Performance Food Group Co 8-K, filed Sep 1, 2021
Performance Food Group Co (PFGC)
About this 8-K
Performance Food Group Co filed this 8-K on September 1, 2021.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.01. Completion of Acquisition or Disposition of Assets.
On September 1, 2021 (the “Closing Date”), Performance Food Group Company, a Delaware corporation (the “Company”), completed the previously announced acquisition of Core-Mark Holding Company, Inc., a Delaware corporation (“Core-Mark”), pursuant to the Agreement and Plan of Merger, dated as of May 17, 2021 (the “Merger Agreement”), by and among the Company, Longhorn Merger Sub I, Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub I”), Longhorn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Company (“Merger Sub II”), and Core-Mark. Pursuant to the Merger Agreement, on the Closing Date, Merger Sub I merged with and into Core-Mark (the “First Merger”), with Core-Mark continuing as the surviving corporation of the First Merger and a direct, wholly owned subsidiary of the Company (the “Surviving Corporation”). After the effective time of the First Merger (the “Effective Time”), the Surviving Corporation merged with and into Merger Sub II (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub II continuing as the surviving entity of the Second Merger and a direct, wholly owned subsidiary of the Company. As a result of the Mergers, Core-Mark became a wholly owned subsidiary of the Company on the Closing Date.
Pursuant to the Merger Agreement and by virtue of the First Merger, at the Effective Time, each share of common stock, par value $0.01 per share, of Core-Mark (the “Core-Mark Common Stock”) issued and outstanding immediately prior to the Effective Time (other than any shares of Core-Mark Common Stock owned, directly or indirectly, by the Company, Core-Mark (including as treasury stock or otherwise), Merger Sub I, Merger Sub II, and any shares of Core-Mark Common Stock as to which appraisal rights have been properly exercised) was automatically canceled and converted into the right to receive (i) 0.44 (such ratio, the “Exchange Ratio”) validly issued, fully paid and nonassessable shares of the common stock, par value $0.01 per share, of the Company (“Company Common Stock”) and (ii) $23.875 in cash, without interest (the “Per-Share Cash Amount” and, collectively, the “Merger Consideration”).
At the Effective Time, each outstanding time-based restricted stock unit of Core-Mark (each, an “RSU”) held by a non-employee director, whether vested or unvested, was cancelled and converted into the right to receive the Merger Consideration. Additionally, at the Effective Time, each other outstanding RSU, whether vested or unvested, was converted into a restricted stock unit relating to a number of shares of Company Common Stock equal to the number of shares of Core-Mark Common Stock subject to the RSU multiplied by the sum of (i) the Exchange Ratio, plus (ii) the quotient of the Per-Share Cash Amount divided by the volume weighted average sale price of Company Common Stock for the ten (10) full consecutive trading days ending on and including the business day prior to the Effective Time (the “Stock Award Exchange Ratio”) and otherwise subject to the same terms and conditions (including the vesting schedule and termination-related vesting provisions) applicable immediately prior to the Effective Time.
At the Effective Time, each outstanding performance-based restricted stock unit of Core-Mark (each, a “PSU”), whether vested or unvested, was converted into a corresponding time-based restricted stock unit subject to the same terms and conditions (including with respect to termination-related vesting provisions applicable immediately prior the Effective Time, provided that the performance-based vesting conditions no longer apply), and relating to a number of shares of Company Common Stock equal to the product of (i) for PSUs granted during the 2021 calendar year, (A) the number of shares of Core-Mark Common Stock subject to such PSU immediately prior to the Effective Time that would have vested based on the achievement of the greater of (1) the applicable performance at the target level and (2) the actual level of performance as of the Closing Date, based on the achievement of the applicable performance metrics applied on a pro rata basis with respect to the applicable performance period as determined in good faith by Core-Mark’s board of directors, multiplied by (B) the Stock Award Exchange Ratio, and (ii) for PSUs granted prior to the 2021 calendar year, (A) the number of shares of Core-Mark Common Stock subject to such PSU immediately prior to the Effective Time based on the achievement of the applicable performance metrics at the actual level of performance and as determined in good faith and consistent with past practice by Core-Mark’s board of directors, multiplied by (B) the Stock Award Exchange Ratio, and in each case of the foregoing clauses (i) and (ii), with any fractional shares rounded to the nearest whole share.
