Item 1.01. Entry Into a Material Definitive Agreement
On January 13, 2020, PetIQ, Inc. (the "Company") entered into that certain Asset
Purchase Agreement (the "Purchase Agreement") by and between Elanco US Inc.
("Seller"), PetIQ, LLC ("Buyer") and the Company (solely as a guarantor of
Buyer's obligations under the Purchase Agreement). Upon the terms and subject to
the conditions set forth in the in the Purchase Agreement, Buyer will acquire
the U.S. rights to Capstar® and CapAction® and related assets (the "Assets")
from Seller (the "Acquisition"). A press release announcing the execution of the
Purchase Agreement is included as Exhibit 99.1 to this Current Report on Form
8-K.
The purchase price for the Assets is $95 million in cash, plus the cost of
certain outstanding finished goods inventory in saleable condition. The Purchase
Agreement contains customary representations and warranties, covenants and
agreements, including, among others, the obligation of Seller to conduct the
business associated with the Assets in the ordinary course of business prior to
closing and the requirement that Buyer take certain actions to obtain antitrust
approval. In addition, the parties to the Purchase Agreement have agreed to
indemnify each other for certain liabilities arising out of the Purchase
Agreement, subject to various limitations including, among other things, caps
and time limitations. Buyer will also obtain representation and warranty
insurance that provides coverage for certain breaches of, and inaccuracies in,
representations and warranties made by Seller in the Purchase Agreement, subject
to exclusions, deductibles and other terms and conditions.
The obligation of the parties to close the Acquisition is subject to customary
closing conditions, including, among others, the issuance of a consent order by
the Federal Trade Commission. The parties have agreed that the Acquisition will
not close earlier than July 1, 2020. The Purchase Agreement may be terminated in
certain circumstances including, among other things, if the closing has not
occurred by December 31, 2020, if certain antitrust approvals are not obtained
or if Seller's agreement in connection with Seller's acquisition of Bayer AG's
animal health business is terminated prior to closing of the
Acquisition. Following closing, the Seller will manufacture and supply the
Assets and provide certain technology transfer services to Buyer over a 24-month
period pursuant to a manufacturing and supply agreement. The Company continues
to act as a non-exclusive distributor of Seller's products, including the
Assets.
The foregoing description of the Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the Purchase
Agreement, which will be filed with the Company's Annual Report on Form 10-K for
the year ended December 31, 2019.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Description
99.1 Press Release dated January 13, 2020
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