JBT MAREL Corp 8-K/A, filed Jan 22, 2025
JBT MAREL Corp (JBTM)
About this 8-K/A
JBT MAREL Corp filed this 8-K/A on January 22, 2025, reporting on events of January 2, 2025.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Introductory Note
On January 2, 2025, JBT Marel Corporation (f/k/a John Bean Technologies Corporation), a Delaware corporation (the “Company” or “JBT Marel”), completed its previously announced voluntary takeover offer (the “Offer”) to acquire all issued and outstanding shares (other than treasury shares) of Marel hf., a public limited liability company incorporated under the laws of Iceland (“Marel”). The Offer was made pursuant to the Transaction Agreement, dated April 4, 2024 (the “Transaction Agreement”), by and among the Company, John Bean Technologies Corporation Europe B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands and a wholly owned subsidiary of the Company, and Marel. The transactions contemplated by the Transaction Agreement, including the Offer, are herein referred to as the “Transaction.”
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial Statements of Business Acquired.
The consolidated financial statements of Marel as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 and the related notes thereto and, with respect to the years ended December 31, 2023 and 2022, the related report of KPMG Accountants N.V., Marel’s independent auditors, were included in the Company’s Registration Statement on Form S-4/A (File No. 333-279438), filed with the SEC on June 24, 2024 and declared effective on June 25, 2024, and are incorporated by reference into this Item 9.01(a) as Exhibit 99.1, except that Marel’s consolidated financial statements for the year ended December 31, 2021 and the related portions of the notes thereto are not incorporated by reference.
The unaudited condensed consolidated interim financial statements of Marel as of September 30, 2024 and for the nine months ended September 30, 2024 and 2023 and the related notes thereto were filed on the Company’s Current Report on Form 8-K, filed with the SEC on November 15, 2024, and are incorporated by reference into this Item 9.01(a) as Exhibit 99.2.
(b) Pro Forma Financial Information.
The Company’s unaudited pro forma condensed combined financial information giving effect to the Transaction (the “Pro Forma Financial Information”), which includes the unaudited pro forma condensed combined balance sheet as of September 30, 2024, the unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2024 and the year ended December 31, 2023 and the related notes thereto, previously filed by the Company on November 15, 2024, have been amended to reflect certain updated assumptions and additional clarifications that are utilized in the calculations of the Pro Forma Financial Information, including with respect to the following:
| 1. | Impact of the closing of the Offer on the preliminary estimated Transaction Consideration (as defined therein) and on the preliminary Purchase Price Allocation (as defined therein), as described in the Pro Forma Financial Information. |
| 2. | Impact of Transaction Financing (as defined therein) and related costs, as described in the Pro Forma Financial Information. |
| 3. | Conversion of Marel’s historical consolidated financial information from IFRS (as defined therein) to GAAP (as defined therein) and Policy Adjustments (as defined therein), as described in the Pro Forma Financial Information, which now provides added clarification around the gross impact of such conversion, including impact of the adjustments on Marel’s historical amortization and impairment expense. |
The Pro Forma Financial Information is attached hereto as Exhibit 99.3 and incorporated herein by reference.
The Pro Forma Financial Information included in this Amendment has been presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Transaction occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the Transaction.
(d) Exhibits.
IMPORTANT NOTICES
This Current Report is not intended to and does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In particular, this Current Report is not an offer of securities for sale in the United States, Iceland, the Netherlands or Denmark.
IMPORTANT ADDITIONAL INFORMATION
No offer of JBT Marel securities shall be made except by means of a prospectus, or an exemption from a prospectus, meeting the requirements of the applicable European regulations, including the Icelandic Prospectus Act no. 14/2020. In connection with the offering of JBT Marel shares to the shareholders of Marel, JBT Marel filed with the Financial Supervisory Authority of the Central Bank of Iceland (the “FSA”) a prospectus which has been approved by the FSA. You may obtain a free copy of the prospectus on the FSA’s website at www.fme.is and on JBT Marel’s website at https://www.jbtc.com/jbt-marel-offer-launch/.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JBT MAREL CORPORATION | ||
| By: | /s/ Matthew J. Meister | |
| Name: | Matthew J. Meister | |
| Title: | Executive Vice President and Chief Financial Officer | |
Dated: January 22, 2025
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the registration statements (Nos. 333-152682 and 333-218253) on Form S-8 of JBT Marel Corporation of our report dated May 9, 2024, with respect to the consolidated financial statements of Marel hf., which report appears in the Form S-4/A of JBT Marel Corporation dated June 24, 2024.
/s/ KPMG Accountants N.V.
Amstelveen, the Netherlands
January 22, 2025
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
On January 2, 2025 (the “Closing Date”), JBT Marel Corporation (f/k/a John Bean Technologies Corporation) (“JBT Marel” or the “Company”) completed its voluntary takeover offer (the “Offer”) to shareholders of Marel hf. (“Marel” and such shareholders, “Marel Shareholders”) to acquire all of the issued and outstanding ordinary shares, nominal value ISK 1 per share (other than treasury shares) (the “Marel Shares”) of Marel pursuant to the transaction agreement dated April 4, 2024 (the “Transaction Agreement”), by and among the Company, John Bean Technologies Corporation Europe B.V., a subsidiary of the Company (the “Offeror”), and Marel. Based on the final results of the Offer, the Company received acceptance by Marel Shareholders representing 735,338,954 Marel Shares, corresponding to approximately 97.5 percent of all issued and outstanding Marel Shares. As the Company’s ownership in Marel exceeds 90 percent of all Marel shares after settlement of the Offer, the Company intends to redeem any Marel Shares not tendered in the Offer by way of a compulsory purchase, pursuant to Articles 24 and 25 of the Icelandic Act on Public Limited Companies no. 2/1995, as amended, and Article 110 of the Icelandic Takeover Act no. 108/2007, as amended (the “Squeeze-Out”). The Squeeze-Out is further described in the “Description of the Transaction” section below.
This unaudited pro forma condensed combined financial information has been prepared to illustrate the estimated effect of the transactions contemplated by both the Transaction Agreement (the “Transaction”) and the Transaction Financing (as defined below). Such information is based on the following historical consolidated financial statements of the Company and Marel, as adjusted to give effect to the Transaction and the Transaction Financing:
| • | the separate audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2023, and the related notes, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023; |
| • | the separate unaudited condensed consolidated interim financial statements of the Company as of and for the nine months ended September 30, 2024, and the related notes, included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024; |
| • | the separate audited consolidated financial statements of Marel as of and for the fiscal year ended December 31, 2023, and the related notes, incorporated in this Current Report on Form 8-K/A by reference to the Company’s Registration Statement on Form S-4 (File No. 333-279438), filed with the SEC on June 24, 2024 and declared effective on June 25, 2024; and |
| • | the separate unaudited condensed consolidated interim financial statements of Marel as of and for the nine months ended September 30, 2024, and the related notes, incorporated in this Current Report on Form 8-K/A by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 15, 2024. |
The unaudited pro forma condensed combined balance sheet as of September 30, 2024 gives effect to the Transaction as if it had occurred or become effective on September 30, 2024. The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2024 and the fiscal year ended December 31, 2023 give effect to the Transaction and the Transaction Financing as if it had occurred or become effective on January 1, 2023.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read together with the accompanying notes. Such notes describe the assumptions and estimates related to the adjustments to the unaudited pro forma condensed combined financial information. In addition, the unaudited pro forma condensed combined financial information should be read in conjunction with the separate respective audited consolidated financial statements of the Company and Marel.
Description of the Transaction
On June 24, 2024, the Offeror launched a voluntary public takeover offer to Marel Shareholders to acquire all of the issued and outstanding Marel Shares, not including any treasury shares held by Marel. The Offer was conditioned upon, among other things, the Offer having been validly accepted by eligible Marel Shareholders representing (when taken together with any Marel Shares acquired or agreed to be acquired by the Offeror other
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than through the Offer in accordance with applicable law) at least 90% (or, in the Offeror’s sole discretion, a lower percentage, not to be reduced below 80% without Marel’s consent) of the issued and outstanding share capital and voting rights of Marel (excluding Marel Shares owned by any of Marel’s subsidiaries) as of the time at which the Offeror accepts for exchange, and exchanges, all of the Marel Shares validly tendered and not validly withdrawn (the “Offer Closing Time”) and such acceptances not being withdrawn or subject to any third party consents in respect of pledges or other rights (the “Minimum Acceptance Condition”).
The Offer period expired on December 20, 2024 at 12:00 PM GMT, and based on the final result of the Offer, the Company achieved acceptance of the Offer by Marel Shareholders representing approximately 97.5 percent of Marel Shares. The Offer was then subsequently settled and the consideration described below was paid or issued, as applicable, on the Closing Date.
Marel Shareholders who validly tendered their Marel shares were able to elect to receive, in exchange for each Marel share, (i) EUR 3.60 in cash, (ii) EUR 1.26 in cash and 0.0265 shares of JBT Marel, or (iii) 0.0407 shares of JBT Marel, subject to a proration feature. Marel Shareholders elected to receive more shares of JBT Marel than were available. Therefore, as a result of the application of the proration feature, Marel Shareholders who elected to receive (i) EUR 3.60 in cash received, in exchange for each Marel share, EUR 3.60 in cash, (ii) EUR 1.26 in cash and 0.0265 shares of JBT Marel received, in exchange for each Marel share, EUR 1.26 in cash and 0.0265 shares of JBT Marel and (iii) 0.0407 shares of JBT Marel received, in exchange for each Marel share, EUR 1.2073635 in cash and 0.0270961 shares of JBT Marel. In the aggregate, at settlement of the Offer, Marel Shareholders received approximately EUR 926.6 million in cash and 19,486,483 shares of JBT Marel. JBT Marel expects to pay or issue, as applicable, additional cash and/or shares of JBT Marel in connection with the Squeeze-Out, as further described below.