The foregoing description of the Merger Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference in this Item 2.01.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On the Closing Date, the Board of Directors (the “Board”) of the Company appointed Laura Flanagan to the Board, effective immediately. The Board has determined that Ms. Flanagan qualifies as an independent director under the corporate governance standards of the New York Stock Exchange, the Company’s Corporate Governance Guidelines and the applicable rules of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Laura Flanagan, 53, is currently the Chief Executive Officer of Ripple Foods and serves on the board of Callaway Golf. She served as Chief Executive Officer of Foster Farms, the West Coast leader in branded and private label poultry, headquartered in Livingston, California, from 2016 to February 2019. She was previously the President of the Snacks Division of ConAgra Foods, Inc., a packaged foods company headquartered in Omaha, Nebraska, from 2011 until 2014, and served as President of ConAgra’s Convenient Meals Division from 2008 until 2011. Prior to joining ConAgra in 2008, Ms. Flanagan was Vice President and Chief Marketing Officer for Tropicana® Shelf Stable Juices at PepsiCo Inc. from 2005 to 2008. Ms. Flanagan also held various marketing leadership positions at General Mills, Inc. and PepsiCo Inc. from 1996 to 2005.
The compensation of Ms. Flanagan for her service as a non-employee director will be consistent with that of the Company’s other non-employee directors. The cash portion of her compensation will be prorated from the date of her appointment.
Other than the standard compensation arrangement described above, there is no arrangement or understanding between Ms. Flanagan and any other person pursuant to which she was selected as a director. Ms. Flanagan does not have any direct or indirect material interest in any transaction in which the Company is a participant that is required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 7.01. Regulation FD Disclosure.
On the Closing Date, the Company issued two press releases in connection with the completion of the Mergers. Copies of the Company’s press releases are furnished as Exhibit 99.1 hereto and Exhibit 99.2 hereto and incorporated by reference in this Item 7.01. The information in this Item 7.01, including Exhibit 99.1 hereto and Exhibit 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 2.1 | Agreement and Plan of Merger, dated as of May 17, 2021, by and among Performance Food Group Company, Longhorn Merger Sub I, Inc., Longhorn Merger Sub II, LLC and Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 2.1 to Performance Food Group Company’s Current Report on Form 8-K dated May 18, 2021).* | |
| 99.1 | Press Release of Performance Food Group Company, dated September 1, 2021. | |
| 99.2 | Press Release of Performance Food Group Company, dated September 1, 2021. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
| * | Schedules (as similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request. |
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.
| PERFORMANCE FOOD GROUP COMPANY | ||||||
| Dated: September 1, 2021 | By: | /s/ A. Brent King | ||||
| Name: A. Brent King | ||||||
| Title: Senior Vice President, General Counsel and Secretary | ||||||
Exhibit 99.1
| NEWS RELEASE | ||||
| For Immediate Release | Investors: | Media: | ||
| September 1, 2021 | Bill Marshall | Trisha Meade | ||
| Vice President, Investor Relations | Director, Communications & Engagement | |||
| (804) 287-8108 | (804) 285-5390 | |||
| bill.marshall@pfgc.com | mediarelations@pfgc.com | |||
Performance Food Group Company Completes the Acquisition of Core-Mark
RICHMOND, Va. – Performance Food Group Company (PFG) (NYSE: PFGC) announced today that it has completed the acquisition of Core-Mark Holding Company, Inc. (Core-Mark). The transaction creates a best-in-class convenience business within PFG’s Vistar segment that includes the Core-Mark and Eby-Brown businesses. The expanded convenience business will continue to operate under Core-Mark and will be headquartered in Westlake, Texas with Eby maintaining ongoing operations in Naperville, Illinois. Scott McPherson will continue in his role as President and Chief Executive Officer of Core-Mark, and Tom Wake will continue as President and Chief Executive Officer of Eby-Brown, reporting to Mr. McPherson.
“We are very pleased to close this acquisition and welcome Core-Mark’s many talented associates to PFG,” said George Holm, PFG Chairman, President & CEO. “Core-Mark has proven itself to be a leader in convenience distribution and we are thrilled to add their leadership strength to the strong senior talent already driving PFG’s success in the foodservice and convenience distribution industries. We are excited to begin the integration process and start to service Core-Mark’s customers with the combined suite of brands. By adding PFG’s food and foodservice capabilities to Core-Mark’s solid platform, we expect to quickly begin to unlock the transaction value.”
The addition of Core-Mark brings one of the largest wholesale distributors to the convenience retail industry in North America into PFG’s family of companies, with approximately $17 billion in net sales. The company has approximately 8,000 employees and operates 32 distribution centers across the United States and Canada. Core-Mark services approximately 41,000 customer locations in all 50 U.S. states and five Canadian provinces.
PFG also announced that it has appointed Laura Flanagan to serve as an independent director on its Board of Directors, effective today. Ms. Flanagan, 53, has served as a Director of Core-Mark since June 2016. This appointment expands PFG’s Board to 12 directors.
