Apollo Funds to Acquire Majority Control of ABC Technologies Holdings Inc.

Rhea-AI Summary

ABC Technologies Holdings (TSX: ABCT) announced that its majority shareholder, ABC Group Canada LP, has agreed to sell a majority stake to Apollo Funds, managed by Apollo Global Management (NYSE: APO), for CAD$10.00 per share. This transaction involves the sale of 51% of ABC's common shares, valued at approximately CAD$276.6 million. Post-acquisition, Apollo will nominate five board members while ABC LP will retain three. Closing is subject to regulatory approvals across several countries. The deal includes a potential price increase to CAD$10.64 per share if ABC meets certain acquisition thresholds.

Positive

• Acquisition signifies strategic partnership with Apollo, enhancing access to resources and expertise.
• Potential for ABC to expand in the automotive plastics market, leveraging Apollo's support for industry consolidation.

Negative

• ABC LP's ownership will decrease from approximately 79.1% to 26.4%, potentially affecting shareholder influence.
• Transaction subject to regulatory approvals, which may delay closing.

ABC Technologies Holdings Inc. (TSX: ABCT) (“ABC Technologies”, “ABC” or the “Company”) announced today that its majority shareholder, ABC Group Canada LP (“ABC LP”), an affiliate of funds managed by Cerberus Capital Management, L.P., (“Cerberus”) has entered into a share purchase agreement (the “Agreement”), with certain funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (“Apollo”) to sell a majority stake in the Company to the Apollo Funds.

Under the terms of the Agreement, the Apollo Funds will purchase 51% of the outstanding common shares (on a fully-diluted basis) of the Company from ABC LP for CAD$10.00 per common share. Upon closing of the transaction, the parties will enter into an amended and restated investor rights agreement, which will provide Apollo with, among other things, certain director nomination rights, registration rights, pre-emptive rights and information rights. At closing, Apollo will be entitled to nominate five of the nine members of the Board, while ABC LP will retain the ability to nominate three members of the Board. The parties anticipate announcing the future composition of the Board closer to the closing date.

ABC Technologies President and CEO Todd Sheppelman said, “ABC’s strong operational and financial performance, combined with its near-term opportunities as a platform for industry consolidation in the automotive technical plastics space, led to an unsolicited offer from the Apollo Funds to acquire a majority stake in the Company and join in the journey outlined during ABC’s recent IPO process. We are excited to gain access to Apollo’s expertise and resources and look forward to a highly collaborative relationship as we continue to grow our business and better serve global automotive customers with industry-leading products.”

Apollo Partner Michael Reiss said, “ABC Technologies is a top supplier in the automotive industry, bringing innovative solutions to OEM customers across North America. We are excited by the platform’s ability to act as a consolidator of the fragmented plastics supplier space, a market with strong momentum driven by vehicle lightweighting and a sustained increase in automotive plastics contents. We believe Todd and the management team are the right leaders to help ABC Technologies become a global force in the Tier-1 automotive supplier space and Apollo looks forward to supporting the Company on this path.”

Cerberus Senior Managing Director Dev Kapadia added, “We have had a great partnership with ABC over the past four years and this milestone is a testament to all we accomplished together. With its recent IPO, ABC is well-positioned to win market share and drive its leadership in the automotive plastics industry through organic growth and acquisition opportunities. We welcome Apollo as a new strategic partner and look forward to continuing to support Todd and the ABC team in this exciting next phase for the Company.”

Closing is subject to customary closing conditions including the receipt of applicable regulatory approvals in Canada, United States, Mexico, Spain and Poland.

In accordance with the terms of the Agreement, the acquisition price may be increased to C$10.64 per common share upon consummation of one or more acquisitions by the Company, meeting certain agreed upon thresholds, if entered into prior to or within 12 months following closing. The acquisition is exempt from the take-over bid requirements of applicable Canadian securities law.

Evercore Inc. is exclusive financial advisor to ABC Technologies and Blake, Cassels & Graydon LLP, Lowenstein Sandler LLP and Creel are legal advisors to ABC Technologies and ABC LP. Goodmans LLP and Paul Weiss Rifkind Wharton & Garrison LLP are legal advisors to Apollo. Wildeboer Dellelce LLP is legal advisor to the Board of Directors of ABC Technologies.

As at the date hereof, (i) ABC LP, directly or indirectly, beneficially owns or controls 41,522,392 common shares, representing approximately 79.1% of the issued and outstanding common shares (or approximately 76.6% of the issued and outstanding common shares on a fully-diluted basis), and (ii) the Apollo Funds beneficially own or control, directly or indirectly, none of the issued and outstanding common shares. Following completion of the acquisition, ABC LP’s ownership of ABC Technologies will decrease to approximately 26.4% of the issued and outstanding common shares, the Apollo Funds will own approximately 52.7% of the issued and outstanding common shares, while public shareholders will own approximately 20.9% of the common shares.

At closing, the Apollo Funds would acquire 27.7 million common shares from ABC LP (assuming the number of issued and outstanding common shares on a fully diluted basis as of closing is 54.2 million) for CAD$10.00 per common share, representing aggregate consideration of CAD$276.6 million. Assuming the additional consideration (as described above) becomes payable, the Apollo Funds will pay additional consideration of

FAQ

What are the details of the acquisition involving Apollo and ABC Technologies?

Apollo Funds will purchase 51% of ABC Technologies for CAD$10.00 per common share, totaling CAD$276.6 million.

What impact will the acquisition have on ABC Technologies' management structure?

Apollo will have the right to nominate five of the nine board members after the acquisition.

Is there a possibility for a price increase in this acquisition?

Yes, the acquisition price may increase to CAD$10.64 per share if ABC meets certain acquisition thresholds within 12 months post-closing.

What regulatory approvals are needed for the acquisition to close?

The transaction requires approvals in Canada, the United States, Mexico, Spain, and Poland.

How will the ownership structure change after the acquisition?

Post-acquisition, Apollo Funds will own approximately 52.7% of common shares, while ABC LP's ownership will decrease to about 26.4%.