On the Closing Date, JBT Marel commenced the Squeeze-Out. The remaining Marel Shareholders can elect to receive, in exchange for each Marel Share, (a) EUR 3.60 in cash, (b) EUR 1.26 in cash and 0.0265 shares of JBT Marel, or (c) 0.0407 shares of JBT Marel, subject to proration in the same manner as the shares tendered in the Offer. Any Marel Shareholders that do not make an election will receive, in exchange for each Marel Share, EUR 1.26 in cash and 0.0265 shares of JBT Marel. This will result in the Marel Shareholders receiving, in the aggregate across both the Offer and the Squeeze-Out, approximately EUR 950 million in cash and approximately a 38% ownership interest in the Company. The redemption period is scheduled to expire on January 30, 2025, at 5:00 p.m. Icelandic time (GMT). Settlement of the Squeeze-Out is expected to occur as soon as practicable following the expiry of the redemption period.
On the Closing Date, the Company changed its name and stock ticker symbol to “JBT Marel Corporation” and “JBTM,” respectively. JBTM shares remain listed on the New York Stock Exchange (“NYSE”) with a secondary listing on Nasdaq Iceland hf (“Nasdaq Iceland”). Shares of JBTM commenced trading on both NYSE and Nasdaq Iceland exchanges on January 3, 2025. In addition, Nasdaq Iceland and Euronext Amsterdam N.V. approved Marel’s requests to delist its shares from Nasdaq Iceland and Euronext Amsterdam and the last day of trading on the respective exchanges being January 3, 2025.
At the Offer Closing Time, each stock option with respect to Marel Shares (a “Marel Stock Option”) that was granted prior to the date of the Transaction Agreement and remained outstanding as of immediately prior to the Offer Closing Time with an exercise price per share less than the volume-weighted average trading price of a Marel Share on the last trading day immediately prior to the date on which settlement of the Offer is made (the “Marel Closing Price”), whether vested or unvested, was automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of Marel Shares subject to such Marel Stock Option as of immediately prior to the Offer Closing Time and (ii) the excess, if any, of the Marel Closing Price over the exercise price per share of such Marel Stock Option. Each Marel Stock Option with an exercise price per share equal to or greater than the Marel Closing Price was cancelled without any cash payment being made in respect thereof.
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In connection with the Transaction, on the Closing Date, JBT Marel entered into the Second Amended and Restated Credit Agreement (“Credit Agreement”), which provides for a $1.8 billion revolving credit facility (the “New Revolving Credit Facility”) and a 7-year, $900 million senior secured term loan B (the “Term Loan B”). On the Closing Date, borrowings under the Credit Agreement were used to consummate the Transaction and to repay certain existing indebtedness of Marel and its subsidiaries (collectively, the “Transaction Financing”).
On April 4, 2024, the Company entered into the Bridge Credit Agreement, dated as of April 4, 2024, by and among the Company, the lenders party thereto and Goldman Sachs Bank USA, as administrative agent, Wells Fargo Bank, National Association, as syndication agent, and Goldman Sachs Bank USA and Wells Fargo Securities, LLC, as joint bookrunners and lead arrangers (the “Bridge Credit Agreement”). On January 2, 2025, the commitments under the Bridge Credit Agreement were reduced to $0 as a result of the Transaction Financing described above. Substantially concurrently with entering into the Credit Agreement and the consummation of the Transaction, JBT Marel terminated the Bridge Credit Agreement in its entirety as permitted under its terms. In connection with the termination of the Bridge Credit Agreement, all accrued and unpaid fees thereunder were paid in full and all commitments thereunder were terminated.
Accounting for the Transaction
The unaudited pro forma condensed combined financial information has been prepared by the Company using the acquisition method of accounting, with the Company as the acquirer for accounting purposes. For purposes of the unaudited pro forma condensed combined financial information, the applicable historical financial statements of Marel have been reclassified to align to the financial statement presentation of the Company, translated into U.S. dollars, and preliminarily adjusted for differences between International Financial Reporting Standards as issued
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by the International Accounting Standards Board (the “IASB,” and such reporting standards, “IFRS”) and the Company’s accounting policies, which reflect accounting principles generally accepted in the United States of America (“GAAP”), for material accounting policy differences identified to date. Further, the unaudited pro forma condensed combined financial information includes transaction accounting adjustments which are necessary to account for the Transaction in accordance with GAAP and adjustments to reflect the Transaction Financing. The unaudited pro forma adjustments are based upon certain assumptions that the Company’s management believes are reasonable and currently available information.
The unaudited pro forma condensed combined financial information is provided for informational purposes only and is not necessarily indicative of results that would have occurred had the Transaction been completed as of the dates indicated above. In addition, the unaudited pro forma condensed combined financial information does not purport to be indicative of the future financial position or operating results of the combined operations and does not reflect the costs of any integration activities nor any benefits that may result from realization of future cost savings from operating efficiencies or revenue or other synergies expected to result from the Transaction.
The valuations of the assets acquired and liabilities assumed are preliminary and have not been finalized. The Company intends to finalize valuations and other studies and will finalize the purchase price allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the Transaction. The assets and liabilities of Marel have been measured based on various preliminary estimates using assumptions that Company management believes are reasonable and based on currently available information. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing this unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final purchase accounting will occur, and the final purchase accounting could be materially different from the preliminary estimates used to prepare the accompanying unaudited pro forma condensed combined financial information and could have a material impact on the combined company’s future results of operations and financial position.
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JBT MAREL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2024
| (In millions) | Historical JBT |
Historical Marel (IFRS) Adjusted for Reclassifications |
IFRS to GAAP Adjustments |
Transaction Accounting Adjustments |
Transaction Financing Adjustments |
Pro Forma Combined |
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| Note 2 | Note 3 | Note 5 | Note 6 | |||||||||||||||||||||||||||||||||
| Assets: |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 534.5 | $ | 70.2 | $ | (1,920.4 | ) | 5 | (a) | $ | 1,729.2 | 6 | (a) | $ | 413.5 | |||||||||||||||||||||
| Trade receivables, net of allowances |
237.9 | 240.7 | — | 478.6 | ||||||||||||||||||||||||||||||||
| Contract assets |
96.7 | 59.6 | — | 156.3 | ||||||||||||||||||||||||||||||||
| Inventories |
259.0 | 374.6 | 35.0 | 5 | (b) | 668.6 | ||||||||||||||||||||||||||||||
| Other current assets |
77.5 | 110.4 | 8.1 | 3 | (c) | — | 196.0 | |||||||||||||||||||||||||||||
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| Total current assets |
1,205.6 | 855.5 | 8.1 | (1,885.4 | ) | 1,729.2 | 1,913.0 | |||||||||||||||||||||||||||||
| Property, plant and equipment, net |
243.3 | 371.4 | 123.6 | 5 | (c) | 738.3 | ||||||||||||||||||||||||||||||
| Goodwill |
785.8 | 958.6 | 858.6 | 5 | (e) | 2,603.0 | ||||||||||||||||||||||||||||||
| Intangible assets, net |
358.8 | 560.5 | (111.7 | ) | 3 | (a) | 1,851.2 | 5 | (d) | 2,658.8 | ||||||||||||||||||||||||||
| Other assets |
195.5 | 121.5 | (8.1 | ) | 3 | (c) | (23.6 | ) | 5 | (f) | (1.3 | ) | 6 | (b) | 284.0 | |||||||||||||||||||||
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| Total assets |
$ | 2,789.0 | $ | 2,867.5 | $ | (111.7 | ) | $ | 924.4 | $ | 1,727.9 | $ | 8,191.7 | |||||||||||||||||||||||
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| Liabilities and Stockholders’ Equity: |
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| Current Liabilities: |
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| Accounts payable, trade and other |
144.7 | 168.0 | — | 312.7 | ||||||||||||||||||||||||||||||||
| Advance and progress payments |
159.1 | 288.2 | — | 447.3 | ||||||||||||||||||||||||||||||||
| Accrued payroll |
45.2 | 96.3 | — | 141.5 | ||||||||||||||||||||||||||||||||
| Other current liabilities |
124.4 | 75.7 | (15.6 | ) | 5 | (g) | 6.3 | 6 | (c) | 190.8 | ||||||||||||||||||||||||||
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| Total current liabilities |
473.4 | 628.2 | — | (15.6 | ) | 6.3 | 1,092.3 | |||||||||||||||||||||||||||||
| Long-term debt |
648.3 | 940.7 | (940.7 | ) | 5 | (h) | 1,728.9 | 6 | (a) | 2,377.2 | ||||||||||||||||||||||||||
| Accrued pension and other postretirement benefits, less current portion |
22.4 | — | — | 22.4 | ||||||||||||||||||||||||||||||||
| Other liabilities |
59.8 | 138.9 | (27.9 | ) | 3 | (a) | 498.4 | 5 | (i) | 669.2 | ||||||||||||||||||||||||||
| Stockholders’ Equity: |
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| Common stock and additional paid-in capital |
229.6 | 498.2 | 1,938.2 | 5 | (j) | 2,666.0 | ||||||||||||||||||||||||||||||
| Retained earnings |
1,546.3 | 715.4 | (83.8 | ) | 3 | (a) | (695.7 | ) | 5 | (j) | (7.3 | ) | 6 | (b) | 1,474.9 | |||||||||||||||||||||
