Item 7.01. Regulation FD Disclosure.
On
May 13, 2021, Floor & Decor Holdings, Inc. (the “Company”), Floor and Decor Outlets of America, Inc.,
a Delaware corporation and wholly-owned subsidiary of the Company (“Purchaser”), Kevin Jablon, an individual resident of Maryland
(“Seller 1”), The Jablon 2021 Trust, a grantor trust governed by Maryland law (“Seller 2” and, together with Seller
1, “Sellers”, and each individually, a “Seller”), SSJ Holdco, LLC, a Delaware limited liability company (“Seller
Holdco”), and Spartan Surfaces, Inc., a Pennsylvania corporation (“Spartan”), entered into a membership interest
purchase agreement (the “Purchase Agreement”), pursuant to which Purchaser will acquire 100% of the issued and outstanding
equity interests of Spartan (the “Acquisition”). Spartan is a specialty flooring distribution company headquartered in Bel
Air, Maryland with showrooms in Washington, D.C., and Chicago, Illinois. Pursuant to the terms of the Purchase Agreement, Purchaser
has agreed to pay a purchase price of up to $90 million, consisting of $67 million in cash and $5 million of the Company’s Class A
common stock, subject to customary adjustments at closing for cash, working capital, transaction expenses and indebtedness of Spartan,
and amounts placed in escrow. The purchase price also includes a potential earn out payment of up to $18 million based on achievement
of certain performance metrics. In connection with the Acquisition, the Company intends to enter into offer letters and non-competition
agreements with certain key employees of Spartan.
The
Acquisition is expected to close during the second quarter of 2021, subject to customary closing conditions. The Purchase Agreement also
includes customary representations, warranties and covenants of the Company, Purchaser, Seller Holdco and the Sellers. The Purchase Agreement
also includes non-competition and non-solicitation covenants of Seller 1 and his affiliates. The Purchase Agreement also contains post-closing
indemnification obligations pursuant to which the parties have agreed to indemnify each other against losses resulting from certain events,
including breaches of representations and warranties, covenants and certain other matters.
The foregoing description
of the Purchase Agreement is a general summary of certain material terms and does not purport to be a complete description of all terms
that might be considered to be material.
On May 13, 2021, the
Company issued a press release announcing the Acquisition. A copy of the press release is attached as Exhibit 99.1 and incorporated
herein by reference. A copy of an investor presentation dated May 13, 2021 that will issued by the Company with respect to the
Acquisition is attached as Exhibit 99.2 and incorporated herein by reference.
The information disclosed
under this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as
expressly set forth by specific reference in such filing.
Forward-Looking Statements
This Form 8-K includes
statements relating to the Acquisition and the Company’s business plans, and expected results that are “forward looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. In many cases, such forward-looking statements may be identified by such words as “may”,
“should”, “would”, “plan”, “intend”, “expect”, “believe”, “anticipate”,
“estimate”, “predict”, “potential”, “seem”, “seek”, “continue”,
“future”, “will”, “outlook”, or other similar expressions, words or phrases, or by their context.
These statements include statements regarding the industry in which the combined companies will operate, the estimated or anticipated
future results and benefits of the combined companies following the Acquisition, including the likelihood and ability of the parties to
successfully consummate the Acquisition, future synergies and opportunities for the combined companies, the timing of the closing of the
Acquisition and other statements that are not historical facts. These statements are made on the basis of current knowledge and current
expectations of Company management and, by their nature, involve numerous assumptions and uncertainties and are not predictions of actual
performance. Nothing set forth in this Form 8-K should be regarded as a representation, warranty, or prediction that the Company
or Spartan will achieve or are likely to achieve any particular future result. Various factors could cause actual future results, performance
or events to differ materially from those described in this Form 8-K. This Form 8-K does not purport to be all-inclusive or
to contain all the information that a prospective investor may desire in making an evaluation. Each investor must conduct and rely on
its own evaluation, including of the associated risks, in making an investment decision. The Company assumes no obligation to update any
information in this Form 8-K, except as required by law. Some of the risks and uncertainties that may impact future results and performance
may include, without limitation:
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the possibility that closing conditions will not be met or waived;
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2.
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failure to realize the anticipated benefits of the Acquisition, including as a result of a delay in consummating
the Acquisition or a delay or difficulty in integrating the business of the Company and Spartan or in achieving synergies between the
Company and Spartan;
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3.
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the potential impact of unforeseen liabilities, expenditures, expenses, or financial performance associated
with the Acquisition;
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4.
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that the Acquisition may not be well received by customers or employees of the Company or Spartan;
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that the Company’s current management team has limited experience in addressing the challenges of
integrating the management teams, strategies, cultures and organizations of acquired businesses; and
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the other risks and uncertainties in filings made by the Company from time to time with the SEC and available
at www.sec.gov, including, without limitation, the Company’s most recent Form 10-K for 2020 filed with the SEC.
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