Compelling Strategic and Financial Benefits
| • | Accelerates PFG’s diversification and adds highly complementary assets in the convenience store channel: Expands PFG’s geographic reach and market diversification into the growing convenience store channel. |
| • | Adds complementary customer-centric operating model: Core-Mark brings a consistent go-to-market approach with a selling culture focused on customer success. |
| • | Enhances attractive customer base and product offerings: The transaction builds upon PFG’s current foodservice focus within the convenience channel adding additional customers and product offerings, particularly in the fresh food space. |
| • | Strong strategic and financial merits: The transaction is expected to be accretive to Adjusted Diluted EPS in the first full fiscal year following the close. The accretion calculation does not include any of the expected cost synergies. |
| • | Annual run-rate net cost synergies of approximately $40 million expected to be achieved by the third full year after closing. |
About Performance Food Group Company
Built on the many proud histories of our family of companies, Performance Food Group is a customer-centric foodservice distribution leader headquartered in Richmond, Virginia. Grounded by roots that date back to a grocery peddler in 1885, PFG today has a nationwide network of over 100 distribution facilities, thousands of talented associates, and valued suppliers across the country. With the goal of helping our customers thrive, we market and deliver quality food and related products to over 250,000 locations including independent and chain restaurants, schools, business and industry locations, healthcare facilities, vending distributors, office coffee service distributors, big box retailers, theaters, and convenience stores. Building strong relationships is core to PFG’s success – from connecting associates with great career opportunities to connecting valued suppliers and quality products with PFG’s broad and diverse customer base. To learn more about PFG, visit pfgc.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, our proposed acquisition of Core-Mark (the “Proposed Core-Mark Acquisition”) and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.
Such forward-looking statements are subject to various risks and uncertainties. The following factors, in addition to those discussed under the section entitled Item 1A. Risk Factors in the PFG’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021 filed with the Securities and Exchange Commission (the “SEC”) on August 24, 2021, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, could cause actual future results to differ materially from those expressed in any forward-looking statements:
| • | the material adverse impact the novel coronavirus (“COVID-19”) pandemic has had and is expected to continue to have on the global markets, the restaurant industry, and our business specifically, including the effects on vehicle miles driven, on the financial health of our business partners, on supply chains, and on financial and capital markets; |
| • | competition in our industry is intense, and we may not be able to compete successfully; |
| • | we operate in a low margin industry, which could increase the volatility of our results of operations; |
| • | we may not realize anticipated benefits from our operating cost reduction and productivity improvement efforts; |
| • | our profitability is directly affected by cost inflation and deflation and other factors; |
| • | we do not have long-term contracts with certain of our customers; |
| • | group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of these organizations; |
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| • | changes in eating habits of consumers; |
| • | extreme weather conditions including earthquake and natural disaster damage; |
| • | our reliance on third-party suppliers; |
| • | labor relations and cost risks and availability of qualified labor; |
| • | volatility of fuel and other transportation costs; |
| • | inability to adjust cost structure where one or more of our competitors successfully implement lower costs; |
| • | we may be unable to increase our sales in the highest margin portion of our business; |
| • | changes in pricing practices of our suppliers; |
| • | our growth strategy may not achieve the anticipated results; |
| • | risks relating to acquisitions, including the risk that we are not able to realize benefits of acquisitions or successfully integrate the businesses we acquire; |
| • | environmental, health, and safety costs; |
| • | the risk that we fail to comply with requirements imposed by applicable law or government regulations or substantial changes to governmental regulations, including increased regulation of electronic cigarette and other alternative nicotine products; |
| • | a portion of our sales volume is dependent upon the distribution of cigarettes and other tobacco products, sales of which are generally declining; |
| • | if products we distribute are alleged to cause injury or illness or fail to comply with governmental regulations, we may need to recall our products and may experience product liability claims; |
| • | our reliance on technology and risks associated with disruption or delay in implementation of new technology; |
| • | costs and risks associated with a potential cybersecurity incident or other technology disruption; |
| • | product liability claims relating to the products we distribute and other litigation; |
| • | adverse judgements or settlements or unexpected outcomes in legal proceedings; |
| • | negative media exposure and other events that damage our reputation; |
| • | decrease in earnings from amortization charges associated with acquisitions; |
| • | impact of uncollectibility of accounts receivable; |
| • | difficult economic conditions affecting consumer confidence; |
