Item 8.01 Other Events.
As previously disclosed and reported in the Current Report on Form 8-K filed on
June 21, 2021 with the U.S. Securities and Exchange Commission (the "SEC"),
Raven Industries, Inc., a South Dakota corporation (the "Company" or "Raven"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of June 20, 2021, with CNH Industrial N.V., a Netherlands public limited
liability company ("CNH Industrial"), and CNH Industrial South Dakota, Inc., a
South Dakota corporation and wholly owned subsidiary of CNH Industrial ("Merger
Subsidiary"), pursuant to which, among other things and subject to the
satisfaction or waiver of specified conditions, Merger Subsidiary will merge
with and into the Company (the "Merger"). As a result of the Merger, Merger
Subsidiary will cease to exist, and the Company will survive as a wholly owned
subsidiary of CNH Industrial.
On August 6, 2021, the Company filed with the SEC a definitive proxy statement
in connection with the Merger (the "Definitive Proxy Statement"). As disclosed
in the Definitive Proxy Statement, as of August 6, 2021, three purported
stockholders of Raven had filed actions in the United States District Court for
the Southern District of New York (the "Preliminary Proxy Complaints"),
captioned Stein v. Raven Industries, Inc., et al., Case No. 1:21-cv-06215
(S.D.N.Y.), Hopkins v. Raven Industries, Inc., et al., Case No. 1:21-cv-06363
(S.D.N.Y.) and Maluga v. Raven Industries, Inc. et al., Case No. 1:21-cv-06636
(S.D.N.Y.), alleging that a preliminary version of the proxy statement filed
with the SEC on July 19, 2021 (the "Preliminary Proxy Statement") was materially
incomplete, false or misleading in certain respects, thereby allegedly violating
Sections 14(a) and 20(a) of the Exchange Act (15 U.S.C. § § 78n(a), 78t(a)), and
SEC Rule 14a-9 (17 C.F.R. § 240.14a-9) or 17 C.F.R. § 244.100 promulgated
thereunder.
Following the filing of the Definitive Proxy Statement and prior to the filing
of this Current Report on Form 8-K, five additional complaints have been filed
as individual actions in United States District Courts and one complaint has
been filed in South Dakota state court (the "Definitive Proxy Complaints" and,
collectively, with the Preliminary Proxy Complaints, the "Complaints"). The
Complaints are filed as individual actions against the Company and its
directors. The state court Complaint also asserts its claims against CNH
Industrial and the Merger Subsidiary. Two Definitive Proxy Complaints have been
filed in the United States District Court for the Southern District of New York
and are captioned Chaney v. Raven Industries, Inc., et al., Case No.
1:21-cv-06953 and Cohen v. Raven Industries, Inc., et al., Case No.
1:21-cv-07383. Two of the Definitive Proxy Complaints have been filed in the
United States District Court for the District of Colorado and are captioned
Taylor v. Raven Industries, Inc., et al., Case No. 1:21-cv-02321 and Reinhardt
v. Raven Industries, Inc., et al., Case No. 1:21-cv-02323. One Definitive Proxy
Complaint has been filed in the United States District Court for the Eastern
District of Pennsylvania and is captioned Ciccotelli v. Raven Industries, Inc.,
et al., Case No. 2:21-cv-03874. One Definitive Proxy Complaint was filed in the
Circuit Court for the Second Judicial District of the State of South Dakota,
Minnehaha County, and is captioned Garfield v. Andriga, et al., Case No.
49CIV21-002169.
The Complaints generally allege that the Preliminary Proxy Statement or the
Definitive Proxy Statement, as applicable, failed to disclose material
information in connection with the Merger and that, as a result, the Preliminary
Proxy Statement or Definitive Proxy Statement, as applicable, is materially
misleading in violation of Section 14(a) and Section 20(a) of the Exchange Act
or Section 20-10-1 and Section 20-10-2 of the South Dakota Codified Laws. The
state court Complaint asserts additional claims for breach of fiduciary duties
and misrepresentation under South Dakota statutory and common law. The
Complaints seek, among other things, to enjoin the Company from consummating the
Merger or, in the alternative, rescission of the Merger or damages. Additional
lawsuits arising out of the Merger may also be filed in the future.
The Company believes that the claims asserted in the Complaints are without
merit and that no supplemental disclosure is required under applicable law.
