BMC STOCK HOLDINGS, INC. Item 1.01 Entry into a Material Definitive Agreement.
On
At the Effective Time, each issued and outstanding share of BMC common stock,
par value
Each outstanding BMC stock option held by a current employee or service-provider will become, at the Effective Time, an option to purchase shares of BLDR Common Stock, with the number of shares and the exercise price adjusted by the Exchange Ratio. Each outstanding BMC stock option held by any former BMC employee or service-provider will be converted at the Effective Time into the right to receive cash in an amount equal to the product of (i) the number of shares of BMC Common Stock subject to such BMC stock option as of immediately prior to the Effective Time and (ii) the excess of the market value of 1.3125 shares of BLDR Common Stock over the applicable exercise price per share of such option, subject to applicable withholding taxes. Each outstanding BMC time-vested and performance-vested restricted stock unit will vest and settle at the Effective Time in a number of shares of BLDR Common Stock equal to the number of shares of BMC Common Stock otherwise issuable upon settlement of such BMC restricted stock unit (assuming target level of performance for performance-vested awards), multiplied by the Exchange Ratio, and subject to applicable withholding taxes.
The Merger Agreement provides that, upon consummation of the Merger, the board
of directors of Builders FirstSource will consist of twelve members, seven of
whom will be Builders FirstSource's directors and five of whom will be BMC's
directors, in each case, immediately prior to the Effective Time. For a period
of ninety days after the Effective Time (the "CEO Transition Period"), Mr.
The respective boards of directors of BMC and Builders FirstSource have unanimously approved the Merger Agreement and recommended to their respective stockholders that, in the case of BMC, they adopt the Merger Agreement or, in the case of Builders FirstSource, they approve the issuance of BLDR Common Stock in the Merger (the "Stock Issuance"). In connection with the Stock Issuance, Builders FirstSource's board of directors has also approved and recommended to its stockholders that they adopt an amendment of Builders FirstSource's certificate of incorporation to increase the number of authorized shares of BLDR Common Stock (the "Charter Amendment").
Consummation of the Merger is subject to certain conditions, including (i) the
adoption of the Merger Agreement by BMC's stockholders, (ii) the approval of the
Stock Issuance and adoption of the Charter Amendment by Builders FirstSource's
stockholders, (iii) the absence of certain legal impediments, (iv) the
expiration or termination of the required waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (v) the
approval for listing on the
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The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code so that none of BMC, Builders FirstSource, Merger Sub, or any of the BMC stockholders generally will recognize any gain or loss on the issuance or receipt of BLDR Common Stock in the Merger, except that BMC stockholders generally may recognize gain or loss with respect to cash received in lieu of fractional shares of BLDR Common Stock.
The parties have made customary representations, warranties, and covenants in the Merger Agreement, including covenants regarding the conduct of their respective businesses during the pre-closing period and their use of reasonable best efforts to consummate the Merger.
The Merger Agreement contains restrictions on BMC's and Builders FirstSource's ability to (i) solicit competing acquisition proposals and (ii) subject to certain exceptions if their respective boards of directors determine it would be inconsistent with their fiduciary duties, to participate in any discussions or negotiations, or provide any non-public information, or take other actions in furtherance of or relating to any competing acquisition proposals, or change, withdraw, qualify, or modify the recommendation by BMC's or Builders FirstSource's board of directors to their respective stockholders to adopt the Merger Agreement and approve the Stock Issuance, respectively.
The Merger Agreement contains certain termination rights for both BMC and
Builders FirstSource, including (i) if the Merger is not consummated on or
before the "outside date" of
The foregoing description of the Merger Agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated into this Item 1.01 by reference. The Merger Agreement has been included to provide security holders with information regarding its terms. It is not intended to provide any other factual information about BMC, Builders FirstSource, or their respective subsidiaries or affiliates. The Merger Agreement contains representations, warranties, and covenants by each of the parties to the Merger Agreement. These representations, warranties, and covenants were made solely for the benefit of the other parties to the Merger Agreement, are subject to limitations agreed upon by the parties, and (i) are not intended to be treated as categorical statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to stockholders, and (iii) 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, you should not rely on the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of BMC . . .
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
The foregoing description of the Flitman Employment Agreement does not purport to be a complete description and is qualified in its entirety by the full text of the Flitman Employment Agreement filed as Exhibit 10.1 hereto and incorporated into this Item 5.02 by reference.
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Item 9.01 Financial Statements and Exhibits.
(d) The following Exhibits are filed herewith.
Exhibit No. Description 2.1 Agreement and Plan of Merger, datedAugust 26, 2020 , by and amongBMC Stock Holdings, Inc. , Builders FirstSource, Inc., andBoston Merger Sub I Inc. * 10.1 Amended and Restated Employment Agreement, dated as ofAugust 26, 2020 , betweenDavid E. Flitman , Builders FirstSource, Inc., andBMC Stock Holdings, Inc. 104 Cover Page Interactive Date File (embedded within the Inline XBRL document).
