Merger Agreement

9 Months Ended

Oct. 31, 2020

Business Combinations [Abstract]

Merger Agreement

MERGER AGREEMENT

On October 28, 2020, the Registrant entered into an Amended and Restated Agreement and Plan of Merger (the "Merger Agreement") by and among the Registrant, LVMH Moët Hennessy - Louis Vuitton SE, a societas Europaea (European company) organized under the laws of France ("Parent"), Breakfast Holdings Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Holding"), and Breakfast Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary of Holding ("Merger Sub"). The Merger Agreement amends and restates the Agreement and Plan of Merger, dated as of November 24, 2019 (the "Original Merger Agreement"), by and among the Registrant, Parent, Holding and Merger Sub, in its entirety, on the terms and subject to the conditions set forth therein. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Registrant (the "Merger"), with the Registrant continuing as the surviving company in the Merger and a wholly owned indirect subsidiary of Parent.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of common stock, $0.01 par value, of the Registrant ("Common Stock") issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock owned by the Registrant, Parent or any of their respective wholly owned subsidiaries, and shares of Common Stock owned by stockholders of the Registrant who have properly demanded and not withdrawn a demand for appraisal rights under Delaware law) will be converted into the right to receive $131.50 in cash, without interest and less any required tax withholding.

The consummation of the pending Merger, which cannot take place prior to January 7, 2021, is subject to various conditions, including, among others, customary conditions relating to (i) the adoption of the Merger Agreement by holders of a majority of the outstanding shares of the Registrant's Common Stock entitled to vote on such matter (the "Stockholders Approval") at the meeting of stockholders of the Registrant (the "Stockholders Meeting") held to vote on the adoption of the Merger Agreement (or any postponement or adjournment thereof), (ii) the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, and all rules and regulations promulgated thereunder, collectively, the "HSR Act") and (iii) the maintenance or receipt of certain non-U.S. regulatory clearances or waivers, it being understood among the parties that the existing regulatory clearances and waivers obtained for the Merger pursuant to the Original Merger Agreement will be deemed to satisfy the condition to the extent still in effect at the time the Merger is consummated. All regulatory authorizations, consents, orders, approvals or waivers required for the Merger under the Merger Agreement have been obtained. Pursuant to the Original Merger Agreement, as previously announced: on January 3, 2020, Parent and the Registrant filed notification of the pending Merger with the Federal Trade Commission and the United States Department of Justice under the HSR Act; on February 3, 2020, the waiting period under the HSR Act in connection with the pending Merger expired; on March 26, 2020, the Committee on Foreign Investment in the United States cleared the pending Merger, informing the Registrant that its review of the pending Merger had concluded and it determined that there are no unresolved national security concerns with respect to the pending Merger; on March 30, 2020, the Australian Competition and Consumer Commission issued a no-action letter clearing the transaction; on April 7, 2020, the parties received a no-action letter from the Canadian Competition Bureau indicating that it does not intend to challenge the pending Merger and thereby clearing the pending Merger; on June 4, 2020, the Federal Antimonopoly

Service of Russia formally cleared the pending Merger; on June 12, 2020, the Korea Fair Trade Commission of South Korea formally cleared the pending Merger; on July 3, 2020, the Australian Foreign Investment Review Board issued a notification indicating that it has no objection to the pending Merger; on July 25, 2020, the State Administration for Market Regulation of China decided that it will not prohibit the pending Merger; on September 10, 2020, the Japan Fair Trade Commission and the Mexican competition authority (Comisión Federal de Competencia Económica) granted clearance of the pending Merger; on September 29, 2020, the Taiwan Fair Trade Commission determined to waive its jurisdiction over the Merger, effectively granting clearance of the pending Merger; and on October 26, 2020, the European Commission granted clearance of the pending Merger. Pursuant to the Merger Agreement, the parties must use their respective reasonable best efforts to consummate and make effective the Merger, and may prepare and file necessary notices and other filings for the foregoing jurisdictions in accordance with the Merger Agreement.

The obligation of each party to consummate the pending Merger is also conditioned on the accuracy of certain of the other party's representations and warranties (in the case of the Registrant's representations and warranties, with such representations and warranties being limited to only select fundamental representations and warranties relating to the Registrant's organization, good standing and qualification, capital structure (except for de minimis inaccuracies), corporate authority and approval, actions taken to render inapplicable takeover statutes, absence of rights plans, absence of undisclosed broker's or finder's fees and receipt of financial advisor opinions) and the other party's compliance, in all material respects, with certain covenants and agreements under the Merger Agreement. The Merger Agreement also contains other customary representations, warranties and covenants of the Registrant, Parent, Holding and Merger Sub, including covenants made by the Registrant regarding the operation of the business of the Registrant and its subsidiaries prior to the Effective Time.

The Merger Agreement provides for certain termination rights of the Registrant and Parent, including the right of either party to terminate the Merger Agreement if the Merger is not completed on or before June 30, 2021 (the "Outside Date"), provided that the Outside Date will be automatically extended to December 31, 2021, if all conditions are satisfied other than the receipt of the regulatory approvals. The Registrant may terminate the Merger Agreement, in certain circumstances, including, prior to obtaining the Stockholders Approval at the Stockholders Meeting, to enter into an acquisition agreement with respect to a superior proposal on the terms set forth in the Merger Agreement. The Merger Agreement also provides that the Registrant will be required to pay Parent a termination fee of $575.0 million in certain circumstances, including if the Registrant terminates the Merger Agreement to enter into an acquisition agreement with respect to a superior proposal.

Additional information about the Merger Agreement is set forth in the Registrant's Preliminary Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the "SEC") on November 16, 2020.

During the three and nine months ended October 31, 2020, the Company incurred expenses of $18.4 million and $43.0 million, respectively, related to the pending Merger for incentive compensation costs and professional fees.