Blount enters into agreement to be acquired by American Securities and P2 Capital Partners

Blount International, Inc. announced Dec. 10, 2015, that it has entered into a definitive agreement to be acquired by affiliates of American Securities LLC (“American Securities”) and P2 Capital Partners, LLC (“P2 Capital Partners”) in an all-cash transaction valued at approximately $855 million, including the assumption of debt. Blount is a global manufacturer and marketer of replacement parts, equipment and accessories for consumers and professionals operating in three market segments: Forestry, Lawn, and Garden (“FLAG”); Farm, Ranch, and Agriculture (“FRAG”); and Concrete Cutting and Finishing (“CCF”).

Under the terms of the proposed transaction, Blount shareholders will receive $10 in cash for each share of Blount common stock they hold. This represents a premium of 86 percent to the company’s closing stock price on Dec. 9, 2015, the last trading day before the announcement of the proposed transaction. The independent members of Blount’s board of directors unanimously approved the proposed transaction based upon the unanimous recommendation of a Special Committee, which was comprised of independent directors and advised by its own financial and legal advisors. The Special Committee and the independent members of the board each recommended that the company’s shareholders adopt the merger agreement.

The merger agreement includes a 50-day “go-shop” period, which runs through Jan. 28, 2016, and is designed to maximize value for Blount shareholders. During this period, the Special Committee, with the assistance of its and the company’s financial and legal advisors, will actively solicit alternative proposals to acquire Blount. There can be no assurances that this process will result in a superior proposal. Blount and the Special Committee do not intend to disclose developments with respect to the solicitation process until the Special Committee and the Board have made a decision.

“The proposed transaction will deliver immediate value to Blount’s shareholders, and we expect it will also provide us with additional flexibility to execute our strategic plan as we continue to navigate the macroeconomic challenges facing our industry,” said Josh Collins, Blount’s chairman and CEO. “American Securities and P2 Capital Partners each have excellent track records of investing in outstanding businesses for the long term.”

“Blount is a strong fit for our strategy of partnering with market-leading companies,” said Loren Easton, managing director at American Securities. “We are excited about working with Blount’s management team to expand the company’s position in its core FLAG and FRAG markets, and plan to leverage our expertise investing in the industrial manufacturing sector to accelerate Blount’s long-term growth.”

“This transaction will enable us to partner with Blount’s proven management team and talented employees to help drive the next wave of product innovation and leadership that has defined Blount for nearly 70 years,” said Josh Paulson, partner at P2 Capital Partners. “We are committed long-term investors, having been a Blount shareholder for several years, and look forward to working closely with Blount as a private company to help it take full advantage of the opportunities that lie ahead.”

Blount expects to maintain its corporate headquarters in Portland, Ore., and its existing global distribution and sales footprints.

In addition to equity funds managed by American Securities and P2 Capital Partners, it is anticipated that Josh Collins, chairman and CEO of Blount, and David Willmott, president and COO of Blount, will invest all of their net proceeds from the transaction in Blount. Blount, American Securities and P2 Capital Partners have also secured committed debt financing from Barclays Bank and KeyBanc Capital Markets.

The proposed transaction is expected to close in the first half of 2016, subject to the approval by Blount’s shareholders and regulatory authorities, the satisfaction or waiver of customary closing conditions and Blount’s ability to terminate the merger agreement to accept a superior proposal.

P2 Capital Partners and certain of its affiliates, which collectively own approximately 14.9 percent of Blount’s outstanding shares, have entered into an agreement with the company to vote their shares in accordance with the recommendation of the company’s board of directors with respect to the proposed transaction. If the company accepts a superior proposal, P2 Capital Partners has agreed to vote all of its shares in favor of an all-cash superior proposal and to vote its shares for or against other superior proposals in the same proportion as the company’s shareholders, excluding American Securities, P2 Capital Partners, members of the company’s management or board of directors, or any of their respective affiliates.

The merger agreement provides that Blount will pay a termination fee of approximately $7.3 million if the merger agreement is terminated in connection with a superior proposal that arose during the “go-shop” period and a termination fee of approximately $14.7 million if the merger agreement is terminated in connection with a superior proposal that arose following the “go-shop” period.

Goldman, Sachs & Co. is acting as financial advisor to Blount and Cravath, Swaine & Moore LLP is acting as its legal advisor. Greenhill & Co. is acting as financial advisor to the Special Committee, and Davis Polk & Wardwell LLP is acting as its legal advisor. Debevoise & Plimpton LLP is acting as legal advisor to American Securities and P2 Capital Partners.

Blount will file a current report on Form 8-K with the U.S. Securities and Exchange Commission (“SEC”) containing a summary of terms and conditions of the proposed transaction.


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