| Accumulated other comprehensive loss |
(190.8 | ) | (53.9 | ) | 53.9 | 5 | (j) | (190.8 | ) | |||||||||||||||||||||||||||
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| Noncontrolling interest |
85.9 | 85.9 | ||||||||||||||||||||||||||||||||||
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| Total stockholders’ equity |
1,585.1 | 1,159.7 | (83.8 | ) | 1,382.3 | (7.3 | ) | 4,036.0 | ||||||||||||||||||||||||||||
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| Total Liabilities and Stockholders’ Equity |
$ | 2,789.0 | $ | 2,867.5 | $ | (111.7 | ) | $ | 924.4 | $ | 1,727.9 | $ | 8,197.1 | |||||||||||||||||||||||
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JBT MAREL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Nine months ended September 30, 2024
| (In millions, except per share data) |
Historical JBT |
Historical Marel (IFRS) Adjusted For Reclassifications |
IFRS to GAAP Adjustments |
Transaction Accounting Adjustments |
Transaction Financing Adjustments |
Pro Forma Combined |
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| Note 2 | Note 3 | Note 5 | Note 6 | |||||||||||||||||||||||||||||||||
| Revenue |
$ | 1,248.4 | $ | 1,349.2 | $ | 2,597.6 | ||||||||||||||||||||||||||||||
| Operating expenses: |
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| Cost of products |
801.3 | 857.0 | 0.1 | 3(b) | 13.8 | 5 | (k) | 1,672.2 | ||||||||||||||||||||||||||||
| Selling, general and administrative expense |
343.3 | 416.4 | 3.8 | 3(a)(b) | 35.0 | 5 | (l) | 798.5 | ||||||||||||||||||||||||||||
| Restructuring expense |
1.1 | 8.2 | 9.3 | |||||||||||||||||||||||||||||||||
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| Operating income |
102.7 | 67.6 | (3.9 | ) | (48.8 | ) | — | 117.6 | ||||||||||||||||||||||||||||
| Pension expense, other than service cost |
3.0 | — | 3.0 | |||||||||||||||||||||||||||||||||
| Interest expense, net |
(6.2 | ) | 57.6 | (1.0 | ) | 3(b) | (44.6 | ) | 5 | (m) | 92.1 | 6 | (d) | 97.9 | ||||||||||||||||||||||
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| Income (loss) from continuing operations before income taxes |
105.9 | 10.0 | (2.9 | ) | (4.2 | ) | (92.1 | ) | 16.7 | |||||||||||||||||||||||||||
| Income tax provision |
14.3 | 6.8 | (0.7 | ) | 5(n) | (1.1 | ) | 5 | (n) | (23.0 | ) | 6 | (e) | (3.7 | ) | |||||||||||||||||||||
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| Equity in net earnings of unconsolidated affiliate |
(0.1 | ) | (0.3 | ) | (0.4 | ) | ||||||||||||||||||||||||||||||
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| Net income (loss) from continuing operations |
$ | 91.5 | $ | 2.9 | $ | (2.2 | ) | $ | (3.1 | ) | $ | (69.1 | ) | $ | 20.0 | |||||||||||||||||||||
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| Basic earnings per share from continuing operations |
$ | 2.86 | $ | 0.00 | $ | 0.39 | ||||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations |
$ | 2.84 | $ | 0.00 | $ | 0.39 | ||||||||||||||||||||||||||||||
| Shares used in computing basic earnings per share |
32.0 | 754.0 | 51.5 | |||||||||||||||||||||||||||||||||
| Shares used in computing diluted earnings per share |
32.2 | 754.0 | 51.7 | |||||||||||||||||||||||||||||||||
6
JBT MAREL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year ended December 31, 2023
| (In millions, except per share data) | Historical JBT |
Historical Marel (IFRS) Adjusted For Reclassifications |
IFRS to GAAP Adjustments |
Transaction Accounting Adjustments |
Transaction Financing Adjustments |
Pro Forma Combined |
||||||||||||||||||||||||||||||
| Note 2 | Note 3 | Note 5 | Note 6 | |||||||||||||||||||||||||||||||||
| Revenue |
$ | 1,664.4 | $ | 1,879.1 | $ | 3,543.5 | ||||||||||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||||||||||
| Cost of products |
1,078.7 | 1,225.9 | 0.1 | 3(b) | 54.6 | 5 | (k) | 2,359.3 | ||||||||||||||||||||||||||||
| Selling, general and administrative expense |
409.6 | 541.6 | 12.4 | 3(a)(b) | 109.7 | 5 | (l) | 1,073.3 | ||||||||||||||||||||||||||||
| Restructuring expense |
11.4 | 9.4 | 20.8 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Operating income |
164.7 | 102.2 | (12.5 | ) | (164.3 | ) | — | 90.1 | ||||||||||||||||||||||||||||
| Pension expense, other than service cost |
0.7 | — | 0.7 | |||||||||||||||||||||||||||||||||
| Interest expense, net |
10.9 | 62.3 | (1.5 | ) | 3(b) | (51.7 | ) | 5 | (m) | 129.2 | 6 | (d) | 149.2 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes |
153.1 | 39.9 | (11.0 | ) | (112.6 | ) | (129.2 | ) | (59.8 | ) | ||||||||||||||||||||||||||
| Income tax provision |
23.5 | 5.6 | (2.8 | ) | 5(n) | (13.6 | ) | 5 | (n) | (32.3 | ) | 6 | (e) | (19.6 | ) | |||||||||||||||||||||
| Equity in net earnings of unconsolidated affiliate |
(0.3 | ) | (0.5 | ) | (0.8 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Net income (loss) from continuing operations |
$ | 129.3 | $ | 33.8 | $ | (8.2 | ) | $ | (99.0 | ) | $ | (96.9 | ) | $ | (41.0 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Basic earnings per share from continuing operations |
$ | 4.04 | $ | 0.04 | $ | (0.80 | ) | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations |
$ | 4.02 | $ | 0.04 | $ | (0.80 | ) | |||||||||||||||||||||||||||||
| Shares used in computing basic earnings per share |
32.0 | 753.5 | 51.5 | |||||||||||||||||||||||||||||||||
| Shares used in computing diluted earnings per share |
32.1 | 754.0 | 51.5 | |||||||||||||||||||||||||||||||||
7
Note 1. Basis of Presentation
The unaudited pro forma condensed combined financial information and accompanying notes are prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined balance sheet as of September 30, 2024 gives effect to the Transaction and the Transaction Financing as if they had been consummated on September 30, 2024. The unaudited pro forma condensed combined statements of income give effect to the Transaction and the Transaction Financing as if they had been consummated on January 1, 2023, the first day of the Company’s fiscal year.
The historical audited financial statements of the Company are prepared in accordance with GAAP and are reported in U.S. dollars. The historical audited financial statements of Marel are prepared in accordance with IFRS as issued by the IASB and are reported in Euro. For purposes of the unaudited pro forma condensed combined financial information, Marel’s historical unaudited consolidated statement of financial position as of September 30, 2024 was translated using the spot rate on September 30, 2024 (1.1190 $/€). Marel’s historical unaudited consolidated statement of income for the nine months ended September 30, 2024 was translated using the average exchange rate for the nine months ended September 30, 2024 (1.1107 $/€). Marel’s historical consolidated statement of income for the year ended December 31, 2023 was translated using the average exchange rate for the year ended December 31, 2023 (1.0916 $/€).
For purposes of the unaudited pro forma condensed combined financial information, the historical financial information of Marel has been reclassified to conform to the Company’s financial statement presentation, converted from IFRS to GAAP, and compiled in a manner consistent with the accounting policies adopted by the Company as set forth in its audited historical financial statements. These adjustments are described further in the following notes. The Company is currently in the process of evaluating Marel’s accounting policies and converting Marel’s financials to GAAP. As a result of that review, additional differences could be identified between the accounting policies of the two companies that could have a material impact on the unaudited pro forma condensed combined financial information.
The Transaction will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805. The Company has been deemed the acquirer for accounting purposes and has therefore estimated the fair value of Marel’s assets acquired and liabilities assumed using the fair value concepts defined in ASC 820, Fair Value Measurement. In identifying the Company as the acquiring entity, management reviewed the proposed composition of the combined company’s board of directors, a majority of whom are existing directors of the Company, the entity issuing the shares and cash to be used as Transaction consideration, the designation of the Company’s President and Chief Executive Officer as the Chief Executive Officer of the combined company, as well as the fact that the Company’s existing shareholders prior to the consummation of the Transaction own the majority of the combined company following the completion of the Transaction.
Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess of the Transaction consideration over the estimated fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.
The allocation of the aggregate Transaction consideration depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the aggregate Transaction consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. The final determination of fair values of assets acquired and liabilities assumed in the Transaction could differ materially from the preliminary allocation of aggregate Transaction consideration. The final valuation will be based on the actual net tangible and intangible assets of Marel existing at the acquisition date.
The unaudited pro forma condensed combined financial information does not reflect any expected cost savings, operating synergies or revenue enhancements that the combined entity may achieve as a result of the Transaction or any acquisition and integration costs that may be incurred. Management is not aware of any material transactions between the Company and Marel during the periods presented. Accordingly, adjustments to eliminate transactions between the Company and Marel have not been reflected in the unaudited pro forma condensed combined financial information.
8
Note 2. Reclassifications
Marel’s historical balances were derived from Marel’s historical financial statements described above and are presented under IFRS and converted from Euro to U.S. dollars based on the historical exchange rates presented above in Note 1.
