Blog: BALCHEM CORP : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) –

Item 1.01 Entry into a Material Definitive Agreement.

Entry into Securities Purchase Agreement

On June 13, 2022, Balchem Corporation, (“Balchem”), and its wholly-owned
subsidiary, Balchem B.V., a Dutch company (Balchem and Balchem B.V. being
hereinafter collective referred to as “Buyers”), entered into a Share Purchase
Agreement (the “Agreement”) among (a) Buyers and Kechu MidCo AS, as seller
(“Seller”), providing for the purchase by Buyers of Kechu BidCo AS and its
subsidiary companies (the “Group”), including Kappa Bioscience AS, a leading
science-based manufacturer of specialty Vitamin K2 for the human nutrition
industry, headquartered in Oslo, Norway (hereinafter collectively referred to as

The following is a summary of the terms and conditions of the Agreement:

• Pursuant to, and subject to the terms and conditions of, the Agreement, Buyers

   will acquire all of the issued and outstanding securities of Kechu BidCo AS
   (the "Securities") from the Seller (the "Transaction").

• The purchase price for the Securities (the “Enterprise Value”) is 3.175 billion

   Norwegian Kroner (approximately USD $338 million) in cash. In addition to the
   Enterprise Value, Seller has an opportunity to receive an additional "earn-out"
   payment in 2024 of 0% to approximately 16% of the Enterprise Value, subject to
   achievement of growth and other performance targets for the Group.

• Each of the parties made customary representations and warranties pursuant to

   the Agreement.  In the case of the representations and warranties made by
   Seller, such representations and warranties generally survive for 18 months
   after the closing date, subject to certain exceptions.

• A representations and warranties insurance policy has been purchased by the

   Buyers in connection with the Agreement, under which the Buyers may, subject to
   exclusions, policy limits and certain other terms and conditions, seek coverage
   for breaches of the Seller's representations and warranties.

• Seller has agreed, subject to limitations set forth in the Agreement, to

   indemnify and hold Balchem harmless from and against, among other things,
   various losses that may be incurred by Balchem as a result of certain losses
   relating to a product line that is not part of the Transaction and was
   associated with the pre-closing operations of Kappa AS' non-operating German

• The Agreement also includes certain non-competition and non-solicitation

covenants by those who benefit from the Transaction.


• Closing under the Agreement is subject to customary closing conditions.

   Balchem currently anticipates that the closing of the acquisition will occur
   during the second quarter of 2022, although no assurance can be given in that

• The Transaction will be financed through Balchem’s existing revolving credit

facility and cash on hand.

The foregoing summary of the Agreement and the other transactions contemplated
thereby, including the Transaction, does not purport to be complete and is
subject to, and qualified in its entirety by, the full text of the Agreement
attached hereto as Exhibit 2.1 and incorporated herein by reference.

The Agreement has been included to provide investors with information regarding
its terms. The Agreement is not intended to provide any factual information
about Buyers or Seller. The representations, warranties and covenants contained
in the Agreement were made only for purposes of the Agreement, were solely for
the benefit of the parties to the Agreement and are subject to limitations
agreed upon by the parties to the Agreement, including being qualified by
information that was disclosed in the data room provided by Seller in respect of
the transaction. Moreover, the representations and warranties contained in the
Agreement were made for the purpose of allocating contractual risk between the
parties to the Agreement instead of establishing matters as facts and may be
subject to standards of materiality applicable to the parties to the Agreement
that differ from those applicable to investors. Investors are not third-party
beneficiaries under the Agreement and should not rely on the representations,
warranties and covenants contained therein or any descriptions thereof as
characterizations of the actual state of facts or condition of Buyers, Seller,
or Kappa. Additionally, information concerning the subject matter of the
representations and warranties contained in the Agreement may change after the
date of the Agreement, which subsequent information may or may not be fully
reflected in Balchem’s public disclosures.

Item 7.01. Regulation FD Disclosure.

On June 14, 2022, Balchem issued a press release announcing its entry into the
Agreement and the Transaction, a copy of which is attached hereto as Exhibit
99.1 and is incorporated herein by reference.

The information contained in this Item 7.01 and in Exhibit 99.1 attached hereto
is being furnished to the Securities and Exchange Commission pursuant to Item
7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liabilities of such section, nor shall any such
information or exhibits be deemed incorporated by reference in any filing under
the Exchange Act or the Securities Act of 1933, as amended (the “Securities


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

  Exhibit Number   Description
    2.1*           Share Purchase Agreement, dated as of June 13, 2022, between Kechu
                   MidCo AS as seller and Balchem Corporation and Balchem B.V. as

                   Portions of the Exhibit have been omitted.
    99.1**         Press release dated June 14, 2022.

* Certain portions of, and schedules to, the Share Purchase Agreement have been

omitted pursuant to Instruction 6 to Form 8-K and Items 601(a)(5) and

601(b)(10) of Regulation S-K. These schedules consist of: (i) Equity Bridge,

(ii) Management Accounts, (iii) Material Agreements, (iv) Earn-Out, (v)

Consents from third parties, and (vi) Warranty Insurance Policy.

** This exhibit is furnished as part of this Current Report on Form 8-K.

Cautionary Note Regarding Forward-Looking Statements

This report, including the exhibits filed and furnished herewith, contains both
historical and forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. These forward-looking statements generally can be identified
because they relate to the topics set forth above or by the use of statements
that include phrases such as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “plan,” “project,” “foresee,” “likely,” “may,” “will,” “would” or
other words or phrases with similar meanings, and include the statements
regarding timing of closing of the transaction, Kappa’s revenues and growth
prospects, timing and amount of any earn-out payment as well as the impact of
the transaction on Balchem’s earnings per share. Similarly, statements that
describe the Balchem’s objectives, plans or goals, are, or may be,
forward-looking statements. These statements are based on current expectations
of future events. If underlying assumptions prove inaccurate or unknown risks or
uncertainties materialize, actual results could vary materially from our
expectations and projections. Some of the factors that could cause actual
results to differ include, but are not limited to, the following: any delay or
failure to complete the acquisition of Kappa on the terms previously agreed or
difficulty in integrating the acquisition if closed or realizing on the
anticipated business from the acquisition; changes to Balchem’s business, its
industry, or the overall economic climate, general industry conditions and
competition; product or other liability risk inherent in the design,
development, manufacture and marketing of its offerings; inability to enhance
Balchem’s existing or introduce new products or services in a timely manner;
economic conditions, such as interest rate and currency exchange rate
fluctuations; technological advances and patents attained by competitors; and
difficulty in integrating other acquisitions into Balchem’s existing business,
thereby reducing or eliminating the anticipated benefits of the acquisition of
Kappa. For a more detailed discussion of these and other factors, see the
information under the caption “Risk Factors” in Balchem’s Annual Report on Form
10-K for the fiscal year ended December 31, 2021 filed with the Securities and
Exchange Commission. All forward-looking statements in this report speak only as
of the date of this report or as of the date they are made and are qualified in
their entirety by the above cautionary statement. Balchem assumes no duty to
update its outlook or other forward-looking statements as of any future date,
except as required by law.


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