However, in order to avoid the risk of the above captioned actions delaying or
adversely affecting the Merger, to alleviate the costs, risks and uncertainties
inherent in litigation, to provide additional information to its stockholders,
and without admitting any liability or wrongdoing, the Company has determined
voluntarily to supplement the Definitive Proxy Statement as described in this
supplemental disclosure. Nothing in this Current Report on Form 8-K shall be
deemed an admission of the legal necessity or materiality under applicable laws
of any of the disclosures set forth herein.
These supplemental disclosures will not affect the merger consideration to be
paid to stockholders of the Company in connection with the Merger or the timing
of the special meeting of the Company's stockholders, which will be held
virtually via the Internet at 9:00 a.m. Central Time on September 15, 2021.
Supplemental Disclosures
The additional disclosures herein supplement the disclosures contained in, and
should be read in conjunction with, the Definitive Proxy Statement, which should
be read in its entirety. To the extent that information in this supplemental
disclosure differs from, or updates information contained in, the Definitive
Proxy Statement, the information in this supplemental disclosure shall supersede
or supplement the information in the Definitive Proxy Statement. Capitalized
terms used herein, but not otherwise defined, shall have the meanings ascribed
to such terms in the Definitive Proxy Statement.
The section of the Definitive Proxy Statement entitled "The Merger (Proposal 1)
- Background of the Merger" is amended and supplemented as follows:
The eighth paragraph on page 28 of the proxy statement is hereby revised as
follows:
"On April 12, 2021, at the direction of the Company, J.P. Morgan and members of
the Company's management contacted six strategic parties, including CNH
Industrial, to assess their level of interest in pursuing a potential strategic
transaction with the Company. Of those six parties, two parties executed
confidentiality agreements with the Company on April 16, 2021, and one party
executed a mutual confidentiality agreement with the Company on April 19, 2021.
All of the confidentiality agreements contained a customary standstill
provision. The Company and CNH Industrial also amended the Confidentiality
Agreement on April 15, 2021 to add a conflicts waiver with respect to the
Company's outside legal counsel."
The sixth paragraph on page 30 of the proxy statement is hereby revised to add
the following sentence at the end:
"The Board also reviewed with representatives of Davis Polk disclosures made by
J.P. Morgan regarding J.P. Morgan's material investment banking and other
relationships (or absence thereof) during the prior two-year period with the
Company, CNH Industrial, Bidder 1, Bidder 2 and Exor N.V."
The section of the Definitive Proxy Statement entitled "The Merger (Proposal 1)
- Opinion of Raven's Financial Advisor" is amended and supplemented as follows:
The second paragraph under the sub-heading "Public Trading Multiples Analysis,"
on page 36 of the proxy statement, and the list of selected companies
immediately following such paragraph are hereby deleted and the first sentence
of the first paragraph on page 37, under the sub-heading "Public Trading
Multiples Analysis" of the proxy statement is hereby revised as follows:
"The companies selected by J.P. Morgan (collectively, the "Selected Companies")
were chosen because they are publicly traded companies with operations and
businesses that, for the purposes of J.P. Morgan's analysis, may be considered
sufficiently similar in certain respects to those of Raven and/or one or more of
its businesses."
The second paragraph on page 37, under the sub-heading "Public Trading Multiples
Analysis" of the proxy statement is hereby supplemented by adding the following
as the last sentence of such paragraph and the following table below such
paragraph:
"The below table summarizes the companies, the metric and the multiples employed
in J.P. Morgan's analysis."