During the preparation of the unaudited pro forma condensed combined financial information, the Company performed a preliminary review of Marel’s financial information to identify differences in financial statement presentation as compared to the presentation of the Company. Based on the information currently available, certain reclassifications have been made to Marel’s historical financial statements to conform to the Company’s presentation. Upon finalization of the review of Marel’s financial statements, further differences may be identified that may result in additional reclassifications, which could be materially different from the amounts set forth in the unaudited pro forma condensed combined financial information presented herein.
Refer to the table below for a preliminary reconciliation of the historical financial information of Marel to the Company’s presentation:
| Balance Sheet Information as of September 30, 2024 | ||||||||||||||||||
| Marel Financial Statement Line |
Marel Historical Amount |
Marel Historical Amount |
Reclassification | Marel Historical Reclassified Amount |
JBT Financial Statement Line | |||||||||||||
| (in millions) | EUR | USD | ||||||||||||||||
| Assets |
Assets | |||||||||||||||||
| Property, plant and equipment |
€ | 331.9 | $ | 371.4 | $ | 371.4 | Property, plant and equipment, net | |||||||||||
| Right of use assets |
38.6 | 43.2 | 43.2 | Other assets | ||||||||||||||
| Goodwill |
856.7 | 958.6 | 958.6 | Goodwill | ||||||||||||||
| Intangible assets |
522.0 | 584.1 | (23.6 | )(a) | 560.5 | Intangible assets, net | ||||||||||||
| 23.6 | (a) | 23.6 | Other assets | |||||||||||||||
| Investments in associates |
3.5 | 3.9 | 3.9 | Other assets | ||||||||||||||
| Other non-current financial assets |
3.5 | 3.9 | 3.9 | Other assets | ||||||||||||||
| Derivative financial instruments |
— | — | — | Other assets | ||||||||||||||
| Deferred income tax assets |
41.9 | 46.9 | 46.9 | Other assets | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Non-current assets |
1,798.1 | 2,012.0 | — | 2,012.0 | ||||||||||||||
| Inventories |
334.8 | 374.6 | 374.6 | Inventories | ||||||||||||||
| Contract assets |
51.0 | 57.1 | 2.5 | (b) | 59.6 | Contract assets | ||||||||||||
| Trade receivables |
215.1 | 240.7 | 240.7 | Trade receivables, net of allowances | ||||||||||||||
| Derivative financial instruments |
1.2 | 1.3 | 1.3 | Other current assets | ||||||||||||||
| Current income tax receivables |
7.3 | 8.2 | 8.2 | Other current assets | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Other receivables and prepayments |
92.4 | 103.4 | (2.5 | )(b) | 100.9 | Other current assets | ||||||||||||
| Cash and cash equivalents |
62.7 | 70.2 | 70.2 | Cash and cash equivalents | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Current assets |
764.5 | 855.5 | 855.5 | Current Assets | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Total assets |
€ | 2,562.6 | $ | 2,867.5 | $ | — | $ | 2,867.5 | Total Assets | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
9
| Balance Sheet Information as of September 30, 2024 | ||||||||||||||||||
| Marel Financial Statement Line |
Marel Historical Amount |
Marel Historical Amount |
Reclassification | Marel Historical Reclassified Amount |
JBT Financial Statement Line | |||||||||||||
| (in millions) | EUR | USD | ||||||||||||||||
| Equity and liabilities |
Liabilities and Stockholders’ Equity | |||||||||||||||||
| Share capital |
€ | 6.7 | $ | 7.5 | $ | 7.5 | Common stock and additional paid-in capital | |||||||||||
| Share premium reserve |
438.5 | 490.7 | 490.7 | Common stock and additional paid-in capital | ||||||||||||||
| Other reserves |
(48.2 | ) | (53.9 | ) | (53.9 | ) | Accumulated other comprehensive loss | |||||||||||
| Retained earnings |
639.3 | 715.4 | 715.4 | Retained earnings | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total shareholders’ equity |
1,036.3 | 1,159.7 | — | 1,159.7 | Total stockholders’ equity | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Liabilities |
||||||||||||||||||
| Borrowings |
840.7 | 940.7 | 940.7 | Long-term debt | ||||||||||||||
| Lease liabilities |
30.1 | 33.7 | 33.7 | Other liabilities | ||||||||||||||
| Deferred income tax liabilities |
82.9 | 92.8 | 92.8 | Other liabilities | ||||||||||||||
| Provisions |
4.7 | 5.3 | 5.3 | Other liabilities | ||||||||||||||
| Other payables |
2.7 | 3.0 | 3.0 | Other liabilities | ||||||||||||||
| Derivative financial instruments |
3.7 | 4.1 | 4.1 | Other liabilities | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-current liabilities |
964.8 | 1,079.6 | — | 1,079.6 | ||||||||||||||
| Contract liabilities |
249.8 | 279.5 | 279.5 | Advance and progress payments | ||||||||||||||
| Trade and other payables |
290.5 | 325.1 | (157.1 | )(c) | 168.0 | Accounts payable, trade and other | ||||||||||||
| 8.7 | (c) | 8.7 | Advance and progress payments | |||||||||||||||
| 96.3 | (c) | 96.3 | Accrued payroll | |||||||||||||||
| 52.1 | (c) | 52.1 | Other current liabilities | |||||||||||||||
| Derivative financial instruments |
0.1 | — | — | Other current liabilities | ||||||||||||||
| Current income tax liabilities |
0.3 | 0.3 | 0.3 | Other current liabilities | ||||||||||||||
| Lease liabilities |
11.1 | 12.4 | 12.4 | Other current liabilities | ||||||||||||||
| Provisions |
9.7 | 10.9 | 10.9 | Other current liabilities | ||||||||||||||
| Current liabilities |
561.5 | 628.2 | — | 628.2 | Total current liabilities | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total liabilities |
1,526.3 | 1,707.8 | — | 1,707.8 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total equity and liabilities |
€ | 2,562.6 | $ | 2,867.5 | $ | — | $ | 2,867.5 | Total Liabilities and Stockholders’ Equity | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Reclassification of historical Marel capitalized software costs that are presented within Other assets by the Company. |
| (b) | Reclassification of historical Marel unbilled revenue that is presented within Contract assets by the Company. |
| (c) | Reclassification of historical Marel trade and other payables to align with the Company’s chart of accounts. |
| Statement of Income Information for the nine months ended September 30, 2024 | ||||||||||||||||||
| Marel Financial Statement Line |
Marel Historical Amount |
Marel Historical Amount |
Reclassification | Marel Historical Reclassified Amount |
JBT Financial Statement Line | |||||||||||||
| (in millions) | EUR | USD | ||||||||||||||||
| Revenues |
€ | 1,214.7 | $ | 1,349.2 | $ | 1,349.2 | Revenue | |||||||||||
| Cost of sales |
(773.4 | ) | (859.0 | ) | 2.0 | (a) | (857.0 | ) | Cost of products | |||||||||
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
441.3 | 490.2 | 2.0 | 492.2 | ||||||||||||||
| Selling and marketing expense |
(188.4 | ) | (209.3 | ) | 1.4 | (a) | (207.9 | ) | Selling, general and administrative expense | |||||||||
| General and administrative expense |
(104.7 | ) | (116.3 | ) | 2.4 | (a) | (113.9 | ) | Selling, general and administrative expense | |||||||||
| Research and development expenses |
(87.3 | ) | (97.0 | ) | 2.4 | (a) | (94.6 | ) | Selling, general and administrative expense | |||||||||
| (8.2 | )(a) | (8.2 | ) | Restructuring expense | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Result from operations |
60.9 | 67.6 | — | 67.6 | Operating Income | |||||||||||||
| Finance costs |
(53.0 | ) | (58.9 | ) | (58.9 | ) | Interest expense, net | |||||||||||
| Finance income |
1.2 | 1.3 | 1.3 | Interest expense, net | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Net finance costs |
(51.8 | ) | (57.6 | ) | — | (57.6 | ) | |||||||||||
| Shareof result of associates |
(0.3 | ) | (0.3 | ) | (0.3 | ) | Equity in net earnings of unconsolidated affiliate | |||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Result before income tax |
8.8 | 9.7 | — | 9.7 | Income from continuing operations before income taxes | |||||||||||||
| Income tax |
(6.1 | ) | (6.8 | ) | (6.8 | ) | Income tax provision | |||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Net result |
€ | 2.7 | $ | 2.9 | $ | — | $ | 2.9 | Net income from continuing operations | |||||||||
|
|
|
|
|
|
|
|||||||||||||
| (a) | Reclassification of Marel restructuring costs to restructuring expense as presented by the Company. |
10
| Statement of Income Information for the year ended December 31, 2023 | ||||||||||||||||||||||
| Marel Financial Statement Line |
Marel Historical Amount |
Marel Historical Amount |
Reclassification | Marel Historical Reclassified Amount |
JBT Financial Statement Line | |||||||||||||||||
| (in millions) | EUR | USD | ||||||||||||||||||||
| Revenues |
€ | 1,721.4 | $ | 1,879.1 | $ | 1,879.1 | Revenue | |||||||||||||||
| Cost of sales |
(1,125.0 | ) | (1,228.1 | ) | 2.2 | (a | ) | (1,225.9 | ) | Cost of products | ||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
| Gross profit |
596.4 | 651.0 | 2.2 | 653.2 | ||||||||||||||||||
| Selling and marketing expense |
(249.1 | ) | (271.9 | ) | 2.6 | (a | ) | (269.3 | ) | Selling, general and administrative expense | ||||||||||||
| General and administrative expense |
(134.4 | ) | (146.7 | ) | 2.0 | (a | ) | (144.7 | ) | Selling, general and administrative expense | ||||||||||||
| Research and development expenses |
(119.3 | ) | (130.2 | ) | 2.6 | (a | ) | (127.6 | ) | Selling, general and administrative expense | ||||||||||||
| (9.4 | ) | (a | ) | (9.4 | ) | Restructuring expense | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
| Result from operations |
93.6 | 102.2 | — | 102.2 | Operating Income | |||||||||||||||||
| Finance costs |
(57.4 | ) | (62.7 | ) | (62.7 | ) | Interest expense, net | |||||||||||||||
| Finance income |
0.4 | 0.4 | 0.4 | Interest expense, net | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
| Net finance costs |
(57.0 | ) | (62.3 | ) | — | (62.3 | ) | |||||||||||||||
| Share of result of associates |
(0.5 | ) | (0.5 | ) | (0.5 | ) | Equity in net earnings of unconsolidated affiliate | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Result before income tax |
36.1 | 39.4 | — | 39.4 | Income from continuing operations before income taxes | |||||||||||||||||
|
|
|
|||||||||||||||||||||
| Income tax |
(5.1 | ) | (5.6 | ) | (5.6 | ) | Income tax provision | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net result |
€ | 31.0 | $ | 33.8 | $ | — | $ | 33.8 | Net income from continuing operations | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Reclassification of Marel restructuring costs to restructuring expense as presented by the Company. |
Note 3. IFRS to GAAP and Policy Adjustments
The historical consolidated financial information of Marel has been converted from IFRS to GAAP, applying the Company’s GAAP accounting policies.
