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BUSINESS COMBINATION
 3 Months Ended
Mar. 31, 2012
BUSINESS COMBINATION
3. BUSINESS COMBINATION

 

On March 26, 2012, the Company entered into a Purchase and Sale Agreement (the “Agreement”) with Walker Group Holdings LLC (“Walker”) and Walker Group Resources LLC, the parent of Walker (“Seller”), as previously described in the Current Report on Form 8-K filed on March 27, 2012, pursuant to which the Company will purchase all of the equity interests of Walker for total consideration of $360 million in cash, subject to purchase price adjustments related to the acquired working capital (the “Acquisition”).

 

Walker is a manufacturer of liquid-transportation systems and engineered products based in New Lisbon, Wisconsin. The Company believes the Acquisition of Walker, which will become part of its Diversified Products segment, supports its commitment to grow and diversify the business outside of the core trailer products and will be a good strategic fit, meeting the Company’s criteria of industry leadership, diversification and financial profile. Walker will provide the Company with further diversification in products, end-markets, customers and geographies while also maintaining a focus on core manufacturing capabilities that the combined companies share.

 

 

Walker has manufacturing facilities for its liquid-transportation products in New Lisbon, Wisconsin; Fond du Lac, Wisconsin; Kansas City, Missouri; and Queretaro, Mexico with parts and service centers in Houston, Texas; Baton Rouge, Louisiana; Findlay, Ohio; Chicago, Illinois; Mauston, Wisconsin; West Memphis, Arkansas; and Ashland, Kentucky. Manufacturing facilities for Walker’s engineered products are located in New Lisbon, Wisconsin; Elroy, Wisconsin; and Huddersfield, United Kingdom with parts and service centers in Tavares, Florida; Dallas, Texas; and Philadelphia, Pennsylvania.

 

Although there can be no assurance, the Acquisition is expected to be consummated in the second quarter of 2012. The Company has incurred acquisition related costs of approximately $1.7 million during the current quarter which were recorded as Acquisition Expenses in the Condensed Consolidated Statement of Operations. The Company plans to finance the Acquisition using a combination of convertible debt and long-term bank debt (see Note 4). Consummation of the Acquisition is subject to various conditions, including, among others, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company received notice that early termination of the waiting period occured on April 23, 2012. The Agreement also contains specified termination rights for the parties, including, among others, if the Acquisition fails to close on or before June 25, 2012. The Agreement may be terminated by Seller if all the conditions to closing of the Acquisition have been satisfied, the Company fails to consummate the transaction, and Seller was ready, willing and able to consummate the Acquisition (a “Wabash Termination Event”). The Agreement further provides that the Company is required to pay a fee equal to $20 million in the event that the Agreement is terminated due to (i) a breach by the Company of its representations, warranties or covenants, or (ii) the occurrence of a Wabash Termination Event.