Item 1.01 Entry Into a Material Definitive Agreement.
Acquisition Agreement
On June 3, 2021, RE/MAX Holdings, Inc. (the “Company”) entered into a stock purchase agreement (the “Purchase Agreement”) to acquire the North American operations of RE/MAX INTEGRA, which is the sub-franchisor of the RE/MAX brand in five Canadian provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) and nine U.S. states (Connecticut, Indiana, Maine, Massachusetts, Minnesota, New Hampshire, Rhode Island, Vermont, and Wisconsin) (collectively, the “Acquisition”). The Purchase Agreement was entered into by and among A La Carte U.S., LLC, A La Carte Investments Canada, Inc., RE/MAX, LLC, Brodero Holdings, Inc., and Fire-Ball Holdings Corporation, Ltd. Each of A La Carte U.S., LLC, A La Carte Investments Canada, Inc. and RE/MAX, LLC is an indirect subsidiary of the Company.
The Company entered into the Purchase Agreement in order to expand its company-owned regional operations. The purchase price to be paid by the Company under the Purchase Agreement to acquire these regions is approximately $235 million in cash. The Acquisition, which is subject to customary closing conditions, is expected to close in the third quarter. The parties to the Purchase Agreement have made certain representations, warranties, and covenants that are customary for a transaction of this nature.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
Financing of the Acquisition
The Company has obtained a commitment for debt financing to pay the purchase price of the Acquisition pursuant to an Incremental Term Facility Commitment Letter (the “Commitment Letter”) dated June 3, 2021, between RE/MAX, LLC and JPMorgan Chase Bank, N.A. (“JPMorgan”) pursuant to which JPMorgan has agreed to provide an incremental term facility in an aggregate principal amount up to $235 million under the Amended and Restated Credit Agreement, dated as of December 15, 2016, among RE/MAX, LLC, RMCO, LLC, the lenders from time to time party thereto and JPMorgan, as administrative agent, and the other parties party thereto, on the terms and subject to the conditions set forth in the Commitment Letter. The funding of the incremental debt pursuant to the Commitment Letter is contingent upon closing of the Acquisition and other customary conditions.
The foregoing description of the Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Commitment Letter, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.