Based on a preliminary review performed by the Company of Marel’s financial information, the following adjustments have been made to reflect Marel’s historical consolidated statement of financial position and consolidated income statement on a GAAP basis for the purposes of the unaudited pro forma condensed combined financial information. At this time, the Company is not aware of any accounting policy differences that would have a material impact on the pro forma condensed combined financial information that are not reflected in the pro forma adjustments. Following the transaction, the Company will finalize the review of accounting policies and IFRS to GAAP adjustments, which could be materially different from the amounts set forth in the unaudited pro forma condensed combined financial information presented herein.
11
| a. | Product development expenditures. Marel incurs expenses as part of development projects relating to the design and testing of new and or improved products which are capitalized as intangible assets under IFRS. Under GAAP, these costs are expensed as incurred, unless recognized in a business combination, as described in Note 4. The resulting adjustments therefore expense such costs as selling, general, and administrative expense, and reverse historical amortization of previously capitalized development costs as follows: |
| (in millions) | As of September 30, 2024 |
For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
|||||||||
| Condensed Balance Sheet |
||||||||||||
| Decrease to Intangible assets, net |
$ | (111.7 | ) | |||||||||
| Decrease to Other liabilities |
$ | (27.9 | ) | |||||||||
| Decrease to Retained earnings |
$ | (83.8 | ) | |||||||||
| Condensed Statement of Income |
||||||||||||
| Reversal of amortization and impairment expense for previously capitalized development costs |
$ | (13.8 | ) | $ | (19.3 | ) | ||||||
| Development cost incurred |
$ | 17.4 | $ | 31.4 | ||||||||
|
|
|
|
|
|||||||||
| (Decrease) increase to Selling, general and administrative expense |
$ | 3.6 | $ | 12.1 | ||||||||
| b. | Leases. Under IFRS, lessees have only one lease classification, which is similar to the finance lease classification under GAAP. Based on a preliminary review of the nature of Marel’s lease arrangements, substantially all of Marel’s leases are expected to be classified as operating leases under GAAP. As a result, adjustments have been made to replace the historical amortization of right-of-use assets and interest expense recognized by Marel under IFRS with straight-line lease expense. The following adjustments have been made for Marel’s operating leases under GAAP: |
| (in millions) | For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Condensed Statement of Income |
||||||||
| Decrease to Interest expense, net |
$ | (1.0 | ) | $ | (1.5 | ) | ||
| Increase to Cost of sales(1) |
$ | 0.1 | $ | 0.1 | ||||
| Increase to Selling, general and administrative expense(1) |
$ | 0.2 | $ | 0.3 | ||||
| (1) | In the aggregate, based on the preliminary review described above, reflects an estimated reversal of amortization expense for finance leases under IFRS of $12.2 million and $15.5 million offset by the recognition of an estimated straight line rent expense of $12.5 million and $15.9 million for the nine months ended September 30, 2024 and for the year ended December 31, 2023, respectively. |
| c. | Taxes on Intra-Entity Transfers of Inventory. Under GAAP, the tax effect of intra-entity transfers of inventory are deferred until the related inventory is sold or disposed of, and no deferred taxes are recognized for the difference between the carrying value of the inventory in the consolidated financial statements and the tax basis of the inventory in the buyer’s tax jurisdiction. In addition, the tax paid or payable from the intra-entity transfer is deferred upon consolidation and is not included in tax expense until the inventory is sold to an unrelated third party. Under IFRS, there is no exception for recognizing such tax consequences of intra-entity transfers of inventory. The following adjustments have been made to Marel’s tax balances under GAAP: |
| (in millions) | As of September 30, 2024 | |||
| Condensed Balance Sheet |
||||
| Increase to prepaid tax assets (other current assets) |
$ | 8.1 | ||
| Decrease to deferred tax assets (other assets) |
$ | (8.1 | ) | |
Note 4. Preliminary Purchase Price Allocation
The total preliminary Transaction consideration has been allocated to Marel’s assets and liabilities based upon management’s preliminary estimate of their fair values as if the Transaction had been consummated on September 30, 2024. For purposes of the unaudited pro forma condensed combined financial information only, the valuation of the Transaction consideration uses the Company’s share price as of the Closing Date on January 2, 2025, of $124.94 per share. This represents the Company’s lowest trading price on the acquisition date, which is consistent with the Company’s accounting policy for determining the fair value of equity consideration exchanged in an acquisition.
12
Marel Shareholders who validly tendered their Marel shares were able to elect to receive, in exchange for each Marel share, (i) EUR 3.60 in cash, (ii) EUR 1.26 in cash and 0.0265 shares of JBT Marel, or (iii) 0.0407 shares of JBT Marel, subject to a proration feature. Marel Shareholders elected to receive more shares of JBT Marel than were available. Therefore, as a result of the application of the proration feature, Marel Shareholders who elected to receive (i) EUR 3.60 in cash received, in exchange for each Marel share, EUR 3.60 in cash, (ii) EUR 1.26 in cash and 0.0265 shares of JBT Marel received, in exchange for each Marel share, EUR 1.26 in cash and 0.0265 shares of JBT Marel and (iii) 0.0407 shares of JBT Marel received, in exchange for each Marel share, EUR 1.2073635 in cash and 0.0270961 shares of JBT Marel. In the aggregate, at settlement of the Offer, Marel Shareholders received approximately EUR 926.6 million in cash and 19,486,483 shares of JBT Marel.
The following table summarizes the components of the preliminary estimated Transaction Consideration:
| (In millions, except per share data) | ||||
| JBT shares issued (1) |
19.5 | |||
| JBT share price (2) |
$ | 124.94 | ||
|
|
|
|||
| Value of JBT shares issued to Marel shareholders |
2,436.3 | |||
| Cash consideration to Marel shareholders (1,3) |
959.3 | |||
| Estimated Settlement of Marel debt (4) |
871.9 | |||
| Estimated fair value of Marel stock options attributable to pre-combination vesting (5) |
5.5 | |||
|
|
|
|||
| Total preliminary estimated Purchase Consideration |
$ | 4,273.0 | ||
|
|
|
|||
| (1) | Marel Shareholders who validly tendered their Marel Shares were able to elect to receive, in exchange for each Marel Share, (i) EUR 3.60 in cash, (ii) EUR 1.26 in cash and 0.0265 shares of JBT Marel, or (iii) 0.0407 shares of JBT Marel, subject to a proration feature. 735,338,954 Marel Shares were voluntarily tendered prior to the expiration of the Offer, representing approximately 97.5% of outstanding Marel Shares. 18,611,317 Marel Shares were not voluntarily tendered and will be redeemed by the Company in the Squeeze-Out, as further described throughout this document. |
| (2) | Represents the Company’s lowest trading price as of January 2, 2025, $124.94 per share. |
| (3) | Cash consideration paid to Marel Shareholders is determined using the Euro to USD exchange rate as of January 2, 2025, of 1.0353 $/€. |
| (4) | Represents the gross settlement of Marel’s existing long-term debt of €842.2 million as of September 30, 2024, that was not assumed by the Company as of the Closing, using the EUR to USD exchange rate as of January 2, 2025 of 1.0353 $/€. See Note 6. |
| (5) | Represents the cash settlement outcome for 7.8 million Marel Stock Options that are in the money based on the Marel Closing Price. Each Marel Stock Option that was granted prior to the date of the Transaction Agreement and remained outstanding as of immediately prior to the Offer Closing Time, whether vested or unvested, may be eligible for cash consideration if the exercise price per share of the Marel Stock Option is less than the Marel Closing Price. Based on the share price of Marel as of the Offer Closing Time, 7.4 million Marel Stock Options were out of the money as the exercise price exceeded the Marel share price. Accordingly, those 7.4 million Marel Stock Options were cancelled for no consideration in this unaudited pro forma condensed combined financial information. |
13
The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by the Company in the Transaction, reconciled to the estimated Transaction consideration:
| (In millions) | Preliminary estimate of fair value |
Total | ||||||
| Estimated Purchase Consideration |
$ | 4,273.0 | ||||||
| Marel net assets acquired: |
||||||||
| Assets: |
||||||||
| Financial assets (1) |
578.8 | |||||||
| Inventories |
409.6 | |||||||
| Property, plant and equipment |
495.0 | |||||||
| Intangible assets |
2,300.0 | |||||||
|
|
|
|||||||
| Total assets acquired: |
3,783.4 | |||||||
| Liabilities assumed: |
||||||||
| Financial liabilities (excluding deferred income tax liabilities) (1) |
674.3 | |||||||
| Deferred income tax liabilities |
567.4 | |||||||
|
|
|
|||||||
| Total liabilities assumed |
1,241.7 | |||||||
|
|
|
|||||||
| Total Marel net assets acquired |
$ | 2,541.7 | ||||||
|
|
|
|||||||
| Total fair value of noncontrolling interest (2) |
85.9 | |||||||
|
|
|
|||||||
| Goodwill |
$ | 1,817.2 | ||||||
|
|
|
|||||||
| (1) | Neither Financial assets nor Financial liabilities have been adjusted for $22.7 million of transaction costs incurred by Marel through the closing date of the Transaction. |
| (2) | Represents the preliminary estimated fair value of the acquired non-controlling interest associated with Marel Shares not validly tendered in the Offer. As described in the “Description of the Transaction”, the Company commenced the Squeeze-Out on the Closing Date and settlement of the Squeeze-Out is expected to occur as soon as practicable following the expiry of the redemption period on January 30, 2025, at 5:00 p.m. Icelandic time (GMT). Therefore, the Company has elected to not present a transaction accounting adjustment to allocate income or loss attributable to noncontrolling interests within the Company’s unaudited pro forma condensed combined statement of income for the year ended December 31, 2023 and nine months ended September 30, 2024. See Note 5(j) for the transaction accounting adjustment presented within the unaudited pro forma condensed combined balance sheet as of September 30, 2024. |
The fair value of assets and liabilities of Marel above have been measured based on various preliminary estimates using assumptions that Company management believes are reasonable and are based on currently available information. For the preliminary estimate of fair values of assets acquired and liabilities assumed of Marel, the Company used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. Income-based, market-based, and/or cost-based valuation approaches using preliminary information were compared against benchmarking information to conclude upon a preliminary estimate of fair values. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon this preliminary estimate of fair values. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing this unaudited pro forma condensed combined financial information. The final determination of the purchase price allocation, will be based on Marel’s assets acquired and liabilities assumed as of the Closing Date and will depend on certain valuations and other studies that are not yet completed.
