Key elements of the exchange offer include:
Ecolab stockholders have the option to exchange some, all or none of their shares of Ecolab common stock for shares of common stock of ChampionX Holding Inc., an Ecolab subsidiary formed to hold the ChampionX Business, subject to proration as described below. In the combination, shares of ChampionX common stock will convert automatically into the right to receive shares of Apergy common stock.
Tendering Ecolab stockholders are expected to receive approximately $111.11 of Apergy common stock for every $100 of Ecolab common stock tendered, subject to the upper limit described below.
Ecolab will determine the prices at which shares of Ecolab common stock and shares of ChampionX common stock (and ultimately shares of Apergy common stock) will be exchanged by reference to the simple arithmetic average of the daily volume-weighted average prices of Ecolab common stock and Apergy common stock on the New York Stock Exchange on each of the last full three trading days ending on and including the third trading day preceding the expiration date of the exchange offer period.
Ecolab currently expects approximately 122 million shares of ChampionX common stock will be available in the exchange offer. The number of shares of Ecolab common stock that will be accepted in the exchange offer will depend on the final exchange ratio, the number of shares of ChampionX common stock offered and the number of shares of Ecolab common stock tendered.
The exchange offer and withdrawal rights are scheduled to expire at 12:01 a.m., New York City time, on June 3, 2020, unless the exchange offer is extended or terminated.
The exchange offer is designed to permit Ecolab stockholders to exchange all or a portion of their shares of Ecolab common stock for shares of ChampionX common stock (which will convert into shares of Apergy common stock) at a discount of 10 percent to the per-share value of Apergy common stock, subject to an upper limit of 24.6667 shares of ChampionX common stock for each share of Ecolab common stock tendered in the exchange offer.
The aggregate number of shares of Apergy common stock issued in the combination is expected to result in holders of shares of ChampionX common stock before the combination and ChampionX employees collectively owning approximately 62 percent of the issued and outstanding shares of Apergy common stock on a fully diluted basis immediately after the combination.
Ecolab will announce the final exchange ratio used to determine the number of shares of ChampionX common stock that Ecolab stockholders participating in the exchange offer will receive for each share of Ecolab common stock accepted for exchange as well as whether the upper limit will be in effect, through www.championxexchangeoffer.com and by press release, no later than 9:00 a.m., New York City time, on June 1, 2020, the second to last full trading day prior to the expiration date (unless the exchange offer is terminated or extended).
The exchange offer will expire at 12:01 a.m., New York City time, on June 3, 2020, unless terminated or extended, and the closing of the merger of the Apergy subsidiary with and into ChampionX is expected to occur promptly following the consummation of the exchange offer. The transactions are subject to customary closing conditions, including Apergy stockholder approval and Ecolab receiving an opinion of counsel regarding certain tax matters. Apergy has scheduled a special meeting of stockholders to be held on May 28, 2020 to approve the issuance of Apergy common stock in the transaction. As a result of the exchange offer, the number of outstanding shares of Ecolab common stock will be reduced.
The exchange offer will be subject to proration if the exchange offer is oversubscribed, and the number of Ecolab shares accepted in the exchange offer may be fewer than the number of Ecolab shares tendered.
If the exchange offer is consummated but not fully subscribed, then the remaining shares of ChampionX common stock owned by Ecolab will be distributed on a pro rata basis to Ecolab stockholders whose shares of Ecolab common stock remain outstanding after the consummation of the exchange offer. If the exchange offer is terminated by Ecolab without the exchange of shares (but the conditions to consummation of the transactions have otherwise been satisfied), Ecolab intends to distribute all shares of ChampionX common stock owned by Ecolab on a pro rata basis to holders of Ecolab common stock, with a record date to be announced by Ecolab.
Source: Company Press Release