Applied Technology FV/2023E EBITDA
Deere & Company 16.7x
Corteva, Inc. 11.3x
Garmin Ltd. 18.9x
CNH Industrial N.V. 6.7x
Trimble Inc. 22.5x
FMC Corporation 11.8x
AGCO Corporation 7.8x
Engineered Films
Amcor plc 10.9x
Celanese Corporation 9.4x
Berry Global Group, Inc. 7.6x
Avient Corporation 9.3x
Aerostar
Raytheon Technologies Corporation 11.7x
Lockheed Martin Corporation 10.9x
Northrop Grumman Corporation 13.7x
L3Harris Technologies, Inc. 12.5x
Autonomy FV/2023 Revenue
Tesla, Inc. 10.4x
NIO Inc. 8.1x
Li Auto Inc. 7.3x
XPENG Inc. 4.3x
Arrival Luxembourg SARL 8.2x
Luminar Technologies, Inc. N/M
Nikola Corporation 23.2x
Velodyne Lidar, Inc. 10.8x
Hyliion Holdings Corp. 4.6x
The second paragraph under the sub-heading "Discounted Cash Flow Analysis," on
page 38 of the proxy statement, is hereby revised as follows:
"J.P. Morgan calculated the unlevered free cash flows that Raven, excluding
Raven's Autonomy business, is expected to generate from April 30, 2021 through
January 31, 2031, using the Projections. The unlevered free cash flows for Raven
for the fiscal years 2022 (in the case of 2022, the portion thereof commencing
April 30, 2021) through 2031 were calculated at the direction of Raven based on
the Raven management forecasts for such calendar years and were reviewed and
approved by Raven management for use by J.P. Morgan in connection with its
financial analyses and in rendering its fairness opinion. Unlevered free cash
flow was calculated as EBITDA, less taxes, less capital expenditures, less
change in net working capital. J.P. Morgan also calculated a range of terminal
values for Raven (excluding Autonomy) by applying a range of terminal growth
rates, as provided by Raven management, ranging from 1.5% to 2.5% to the
unlevered free cash flows. The unlevered free cash flows and the range of
terminal values were then discounted to present values as of April 30, 2021
using a range of discount rates from 9.25% to 10.25%, which range was chosen by
J.P. Morgan based on an analysis of the weighted average cost of capital of
Raven. As inputs to the weighted average cost of capital, J.P. Morgan took into
account, among other things, risk-free rate, equity risk premium, levered beta,
pre-tax cost of debt, post-tax cost of debt, and target debt to total
capitalization ratio. J.P. Morgan then aggregated the range of present values
derived above to derive a range of illustrative enterprise values for Raven
(excluding Autonomy)."
The first paragraph on page 39, under the sub-heading "Discounted Cash Flow
Analysis" of the proxy statement, is hereby revised as follows:
"In addition, using the Projections, J.P. Morgan calculated the unlevered free
cash flows that Raven's Autonomy business is expected to generate from April 30,
2021 through January 31, 2031. The unlevered free cash flows for Raven for the
fiscal years 2022 (in the case of 2022, the portion thereof commencing April 30,
2021) through 2031 were calculated at the direction of Raven based on the Raven
management forecasts for such calendar years and were reviewed and approved by
Raven management for use by J.P. Morgan in connection with its financial
analyses and in rendering its fairness opinion. Unlevered free cash flow was
calculated as EBITDA, less taxes, less capital expenditures, less change in net
working capital. J.P. Morgan also calculated a range of terminal values for
Raven's Autonomy business by applying a range of terminal growth rates, as
provided by Raven management, ranging from 2.5% to 3.5% to the unlevered free
cash flows. The unlevered free cash flows and the range of terminal values were
then discounted to present values as of April 30, 2021 using a range of discount
rates
ranging from 16.00% to 17.00%, which range was chosen by J.P. Morgan based on an
analysis of the weighted average cost of capital for Raven's Autonomy business,
using the same inputs described in the immediately preceding paragraph. J.P.
Morgan then aggregated the range of present values derived above to derive a
range of illustrative enterprise values for Raven's Autonomy business."
The second paragraph on page 39, under the sub-heading "Discounted Cash Flow
Analysis" of the proxy statement, is hereby revised as follows:
"J.P. Morgan then (i) added the range of illustrative enterprise values for
Raven businesses to derive a range of illustrative aggregate enterprise values
for Raven, (ii) subtracted from the range of illustrative enterprise values the
amount of Raven's net debt of approximately $15 million as of April 30, 2021 as
provided by Raven management to derive a range of illustrative equity values for
Raven, and (iii) divided the illustrative aggregate equity value range by the
number of fully diluted shares outstanding (approximately 37 million shares) as
provided by Raven management to arrive at an implied share price range. This
analysis indicated the following approximate implied per share equity value
reference range for Raven common stock, rounded to the nearest $0.25, which was
compared to (i) the closing price of Raven common stock on June 18, 2021 of
$38.62 and (ii) the Merger Consideration of $58.00 per share of Raven common
stock."
The second, third and fourth sentences of the first paragraph under the
sub-heading "Discounted Cash Flow Sum-of-the-Parts Analysis," on page 39 of the
proxy statement, is hereby revised as follows:
"The unlevered free cash flows for Raven for the fiscal years 2022 (in the case
of 2022, the portion thereof commencing April 30, 2021) through 2031 were
calculated at the direction of Raven based on the Raven management forecasts for
such calendar years and were reviewed and approved by Raven management for use
by J.P. Morgan in connection with its financial analyses and in rendering its
fairness opinion. Unlevered free cash flow was calculated as EBITDA, less taxes,
less capital expenditures, less change in net working capital. J.P. Morgan also
calculated terminal values for each Raven business by applying a range of
terminal growth rates, as provided by Raven management, ranging from 1.5% to
2.5% for each business (other than Autonomy) and 2.5% to 3.5% for Raven's
Autonomy business. The unlevered free cash flows and terminal values for each
business were discounted to present value as of April 30, 2021, based on a range
of discount rates chosen for each business by J.P. Morgan based on an analysis
of the weighted average cost of capital of Raven for such business. As inputs to
the weighted average cost of capital, J.P. Morgan took into account, among other
things, risk-free rate, equity risk premium, levered beta, pre-tax cost of debt,
post-tax cost of debt, and target debt to total capitalization ratio. J.P.