The Company expects to use widely accepted income-based, market-based and/or cost-based valuation approaches upon finalization of purchase accounting for the Transaction. Differences between these preliminary estimates and the final purchase accounting will occur, and the final purchase accounting could be materially different from the preliminary estimates used to prepare the unaudited pro forma condensed combined financial information and could have a material impact on the combined company’s future results of operations and financial position.
14
Note 5. Transaction Accounting Adjustments
The determination of transaction-related adjustments presented herein are preliminary and based in part on Company management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed. The adjustments have been prepared to illustrate the estimated effect of the Transaction. Amounts recognized following the consummation of the Transaction may differ significantly based upon finalization of the fair values of assets acquired and useful lives thereon for the purpose of periodic depreciation, amortization and other expenses recognized in those subsequent periods.
15
Unaudited Pro Forma Condensed Combined Balance Sheet
| (a) | Cash and cash equivalents |
The change in cash and cash equivalents was determined as follows:
| (in millions) | Amount | |||
| Cash consideration to Marel Shareholders |
$ | (964.8 | ) | |
| Estimated settlement of Marel debt (1) |
(871.9 | ) | ||
| Transaction costs (2) |
(79.6 | ) | ||
| Estimated settlement of Marel interest rate swaps (3) |
(4.1 | ) | ||
| Pro forma adjustment |
$ | (1,920.4 | ) | |
| (1) | Represents the gross settlement of Marel’s existing long-term debt of €842.2 million as of September 30, 2024, that was not assumed by the Company as of the Closing, using the EUR to USD exchange rate as of January 2, 2025 of 1.0353 $/€. See Note 6. |
| (2) | Transaction costs consist of bank fees, financial advisory fees, and other professional fees of the Company of (i) $18.2 million accrued but unpaid expenses as of September 30, 2024, and (ii) $61.4 million incurred and paid through the Closing. See Notes 5(j) and 5(l). No adjustment has been reflected in this unaudited pro forma combined financial information for $22.7 million of transaction costs that Marel incurred through the Closing. |
| (3) | Represents the estimated net cash settlement of Marel’s existing interest rate swaps that are contractually required to be terminated upon a full repayment of the hedged debt instruments. See Note 5(f). |
| (b) | Inventories, net |
Represents an adjustment to increase the carrying value of Marel’s inventories by approximately $35.0 million to adjust to its preliminary estimated fair value. This estimated step-up is preliminary and is subject to change based upon a final determination of the fair value of the inventories as of the Closing Date. This step-up will be expensed to cost of products as the acquired inventory is sold, which is expected to occur within 12 months of the Closing Date. See Note 5(i).
| (c) | Property, plant and equipment, net of accumulated depreciation |
Represents an adjustment to eliminate Marel’s historical property, plant and equipment and to reflect the acquired property, plant and equipment at the estimated fair value of $495.0 million. The fair value was estimated using a cost approach based on the net book value of each asset class adjusted for (i) the current market replacement cost and (ii) the physical and technology attributes of the property, plant and equipment.
The following table summarizes the estimated fair values and useful life by asset class:
| (in millions, except useful lives) | Preliminary fair value | Estimated Weighted Average Useful Life (in years) |
||||||
| Land and buildings |
$ | 354.0 | 24 | |||||
| Plant, equipment and IT hardware |
115.0 | 7 | ||||||
| Vehicles |
21.0 | 7 | ||||||
| Construction in progress |
5.0 | N/A | ||||||
|
|
|
|||||||
| Total acquired property, plant and equipment |
$ | 495.0 | ||||||
| Removal of Marel’s historical property, plant and equipment |
(371.4 | ) | ||||||
|
|
|
|||||||
| Pro forma net adjustment |
$ | 123.6 | ||||||
|
|
|
|||||||
| (d) | Intangible assets, net |
Represents adjustments to eliminate Marel’s historical intangible assets and capitalized software costs recorded and to reflect the acquired identifiable intangible assets consisting of customer relationship, patents and developed technology, and trademarks at the estimated aggregate fair value of $2,300.0 million. The fair value of the acquired customer relationship intangible asset is estimated based on a multi-period excess earnings method which calculates the present value of the estimated revenues and net cash flows derived from it. A relief-from-royalty method is used to estimate the fair values the acquired trademarks and patents and developed technology, whereby the asset value is determined by reference to the value of the hypothetical royalty payments that would be saved through owning the asset, as compared with licensing the intangible asset from a third party.
16
The following table summarizes the fair values of Marel’s identifiable intangible assets and their estimated useful lives operations:
| (in millions, except useful lives) | Preliminary fair value | Estimated Useful Life (in years) |
||||||
| Customer relationship |
$ | 1,600.0 | 20 | |||||
| Patents and acquired technology |
430.0 | 20 | ||||||
| Trademarks |
270.0 | 30 | ||||||
|
|
|
|||||||
| Total acquired intangible assets |
$ | 2,300.0 | ||||||
| Removal of Marel’s historical intangible assets |
(448.8 | ) | ||||||
|
|
|
|||||||
| Pro forma net adjustment |
$ | 1,851.2 | ||||||
|
|
|
|||||||
| (e) | Goodwill |
Goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. Refer to the table in Note 4 above for the calculation of the fair value of consideration transferred in excess of the preliminary fair value of assets acquired and liabilities assumed based on the preliminary allocation of the estimated purchase consideration to the identifiable tangible and intangible asset acquired and liabilities assumed of Marel.
| (in millions) | Preliminary fair value | |||
| Fair value of consideration transferred in excess of the preliminary fair value of assets acquired and liabilities assumed |
$ | 1,731.3 | ||
| Preliminary fair value of acquired noncontrolling interest |
85.9 | |||
| Removal of Marel’s historical goodwill |
(958.6 | ) | ||
|
|
|
|||
| Pro forma net adjustment |
$ | 858.6 | ||
|
|
|
|||
| (f) | Other assets |
Represents the derecognition of $23.6 million of historical capitalized software costs recorded by Marel. The value associated with these assets is instead included within the estimated fair value of patents and acquired technology, which is presented separately within intangible assets, net. See Note 5(d).
| (g) | Other current liabilities |
The change in other current liabilities was determined as follows:
| (in millions) | Pro forma net adjustment | |||
| Accrued Marel Transaction Bonus (1) |
$ | 2.6 | ||
| Settlement of accrued but unpaid transaction costs (2) |
(18.2 | ) | ||
|
|
|
|||
| Pro forma net adjustment |
$ | (15.6 | ) | |
|
|
|
|||
| (1) | Represents an accrual of the transaction bonus of $2.6 million that is expected to be paid to certain members of Marel’s executive management and other employees who are eligible to receive a cash bonus to be paid in a single lump sum at the Offer Closing Time (the “Transaction Bonus”). This accrual reflects additional compensation cost to be recorded in the post-acquisition financial statements of the combined company. See Note 5(l). |
| (2) | Represents the derecognition of $18.2 million of accrued but unpaid transaction costs as of September 30, 2024 that are expected for the purpose of this unaudited pro forma condensed combined financial information to be settled on the closing date of the Transaction. See Note 5(a). |
| (h) | Long-term debt |
Represents adjustment to long-term debt of $940.7 million to reflect the repayment and settlement of the Long-term debt of Marel consisting of the promissory notes issued by Marel (the “Promissory Notes”), revolving credit facility, and term loans, net of unamortized deferred financing costs, in connection with the closing of the Offer. See Note 6 for adjustments related to the Transaction Financing.