| • | risks relating to federal, state, and local tax rules and changes to federal, state, or local tax regulations; |
| • | increases in excise taxes or reduction in credit terms by taxing jurisdictions; |
| • | the cost and adequacy of insurance coverage and increases in the number or severity of insurance and claims expenses; |
| • | risks relating to our outstanding indebtedness; |
| • | our ability to raise additional capital; and |
| • | the following risks related to the Proposed Core-Mark Acquisition: |
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| • | the risk that, after the closing of the Proposed Core-Mark Acquisition, U.S antitrust authorities could continue to investigate the Proposed Core-Mark Acquisition and challenge the Proposed Core-Mark Acquisition; |
| • | uncertainty as to the expected performance of the combined company following completion of the Proposed Core-Mark Acquisition; |
| • | the possibility that the expected synergies and value creation from the Proposed Core-Mark Acquisition will not be realized or will not be realized within the expected time period; |
| • | the risk that unexpected costs will be incurred in connection with the completion and/or integration of the Proposed Core-Mark Acquisition or that the integration of Core-Mark will be more difficult or time consuming than expected; |
| • | a downgrade of the credit rating of our indebtedness, which could give rise to an obligation to redeem existing indebtedness; |
| • | potential litigation in connection with the Proposed Core-Mark Acquisition which may result in significant costs of defense, indemnification, and liability; |
| • | the inability to retain key personnel; |
| • | disruption from the announcement, pendency and/or completion of the Proposed Core-Mark Acquisition, including potential adverse reactions or changes to business relationships with customers, employees, suppliers, or regulators, making it more difficult to maintain business and operational relationships; and |
| • | the risk that, following the Proposed Core-Mark Acquisition, the combined company may not be able to effectively manage its expanded operations. |
Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. Any forward-looking statement, including any contained herein, speaks only as of the time of this release or as of the date they were made and we do not undertake to update or revise them as more information becomes available or to disclose any facts, events, or circumstances after the date of this release or our statement, as applicable, that may affect the accuracy of any forward-looking statement, except as required by law.
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Exhibit 99.2
| NEWS RELEASE | ||||
| For Immediate Release September 1, 2021 |
Investors: Bill Marshall VP, Investor Relations (804) 287-8108 Bill.Marshall@pfgc.com |
Media: Trisha Meade Director, Communications & Engagement | ||
Performance Food Group Company Appoints Laura Flanagan to Board of Directors
RICHMOND, Va. – Performance Food Group Company (PFG) (NYSE: PFGC) announced that it has appointed Laura Flanagan to serve as an independent director on its Board of Directors, effective today. This appointment expands PFG’s Board to 12 directors. Ms. Flanagan, 53, has served as a Director of Core-Mark Holding Company, Inc. (Core-Mark) since June 2016. PFG acquired Core-Mark effective today.
Ms. Flanagan currently serves as the CEO of Ripple Foods, a leader in branded plant-based foods and beverages. She brings a wealth of knowledge and experience through her many food-industry leadership roles, which include serving as Chief Executive Officer of Foster Farms, the West Coast leader in branded and private label poultry, until February 2019. She was previously President of the Snacks Division of ConAgra Foods, Inc. for three years, after serving as President of ConAgra’s Convenient Meals Division for three years. Prior to that, Ms. Flanagan was Vice President and Chief Marketing Officer for Tropicana Shelf Stable Juices at PepsiCo Inc. and held various marketing leadership positions at General Mills, Inc. and PepsiCo Inc. for nearly a decade.
“I am excited to welcome Laura to our Board of Directors,” said George Holm, PFG Chairman, President & Chief Executive Officer. “Her tremendous experience in the food industry and her deep marketing knowledge will be a great complement to the strong capabilities and deep business and industry experience we have on our Board. We look forward to the valuable perspectives and insights Laura will bring as we continue to execute on PFG’s strategic plan.”
In addition to her Board service with Core-Mark, Ms. Flanagan has served on the Board of Directors of Callaway Golf Company since 2018.
Ms. Flanagan earned a bachelor’s in Systems & Control Engineering from Case Western Reserve University and a Master’s in Business Administration from Stanford Graduate School of Business.
About Performance Food Group Company
Built on the many proud histories of our family of companies, Performance Food Group is a customer-centric foodservice distribution leader headquartered in Richmond, Virginia. Grounded by roots that date back to a grocery peddler in 1885, PFG today has a nationwide network of over 100 distribution facilities, thousands of talented associates, and valued suppliers across the country. With the goal of helping our customers thrive, we market and deliver quality food and related products to over 250,000 locations including independent and chain restaurants, schools, business and industry locations, healthcare facilities, vending distributors, office coffee service distributors, big box retailers, theaters, and convenience stores. Building strong relationships is core to PFG’s success – from connecting associates with great career opportunities to connecting valued suppliers and quality products with PFG’s broad and diverse customer base. To learn more about PFG, visit pfgc.com.