Proposed Merger and Subsequent Event

On October 23, 2012, PolyOne Merger Sub, Merger LLC, and Spartech entered into a Merger Agreement pursuant to which Spartech will be merged with and into Merger Sub, with Spartech to be the surviving corporation in the Merger and a wholly owned subsidiary of PolyOne.

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of Spartech common stock will be canceled and converted into the right to receive consideration equal to $2.67 in cash and 0.3167 PolyOne common shares. In the aggregate, PolyOne will issue approximately 9.9 million of its common shares and pay $83,368,435 in cash to Spartech shareholders. Spartech is required to conduct its business in the ordinary course of business and within certain defined restrictions between the date of signing the agreement to the closing date. Spartech is required to manage within these restrictions or obtain consent in writing from PolyOne to conduct certain activities.

At a special meeting of stockholders of Spartech Corporation on March 12, 2013, the stockholders voted to approve the merger agreement between Spartech and PolyOne Corporation. Pursuant to the merger, stockholders will receive, in exchange for each share of Spartech common stock, (1) $2.67 in cash, without interest, and (2) 0.3167 of a PolyOne common share. Based on the closing price of PolyOne's common stock on March 11, 2013, in exchange for each share of Spartech common stockholders will receive approximately $10.25, comprised of: (1) $2.67 per share in cash; and (2) 0.3167 of a PolyOne common share, having a value of approximately $7.58. The merger will be effective on March 13, 2013. PolyOne Corporation, with 2012 revenues of $3 billion, is a premier provider of specialized polymer materials, services and solutions dedicated to serving customers in diverse industries around the globe, by creating value through collaboration, innovation and an unwavering commitment to excellence. PolyOne is committed to its customers, employees, communities and shareholders through ethical, sustainable and fiscally responsible principles.

In conjunction with the definitive merger agreement, the Company has incurred various costs triggered by and directly related to the merger transaction. In the first quarter of 2013, Spartech recognized merger and transaction costs as follows:



	2013			Cumulative To-Date
Merger and Transaction Costs:
Stock compensation expense from accelerated vesting	$	—		$	4,865
Legal and financial advisor fees	1,357			3,245
Other merger and transaction costs	703			851
Total merger and transaction costs	2,060			8,961
Income tax benefit	(783		)	(3,198		)
Impact on net earnings	$	1,277		$	5,763

Effective on the closing date of the merger, an amount related to the make-whole on the Company's Senior Notes of $10.3 million will be paid in conjunction with the transaction along with $4.2 million to the Company's financial advisors.