17
| (i) | Other liabilities |
Represents, in part, the derecognition of $4.1 million of derivative liabilities, which reflects the required contractual termination of certain interest rate swaps held by Marel in connection with the expected repayment of Marel’s existing long-term debt as discussed in Note 5(h).
Pro forma adjustments have also been made to reflect deferred taxes that are expected to arise as a result of the Transaction.
A pro forma adjustment to deferred taxes is recognized with other liabilities to reflect the anticipated income tax treatment of the Transaction resulting from pro forma fair value adjustments of the acquired assets and assumed liabilities based on an estimate of the applicable statutory tax rate of 25%. The income tax treatment determination is preliminary and subject to change depending on activities that have not occurred yet, including tax structuring, finalization of tax elections, and other studies based on which certain tax basis and deductions may or may not be available. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-Transaction activities, including cash needs, the geographical mix of income and changes in tax law and finalization of the purchase price allocations. Because the tax rates used for the unaudited pro forma condensed combined financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to consummation of the Transaction. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. The unaudited pro forma condensed combined financial information does not include adjustments for potential changes in the combined company’s ability to realize deferred tax assets.
| (in millions) | Preliminary fair value step-up | |||
| Inventory (see Note 5(b)) |
$ | 35.0 | ||
| Property, plant and equipment (see Note 5(c)) |
123.6 | |||
| Intangible assets (see Note 5(d)) |
1,851.2 | |||
|
|
|
|||
| Total pro forma fair value adjustment |
$ | 2,009.8 | ||
| Statutory tax rate |
25 | % | ||
|
|
|
|||
| Pro forma adjustment– deferred income taxes |
$ | 502.5 | ||
| Removal of Marel’s interest rate swap derivative liabilities |
(4.1 | ) | ||
|
|
|
|||
| Pro forma net adjustment |
$ | 498.4 | ||
|
|
|
|||
| (j) | Stockholders’ equity |
Represents adjustments to stockholders’ equity, which consist of the following:
| (in millions) | Common stock and additional paid-in capital |
Retained earnings |
Accumulated other comprehensive loss |
Noncontrolling interest |
||||||||||||
| Elimination of Marel’s historical equity |
$ | (498.2 | ) | $ | (715.4 | ) | $ | 53.9 | $ | — | ||||||
| IFRS to U.S. GAAP adjustments (see Note 3) |
83.8 | |||||||||||||||
| JBT shares issued to Marel shareholders |
2,436.3 | |||||||||||||||
| JBT transaction costs (1) |
(61.4 | ) | ||||||||||||||
| Estimated Marel Transaction Bonus (2) |
(2.6 | ) | ||||||||||||||
| Vesting of JBT Director Restricted Stock Unit Awards (3) |
0.1 | (0.1 | ) | |||||||||||||
| Recognition of noncontrolling interest for Marel shares not tendered (4) |
85.9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Pro forma adjustment |
$ | 1,938.2 | $ | (695.7 | ) | $ | 53.9 | $ | 85.9 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | Represents bank fees, financial advisory fees, and other professional fees and Transaction costs of the Company resulting in an adjustment to retained earnings. See Notes 5(a) and 5(l). |
18
| (2) | Represents accrual of the Transaction Bonus payable to certain members of Marel’s executive management team to be paid in a single lump sum following the closing of the Transaction and recorded by the Company as post-acquisition compensation cost. See Notes 5(g) and 5(l). |
| (3) | Represents the accelerated recognition of compensation cost associated with those certain director restricted stock unit awards of the Company (the “JBT Director Restricted Stock Unit Awards”) that automatically became fully vested upon the completion of the Transaction as the Transaction will be a “change in control” as defined in the JBT 2017 Incentive Compensation and Stock Plan. See Note 5(l) for additional information. |
| (4) | Represents the preliminary estimated fair value of the acquired non-controlling interest associated with Marel Shares not validly tendered on the Closing Date. |
Unaudited Pro Forma Condensed Combined Statement of Income
| (k) | Cost of products |
Represents adjustments to reflect additional pro forma expense associated with the preliminary estimate of the increase to the carrying value of Marel’s inventories to fair value in addition to the incremental depreciation expense and amortization expense from the fair value adjustments to property, plant and equipment and intangible assets, respectively.
| (in millions) |
For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Inventory fair value step-up recognized through Cost of products (1) |
$ | — | $ | 35.0 | ||||
| Pro forma intangible asset amortization (2) |
16.1 | 21.5 | ||||||
| Pro forma tangible asset depreciation (3) |
9.5 | 12.7 | ||||||
| Removal of Marel historical depreciation |
(11.8 | ) | (14.6 | ) | ||||
|
|
|
|
|
|||||
| Pro forma adjustment |
$ | 13.8 | $ | 54.6 | ||||
|
|
|
|
|
|||||
| (1) | These costs are nonrecurring in nature and not anticipated to affect the condensed combined statement of income beyond twelve months after the closing of the Transaction. |
| (2) | Represents straight-line amortization of the estimated fair value of the acquired intangible asset for developed technology over its estimated useful life. See Note 5(d). A 10% change in the fair value of the acquired developed technology would cause a corresponding increase or decrease in the pro forma intangible asset amortization of approximately $1.6 million and $2.2 million for the nine months ended September 30, 2024, and the year ended December 31, 2023, respectively. |
| (3) | Represents straight-line depreciation of the estimated fair value of the acquired property, plant and equipment over the estimated weighted average useful lives of those assets. See Note 5(c). Depreciation expense is allocated to cost of products and selling, general and administrative expense based upon the nature of the activities associated with the use of the acquired tangible assets. A 10% change in the fair value of the acquired tangible assets would cause a corresponding increase or decrease in the pro forma depreciation of approximately $0.9 million and $1.3 million recorded to Cost of products for the nine months ended September 30, 2024, and the year ended December 31, 2023, respectively. |
| (l) | Selling, general and administrative expense |
Represents the adjustments to selling, general and administrative expense (“SG&A”) associated with the preliminary estimate of the fair value of acquired property, plant and equipment and intangible assets, which are recurring in nature, as well as incremental pro forma expense for estimated transactions costs, transaction bonuses, and incremental compensation cost for the Company incurred in connection with the Transaction, which are nonrecurring in nature and will not affect the condensed combined statement of income beyond twelve months after the closing of the Transaction.
19
| (in millions) |
For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Transaction costs of the Company (1) |
$ | — | $ | 61.4 | ||||
| Estimated Marel Transaction Bonus (1) |
— | 2.6 | ||||||
| Vesting of Director Restricted Stock Unit Awards (1) |
— | 0.1 | ||||||
| Pro forma adjusted depreciation, net (see below) |
(3.3 | ) | (4.3 | ) | ||||
| Pro forma adjusted amortization, net (see below) |
38.3 | 49.9 | ||||||
|
|
|
|
|
|||||
| Pro forma adjustment |
$ | 35.0 | $ | 109.7 | ||||
|
|
|
|
|
|||||
| (1) | See footnote 5(j) for additional description of this transaction accounting adjustment. |
Depreciation of acquired property, plant and equipment
| (in millions) |
For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Pro forma tangible asset depreciation (1) |
$ | 8.7 | $ | 11.7 | ||||
| Removal of Marel historical depreciation |
(12.0 | ) | (16.0 | ) | ||||
|
|
|
|
|
|||||
| Pro forma net adjusted depreciation |
$ | (3.3 | ) | $ | (4.3 | ) | ||
|
|
|
|
|
|||||
| (1) | Represents straight-line depreciation of the estimated fair value of the acquired property, plant and equipment over the estimated weighted average useful lives of those assets. See Note 5(c). Depreciation expense is allocated to cost of products and selling, general and administrative expense based upon the nature of the activities associated with the use of the acquired tangible assets. A 10% change in the fair value of the acquired tangible assets would cause a corresponding increase or decrease in the pro forma depreciation of approximately $0.9 million and $1.2 million recorded to SG&A for the nine months ended September 30, 2024, and the year ended December 31, 2023, respectively. |
Pro forma tangible asset depreciation reflects the revised depreciation of property, plant and equipment assets arising from the Transaction and is based on management’s preliminary estimate of useful lives and future production. The Company has historically depreciated all asset classes of property, plant and equipment on a straight-line basis. The amount of depreciation expense recognized following the close of the Transaction may differ significantly between periods based upon the final fair value assigned and depreciation methodology used for each category of property, plant and equipment.
Amortization of acquired intangible assets
| (in millions) | For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Pro forma intangible asset amortization (1) |
$ | 66.8 | $ | 89.0 | ||||
| Removal of Marel historical amortization |
$ | (28.5 | ) | $ | (39.1 | ) | ||
|
|
|
|
|
|||||
| Pro forma net adjusted amortization |
$ | 38.3 | $ | 49.9 | ||||
|
|
|
|
|
|||||
| (1) | Represents straight-line amortization of the estimated fair value of the intangible assets for trade names and customer relationships over the estimated useful life of 30 years and 20 years, respectively. See Note 5(d). |
Pro forma intangible asset amortization reflects the revised amortization of intangible assets arising from the Transaction and is based on the Company’s management’s preliminary estimate of useful lives. The Company has historically amortized all asset classes of intangible assets on a straight-line basis. A 10% change in the valuation of the acquired trade name and customer relationship intangible assets would cause a corresponding increase or decrease in the pro forma amortization expense of approximately $6.7 million for the nine months ended September 30, 2024 and $8.9 million for the year ended December 31, 2023. The amount of amortization expense recognized following the close of the transaction may differ significantly between periods based upon the final fair value assigned, the final determination of useful lives and amortization methodology used for each intangible asset.
