DEFM14A: Barnes Group Agrees to be Acquired by Apollo Funds for $47.50 Per Share

Barnes Group Inc. has entered into a definitive agreement to be acquired by affiliates of Apollo Global Management for $47.50 per share in cash.

Summary

• Barnes Group Inc. has agreed to be acquired by Apollo Funds in an all-cash transaction.
• The deal values Barnes at $47.50 per share.
• The transaction is structured as a merger, with Barnes becoming a wholly-owned subsidiary of Apollo.
• The merger agreement was signed on October 6, 2024.
• A special meeting of Barnes stockholders is scheduled for January 9, 2025, to vote on the merger.
• The transaction is expected to close before the end of the first quarter of 2025.
• The merger is subject to customary closing conditions, including regulatory approvals and stockholder approval.
• The agreement includes a termination fee of $85 million payable by Barnes under certain circumstances and a termination fee of $168.5 million payable by Parent under certain circumstances.
• The deal is not contingent on financing.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the benefits of the merger for Barnes stockholders, including the premium and all-cash consideration. However, it also acknowledges the risks and uncertainties associated with the transaction, resulting in a moderately positive sentiment.

Positives

• The all-cash deal provides certainty of value for Barnes stockholders.
• The merger consideration represents a significant premium over the recent trading price of Barnes stock.
• The transaction is not contingent on financing, reducing the risk of deal failure.
• The Board of Directors has unanimously approved the merger agreement.
• The deal provides for a go-shop period, allowing Barnes to solicit competing bids.

Negatives

• The merger will result in Barnes becoming a private company, delisting from the NYSE.
• Barnes stockholders will no longer have any ownership stake in the surviving company.
• The merger agreement includes a termination fee of $85 million payable by Barnes under certain circumstances.
• The merger agreement includes a termination fee of $168.5 million payable by Parent under certain circumstances.

Risks

• The merger is subject to customary closing conditions, including regulatory approvals and stockholder approval.
• There is a risk that the merger may not be completed on the expected timeline or at all.
• The merger could be challenged by regulatory authorities or other parties.
• There is a risk of litigation related to the merger.
• The merger could result in significant distraction and diversion of managements time and efforts from the execution of Barnes strategic priorities.

Future Outlook

The merger is expected to close before the end of the first quarter of 2025, subject to customary closing conditions.

Management Comments

• The Board of Directors has unanimously determined that the Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of Barnes and its stockholders.
• The Board of Directors unanimously recommends that you vote FOR the Merger Agreement Proposal, FOR the Compensation Proposal, and FOR the Adjournment Proposal.

Industry Context

The acquisition of Barnes Group by Apollo Funds reflects a trend of private equity firms investing in industrial and aerospace companies. This deal could lead to further consolidation in the sector.

Comparison to Industry Standards

• The merger consideration of $47.50 per share represents a premium of approximately 22% over Barnes undisturbed closing share price on June 25, 2024, and a premium of approximately 28% over the volume weighted average price of Barnes common stock for the 90 days ending June 25, 2024.
• Goldman Sachs and Jefferies provided fairness opinions to the Board of Directors, indicating that the Merger Consideration was fair from a financial point of view to the Barnes stockholders.
• The termination fees of $85 million and $168.5 million are within the range of what is typical for transactions of this size.
• The deal is not contingent on financing, which is a positive sign for deal certainty.

Legal Proceedings

• As of the date of this proxy statement, Barnes has received demand letters from purported stockholders of Barnes alleging deficiencies and/or omissions in the preliminary proxy statement.

Stakeholder Impact

• Barnes stockholders will receive $47.50 per share in cash.
• Barnes employees will receive comparable compensation and benefits for at least one year following the merger.
• Barnes will become a private company, delisting from the NYSE.

Next Steps

• Barnes stockholders will vote on the merger at a special meeting on January 9, 2025.
• The parties will seek regulatory approvals for the merger.
• The parties will work to finalize the transaction and close the merger before the end of the first quarter of 2025.

Key Dates

Keywords

merger, acquisition, Apollo Global Management, Barnes Group, stockholders, all-cash transaction, private equity, delisting, NYSE, regulatory approvals