HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

3 Months Ended

Apr. 03, 2021

Business Combinations [Abstract]

HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

Assets Held for Sale

The balances that were classified as Assets Held for Sale as of April 3, 2021 and January 2, 2021 were $8.0 million and $9.1 million, respectively.

Acquisition Pending

On February 15, 2021, the Company entered into definitive agreements with Rexnord Corporation (“Rexnord”), Land Newco, Inc., a wholly owned indirect subsidiary of Rexnord (“Land”), and Phoenix 2021, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), with respect to a Reverse Morris Trust transaction (the “Rexnord Transaction”) pursuant to which, and subject to the terms and conditions of those definitive agreements discussed below, (1) Rexnord will transfer (or cause to be transferred) to Land substantially all of the assets, and Land will assume substantially all of the liabilities, of Rexnord’s Process & Motion Control business (“PMC Business”) (the “Reorganization”), (2) after which, all of the issued and outstanding shares of common stock, $0.01 par value per share, of Land (“Land common stock”) held by a subsidiary of Rexnord will be distributed in a series of distributions to Rexnord’s stockholders (the distributions, and the final distribution of Land common stock from Rexnord to Rexnord’s stockholders, which is to be made pro rata for no consideration, the “Spin-Off”) and (3) immediately after the Spin-Off, Merger Sub will merge with and into Land (the “Merger”) and all shares of Land common stock (other than those held by Rexnord, Land, the Company, Merger Sub or their respective subsidiaries) will be converted into the right to receive shares of our common stock, $0.01 par value per share (“Company common stock”), as calculated and subject to adjustment as set forth in the Merger Agreement (as defined below). When the Merger is completed, Land (which at that time will hold the PMC Business) will be a wholly owned subsidiary of the Company.

The definitive agreements the Company entered into in connection with the Rexnord Transaction include an Agreement and Plan of Merger, by and among Rexnord, Land, Merger Sub and the Company (the “Merger Agreement”), a Separation and Distribution Agreement, by and among Rexnord, Land and the Company and certain ancillary agreements.

In connection with the Rexnord Transaction, the Merger Agreement provides that the Company shall, to the extent required by the Merger Agreement, in certain circumstances in which additional shares of Company common stock are issued at closing to holders of Land common stock, declare a special dividend to the Company's stockholders immediately prior to the consummation of the Merger (the “Company Special Dividend”). The existence and magnitude of the dividend will depend on whether and to what extent the Company is able to count certain overlapping shareholders of the Company and Rexnord in satisfying the tax requirements applicable to a Reverse Morris Trust transaction. In the event that the Company Special Dividend is required to be paid, it could range in amount between zero and approximately $2.0 billion.

In connection with the Rexnord Transaction, the Company has entered into certain financing arrangements, which are described in Note 7.

Closing of the Rexnord Transaction is subject to various closing conditions, including the receipt of the approval of the Company's and Rexnord's shareholders, the receipt of regulatory approvals and other customary closing conditions.

The Rexnord Transaction is described more fully in the Company's Current Report on Form 8-K filed with the SEC on February 19, 2021, and this description is qualified in its entirety by the description set forth in that report.