* Pursuant to Item 601(b)(2) of Regulation S-K promulgated under the Securities
Act, the registrant has omitted the schedules to Exhibit 2.1. A copy of such
schedules will be furnished supplementally to the
* * *Cautionary Notice Regarding Forward-Looking Statements
This report, in addition to historical information, contains "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of BMC and Builders FirstSource. Words such as "may," "will," "should," "plans," "estimates," "predicts," "potential," "anticipate," "expect," "project," "intend," "believe," or the negative of these terms, and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Any forward-looking statements involve risks and uncertainties that are difficult to predict or quantify, and such risks and uncertainties could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks, or uncertainties related to the novel coronavirus disease 2019 (also known as "COVID-19") pandemic and its impact on the business operations of BMC and Builders FirstSource and on local, national and global economies, the growth strategies of BMC and Builders FirstSource, fluctuations of commodity prices and prices of the products of BMC and Builders FirstSource as a result of national and international economic and other conditions, or the significant dependence of both companies' revenues and operating results on, among other things, the state of the homebuilding industry and repair and remodeling activity, lumber prices and the economy. Neither BMC nor Builders FirstSource may succeed in addressing these and other risks or uncertainties.
Forward-looking statements relating to the proposed business combination between BMC and Builders FirstSource include, but are not limited to: statements about the benefits of the proposed business combination between BMC and Builders FirstSource, including future financial and operating results; the plans, objectives, expectations and intentions of BMC and Builders FirstSource; the expected timing of completion of the proposed business combination; and other statements relating to the proposed merger that are not historical facts. Forward-looking statements are based on information currently available to BMC and Builders FirstSource and involve estimates, expectations and projections. Investors are cautioned that all such forward-looking statements are subject to risks and uncertainties, and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. With respect to the proposed business combination between BMC and Builders FirstSource, these factors could include, but are not limited to: the risk that BMC and Builders FirstSource may be unable to obtain governmental and regulatory approvals required for the business combination, or that required governmental and regulatory approvals may delay the business combination or result in the imposition of conditions that could reduce the anticipated benefits from the proposed business combination or cause the parties to abandon the proposed business combination; the risk that a condition to closing of the business combination may not be satisfied, including as a result of the failure to obtain approval of stockholders of BMC and Builders FirstSource on the expected terms and schedule or at all; the length of time necessary to consummate the proposed business combination, which may be longer than anticipated for various reasons; the risk that the businesses will not be integrated successfully; the risk that the cost savings, synergies and growth from the proposed business combination may not be fully realized or may take longer to realize than expected; the assumptions on which the parties' estimates of future results of the combined business have been based may prove to be incorrect in a number of material ways, which could result in an inability to realize the expected benefits of the proposed business combination or exposure to material liabilities; the diversion of management time on issues related to the business combination; the effect of future regulatory or legislative actions on the companies or the industries in which they operate; the risk that the credit ratings of the combined company may be different from what the parties expect; economic and foreign exchange rate volatility; changes in the general economic environment, or social or political conditions, that could affect the
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businesses; the potential effect of the announcement or consummation of the proposed business combination on relationships with customers, suppliers, competitors, lenders, landlords, management and other employees; the ability to attract new customers and retain existing customers in the manner anticipated or at all; the ability to hire and retain key personnel; reliance on and integration of information technology systems; the risks associated with assumptions the parties make in connection with the parties' critical accounting estimates and legal proceedings; certain restrictions during the pendency of the business combination that may affect the ability of BMC and Builders FirstSource to pursue certain business opportunities or strategic transactions; and the potential of international unrest, economic downturn or effects of anticipated tax rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs.
Additional information concerning other risk factors pertaining to BMC and
Builders FirstSource is also contained in the parties' respective most recently
filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and other information filed with the
Additional Information and Where to Find It
In connection with the proposed business combination, Builders FirstSource
intends to file with the
Participants in the Solicitation
BMC, Builders FirstSource, and their respective directors, executive officers, and other members of management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of BMC and Builders FirstSource in connection with the proposed business combination.
The identity of BMC's directors and executive officers and their ownership of
BMC's common stock is set forth in BMC's Annual Report on Form 10-K for the
fiscal year ended
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The identity of Builders FirstSource's directors and executive officers and
their ownership of the common stock of Builders FirstSource is set forth in
Builders FirstSource's Annual Report on Form 10-K for the fiscal year ended
Investors may obtain additional information regarding the interest of such
participants and a description of their direct and indirect interests, by
security holdings or otherwise, by reading the Registration Statement, the Joint
Proxy Statement, and other materials to be filed with the
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