Morgan then (i) aggregated the ranges of implied values for each business to
derive an implied total firm value range, (ii) subtracted net debt of
approximately $15 million as of April 30, 2021 as provided by Raven management
to arrive at an implied total equity value range and (iii) divided the implied
total equity value range by the number of fully diluted shares outstanding
(approximately 37 million shares) as provided by Raven management to arrive at
an implied share price range."
Important Information For Investors And Shareholders
This communication does not constitute an offer to buy or sell or the
solicitation of an offer to buy or sell any securities or a solicitation of any
vote or approval. This communication relates to a proposed transaction between
the Company and CNH Industrial. In connection with the proposed Merger, the
Company filed a definitive proxy statement on Schedule 14A and a form of proxy
with the Securities and Exchange Commission (the "SEC") on August 6, 2021 and
will file or furnish other relevant materials with the SEC. INVESTORS AND
SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT
AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. This communication is not a substitute for the definitive proxy
statement or any other document that may be filed by the Company with the SEC.
The definitive proxy statement filed on August 6, 2021 was first mailed on
August 9, 2021. Investors and security holders are able to obtain free copies of
the definitive proxy statement and other documents filed with the SEC by the
Company through the website maintained by the SEC at http://www.sec.gov. In
addition, copies of the documents filed with the SEC by the Company are
available free of charge on the
Company's internet website at https://investors.ravenind.com or by contacting
the Company's primary investor relation's contact by email at Margaret Carmody
or by phone at Margaret.Carmody@ravenind.com.
Participants in Solicitation
The Company, CNH Industrial, their respective directors and certain of their
respective executive officers may be considered participants in the solicitation
of proxies in connection with the proposed transaction. Information about the
directors and executive officers of the Company is set forth in the Company's
definitive proxy statement on Schedule 14A with respect to the proposed Merger,
as filed with the SEC on August 6, 2021, its Annual Report on Form 10-K for the
fiscal year ended January 31, 2021, which was filed with the SEC on March 24,
2021, its proxy statement for its 2021 annual meeting of shareholders, which was
filed with the SEC on April 9, 2021, certain of its Quarterly Reports on Form
10-Q and certain of its Current Reports filed on Form 8-K. These documents can
be obtained free of charge from the sources indicated above.
Forward Looking Statements
Certain statements contained in this communication are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding the expectations, beliefs, intentions or
strategies regarding the future, not past or historical events. Without limiting
the foregoing, the words "anticipates," "believes," "expects," "intends," "may,"
"plans," "should," "estimate," "would," "will," "predict," "project,"
"potential," and similar expressions are intended to identify forward-looking
statements. However, the absence of these words or similar expressions does not
mean that a statement is not forward-looking. The Company intends that all
forward-looking statements be subject to the safe harbor provisions of the
Private Securities Litigation Reform Act. Although the Company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions when made, there is no assurance that such assumptions
are correct or that these expectations will be achieved. Assumptions involve
important risks and uncertainties that could significantly affect results in the
future. These risks and uncertainties include, but are not limited to, failure
to obtain the required vote of the Company's shareholders; the timing to
consummate the proposed transaction; the risk that a condition of closing of the
proposed transaction may not be satisfied or that the closing of the proposed
transaction might otherwise not occur; the risk that a regulatory approval that
may be required for the proposed transaction is not obtained or is obtained
subject to conditions that are not anticipated; the diversion of management time
on transaction-related issues; risks related to disruption of management time
from ongoing business operations due to the proposed transaction; the risk that
any announcements relating to the proposed transaction could have adverse
effects on the market price of the common stock of the Company; and the risk
that the proposed transaction and its announcement could have an adverse effect
on the Company's ability to retain customers and retain and hire key personnel
and maintain relationships with its suppliers and customers; as well as risk
factors listed from time to time in the Company's filings with the SEC. The
Company cautions readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company disclaims any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
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