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Item 1.01
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Entry into a Material Definitive Agreement
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The Mergers
On January 12,
2021, Cantel Medical Corp., a Delaware corporation (the “Company” or “Cantel”), STERIS plc,
a company incorporated under the laws of Ireland (“STERIS”), Solar New US Holding Co, LLC, a Delaware limited
liability company and a wholly owned subsidiary of STERIS (“US Holdco”) and Crystal Merger Sub 1, LLC,
a Delaware limited liability company and a direct wholly owned subsidiary of US Holdco (“Crystal Merger Sub”),
entered into an Agreement and Plan of Merger (the “Merger Agreement”).
The transaction
will occur through multiple steps. First, the Company will form a direct and wholly owned subsidiary to be incorporated as a Delaware
corporation (“Canyon Newco”) and a direct, wholly owned subsidiary of Canyon Newco to be incorporated as a Delaware
corporation (“Canyon Merger Sub”). The Company will engage in a holding company merger in which Canyon Merger
Sub will be merged with and into the Company, with the Company being the surviving entity (the “Pre-Closing Merger”),
and the shares of Company common stock will be converted into shares of Canyon Newco common stock. Second, immediately following
the Pre-Closing Merger, the Company will be converted into a limited liability company (the “Pre-Closing Conversion”).
Third, immediately following the Pre-Closing Merger and the Pre-Closing Conversion, Crystal Merger Sub will merge with and into
Canyon Newco, with Canyon Newco being the surviving entity (the “First Merger”). Fourth, immediately following
the First Merger, Canyon Newco will merge with and into US Holdco, with US Holdco being the surviving entity (the “Second
Merger” and, together with the First Merger, the “Parent Mergers,” and, the Pre-Closing Merger and
the Parent Mergers, collectively, the “Mergers”).
The Merger Agreement
provides that, upon completion of the First Merger, each share of Canyon Newco common stock issued and outstanding immediately
prior to the First Merger (other than dissenting shares and common stock of Canyon Newco owned by any Company Subsidiary, STERIS,
US Holdco, or Crystal Merger Sub to be cancelled in accordance with the Merger Agreement) will be converted into the right to receive:
(1) $16.93 in cash; and (2) 0.33787 STERIS ordinary shares (the “Merger Consideration”).
Treatment of Company RSU
Awards
Each Company restricted stock unit held
by a non-employee director will be converted into the right to receive the Merger Consideration. Each Company restricted stock
unit held by a Company employee will be converted into a STERIS restricted stock unit award based on an equity award exchange ratio.
Each Company performance stock unit will be converted into a STERIS restricted stock unit award based on an equity award exchange
ratio, with the number of shares covered by the Company performance stock unit based on target performance. The converted STERIS
restricted stock units will vest in equal installments on the number of grant date anniversaries remaining through the third anniversary
of the grant date.
Representations and Warranties;
Covenants
The Merger
Agreement contains customary representations, warranties and covenants by the parties thereto. Cantel has agreed not to
solicit any offer or proposal for specified alternative transactions, or, subject to certain exceptions relating to the
receipt of an unsolicited offer or proposal that may result in a “superior proposal” (as defined in the Merger
Agreement), to participate in discussions or engage in negotiations regarding such an offer or proposal, and furnish
nonpublic information in connection with such an offer or proposal. Subject to the terms of the Merger Agreement, the Board
is also permitted to change its recommendation in response to a “superior proposal” or an “intervening
event” (as defined in the Merger Agreement). The Merger Agreement also requires the parties thereto to undertake
certain efforts to obtain the required regulatory approvals for the transaction, subject to certain limitations.
Closing Conditions
Each of Cantel’s
and STERIS’s obligations to consummate the Mergers is subject to a number of conditions, including, among others, the following,
as further described in the Merger Agreement: (i) approval of Cantel’s stockholders of the adoption of the Merger Agreement;
(ii) effectiveness of the registration statement on Form S-4 registering the STERIS shares to be issued in the First Merger; (iii)
expiration of the waiting period (or extension thereof) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and other
foreign regulatory approvals; (iv) the shares of STERIS to be issued in the First Merger being approved for listing on the New
York Stock Exchange; (v) the representations and warranties of the other party being true and correct, subject to the materiality
standards contained in the Merger Agreement; (vi) absence of specified adverse laws or orders; (vii) material compliance by the
other party with its covenants; and (viii) no “material adverse effect” (as defined in the Merger Agreement) having
occurred with respect to the other party since the signing of the Merger Agreement.
Termination and Termination Fees
The Merger Agreement
contains certain customary termination rights, including, among others, the following: (a) the right of either STERIS or Cantel
to terminate the Merger Agreement if Cantel’s stockholders fail to adopt the Merger Agreement at the Company special meeting;
(b) the right of Cantel to terminate the Merger Agreement in order to enter into a definitive agreement providing for a “superior
proposal”; (c) the right of STERIS to terminate the Merger Agreement if (i) the Board changes its recommendation with respect
to the transaction, (ii) a competing tender or exchange offer has been commenced and Cantel has not communicated to its stockholders
a statement recommending rejection of the competing proposal within 10 business days, or (iii) Cantel has committed a material
uncured breach of the covenants relating to non-solicitation, the Company special meeting or the registration statement on Form
S-4 and the Proxy Statement/Prospectus; (d) the right of either STERIS or Cantel to terminate the Merger Agreement if the First
Merger has not occurred by October 12, 2021 (the “Outside Date”), subject to certain conditions, provided that
the Outside Date may be extended by up to two three-month periods in certain circumstances; and (e) the right of either STERIS
or Cantel to terminate the Merger Agreement due to a breach by the other party of any of its representations, warranties or covenants
that would result in the closing conditions not being satisfied, subject to certain conditions.
Cantel must pay
a termination fee of $127,400,000 (the “Termination Fee”) (a) if the Merger Agreement is terminated by either
Cantel or STERIS because Cantel stockholder approval is not obtained, (b) if a competing proposal has been publicly disclosed and
not publicly withdrawn prior to the date of the Company Special Meeting, and (c) within 12 months of such termination of the Merger
Agreement, either (i) a competing proposal is consummated or (ii) Cantel enters into a definitive agreement providing for a competing
proposal. Cantel must also pay the Termination Fee if the Merger Agreement is terminated as described in clauses (b) and (c) of
the preceding paragraph.
The foregoing description
of the Mergers and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated into this report by reference.