20
| (m) | Interest expense, net |
Represents a decrease in interest expense for the nine months ended September 30, 2024 and the year ended December 31, 2023 as a result of the repayment of Marel’s Promissory Notes, revolving credit facility and term loans. Refer to Note 6 below for an incremental adjustment made to interest expense to recognize the pro forma impact of the Transaction Financing.
21
Adjustments to interest expense for the nine months ended September 30, 2024, and the year ended December 31, 2023 are as follows:
| (in millions) | For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Removal of interest expense on repaid Marel borrowings |
$ | (45.6 | ) | $ | (53.8 | ) | ||
| Removal of unamortized deferred financing costs on repaid Marel borrowings |
(1.7 | ) | (1.9 | ) | ||||
|
|
|
|
|
|||||
| Removal of interest on terminated Marel interest rate swaps (1) |
2.7 | 4.0 | ||||||
|
|
|
|
|
|||||
| Pro forma net adjusted interest expense |
$ | (44.6 | ) | $ | (51.7 | ) | ||
|
|
|
|
|
|||||
| (1) | Represents an adjustment to reverse amounts Marel had recognized as interest income in connection with interest rate swaps used by Marel to apply cash flow hedge accounting treatment to forecasted payments of interest on Marel’s long-term debt. See Notes 5(f) and 5(i). |
| (n) | Income Taxes |
Represents an estimate of the income tax impacts of the Transaction on the statements of comprehensive income. The taxes associated with the estimated pro forma adjustments reflect an estimated statutory rate of 25% and a preliminary estimate of the deductibility of certain transaction-related costs. Although not reflected in the unaudited pro forma condensed combined financial information, the effective tax rate of the combined company could be different than the Company’s historical effective tax rate (either higher or lower) depending on various factors, including post-Transaction activities.
| (o) | Net earnings per share |
Unaudited pro forma earnings per share calculations are based on the consolidated pro forma weighted average shares outstanding of the Company. The pro forma weighted average shares outstanding are a combination of historical shares of the Company’s common stock, par value $0.01 per share (“Historical JBT Shares”) and shares of the Company issued as Transaction consideration. The number of shares used in computing diluted net loss per share for the combined company equals the number of shares used in computing basic net loss per shares, as the result would otherwise be antidilutive.
| (in millions, except per share data) | For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Pro forma net income |
$ | 20.0 | $ | (41.0 | ) | |||
| Historical JBT Shares used in computing pro forma earnings per share |
||||||||
| Basic |
32.0 | 32.0 | ||||||
| Diluted |
32.2 | 32.1 | ||||||
| JBT Marel shares issued in the Transaction |
19.5 | 19.5 | ||||||
| Pro forma shares used in computing pro forma earnings per share |
||||||||
| Basic |
51.5 | 51.5 | ||||||
| Diluted |
51.7 | 51.5 | ||||||
| Pro forma earnings per share |
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| Basic |
$ | 0.39 | $ | (0.80 | ) | |||
| Diluted |
$ | 0.39 | $ | (0.80 | ) | |||
Note 6. Transaction Financing Adjustments
The Company funded the cash portion of the Transaction through a combination of cash on hand and approximately $1,752.6 million of gross debt financing, consisting of borrowings of $900 million from the Term Loan B and borrowings of approximately $852.6 million under the New Revolving Credit Facility. Proceeds of the financing and cash on hand were used to (i) pay the cash consideration in the Offer, (ii) repay certain existing indebtedness of Marel and settle existing Marel interest rate swaps, and (iii) pay Transaction costs, which include bank fees, financial advisory fees and other professional fees. Substantially concurrently with entering into the Credit Agreement and the consummation of the Transaction, JBT Marel terminated the Bridge Credit Agreement in its entirety as permitted under its terms. In connection with the termination of the Bridge Credit Agreement, all accrued and unpaid fees thereunder were paid in full and all commitments thereunder were terminated. The Company incurred and paid fees of approximately $2.6 million in connection with the termination of the Bridge Credit Agreement.
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| a) | Represents an increase in cash and cash equivalents for additional gross borrowings of $1,752.6 million, net of $2.3 million in debt discounts, $12.4 million in deferred financing costs incurred in connection with the Term Loan B, $6.1 million in deferred financing costs incurred in connection with the New Revolving Credit Facility, and approximately $2.6 million in fees incurred in connection with the termination of the Bridge Credit Agreement. Long-term debt increased by approximately $1,728.9 million, reflecting the additional gross borrowings of $1,752.6 million net of $2.3 million in debt discounts and $12.4 million in deferred financing costs incurred in connect with the Term Loan B, which is presented as a reduction against gross proceeds. Further, for the unaudited pro forma condensed combined balance sheet as of September 30, 2024, $9.0 million of principal payments scheduled to become due on the Term Loan B within 12 months of the balance sheet date which is presented within other current liabilities. Long-term debt is not adjusted for deferred financing costs incurred in connection with the New Revolving Credit Facility, which are presented within other assets, as described in Note 6(b) below. |
| b) | Represents a net decrease in other assets for (i) the reversal of net deferred financing costs of $4.7 million capitalized as a deferred charge in the Company’s September 30, 2024 balance sheet in connection with the Bridge Credit Agreement that was terminated upon the closing of the Transaction and (ii) the reversal of deferred financing costs of approximately $1.6 million capitalized as a deferred charge in the Company’s September 30, 2024 balance sheet in connection with the Term Loan B, offset by (iii) the recognition of an additional $5.0 million of deferred financing costs incurred in connection with the New Revolving Credit Facility. For this unaudited pro forma condensed combined financial information, those certain deferred financing costs of $12.4 million allocated to the Term Loan B are instead shown as a reduction of the initial carrying amount of the long-term indebtedness associated with the Term Loan B. See Notes 6(a) and 6(c). |
| c) | Represents a net increase in other current liabilities for (i) $9.0 million of principal payments scheduled to become due on the Term Loan B within 12 months of the balance sheet date, offset by (ii) the removal of financing costs of $1.1 million accrued in the Company’s September 30, 2024 balance sheet paid off upon the Offer Closing Time and (iii) the reversal of deferred financing costs of approximately $1.6 million capitalized as a deferred charge in the Company’s September 30, 2024 balance sheet in connection with the Term Loan B. For this unaudited pro forma condensed combined financial information, the deferred financing costs related to the Term Loan B have been reversed and are instead shown as a reduction of the initial carrying amount of the long-term indebtedness associated with the Term Loan B. See Notes 6(a) and 6(b). |
| d) | Represents an increase in interest expense related to the incremental borrowings. In determining pro forma interest expense, the Company applied an estimated interest rate of 6.77% per annum on proceeds of $900 million from the Term Loan B, derived from the one-month SOFR as of January 2, 2025, plus a margin of 2.25% per annum. For borrowings under the New Revolving Credit Facility, the Company applied an estimated interest rate of 6.47% per annum, derived from the one-month SOFR as of January 2, 2025, plus a margin of 1.95%. These assumptions and expectations are subject to change and could vary significantly from what is assumed in the unaudited pro forma condensed combined financial information. A hypothetical 1/8 percentage point increase/decrease in the weighted average interest rate would result in an increase/decrease of approximately $1.6 million in pro forma interest expense for the nine months ended September 30, 2024 and $2.2 million in pro forma interest expense for the year ended December 31, 2023. |
| (in millions) | For the nine months ended September 30, 2024 |
For the year ended December 31, 2023 |
||||||
| Estimated interest expense - Transaction Financing |
$ | 87.2 | $ | 116.5 | ||||
| Transaction Financing facility fees (1) |
2.6 | 2.5 | ||||||
| Amortization of debt discounts and deferred financing costs - Transaction Financing (2) |
2.3 | 2.9 | ||||||
| Bridge Credit Agreement termination fees and write-off of unamortized deferred financing costs in connection with the Bridge Credit Agreement (3) |
— | 7.3 | ||||||
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| Pro forma adjustment |
$ | 92.1 | $ | 129.2 | ||||
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| (1) | Represents incremental revolving facility fees stipulated by the Credit Agreement calculated as 0.30% on the aggregate revolving credit commitment amount of $1.8 billion available under the New Revolving Credit Facility, payable quarterly in arrears after the Offer Closing Time, in excess of revolving facility fees incurred under the Existing Revolving Credit Facility of $1.5 million and $2.9 million for the nine months ended September 30, 2024, and the year ended December 31, 2023, respectively. |
| (2) | Assumes $2.3 million in debt discounts and $12.4 million in deferred financing costs associated with the 7-year Term Loan B and $6.1 million in deferred financing costs associated with the 5-year New Revolving Credit Facility were recognized on January 1, 2023. Because the borrowing capacity of the New Revolving Credit Facility exceeds that of the Existing Revolving Credit Facility, it is further assumed that approximately $10.8 million of unamortized deferred financing costs capitalized by the Company as deferred charges in connection with the Existing Revolving Credit Facility will be amortized over the commitment term of the New Revolving Credit Facility. |
| (3) | Represents an adjustment to write-off unamortized deferred financing costs of $4.7 million capitalized as deferred charges in JBT’s September 30, 2024 balance sheet, and $2.6 million in fees incurred in connection with the termination of the Bridge Credit Agreement upon the Offer Closing Time. |
| e) | Income tax effects on the financing adjustments were calculated based on the U.S. federal statutory rate of 25%. |
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