8-KOther Events

W.W. GRAINGER, INC. 8-K Report (Feb 28, 2002)

Filed February 28, 2002For Securities:GWW

Summary

W.W. Grainger, Inc. (GWW) filed an 8-K on February 28, 2002, to report the consummation of an acquisition of substantially all of the assets of Mountain Capital Corporation (MCC). This transaction involved GWW acquiring 4,801,600 shares of its own common stock and cash from MCC, in exchange for 4,695,725 shares of GWW common stock. The deal was structured with a discount on the shares GWW transferred back to MCC and included provisions for expense reimbursement and debt payment. MCC, following the acquisition, distributed the GWW shares it received to its shareholders as part of a liquidation plan. This filing also details the execution of an Escrow Agreement and a Share Transfer Restriction Agreement to secure GWW's interests and manage the transfer of GWW shares by MCC shareholders.

Key Highlights

  • 1GWW acquired substantially all assets of Mountain Capital Corporation (MCC), including 4,801,600 shares of GWW's own common stock and cash.
  • 2In exchange for MCC's assets, GWW issued 4,695,725 shares of its common stock to MCC.
  • 3The share exchange reflects a 1.5% discount on the shares GWW received, along with adjustments for expense reimbursements and MCC debt.
  • 4MCC will distribute the acquired GWW shares to its shareholders as part of a planned liquidation.
  • 5An Escrow Agreement was established, where 10% of the GWW shares received by MCC will be held as security for indemnification obligations.
  • 6A Share Transfer Restriction Agreement was put in place to govern the transfer of GWW shares by MCC shareholders.
  • 7The transaction was approved by GWW's Board of Directors, though a conflict of interest was disclosed regarding director James D. Slavik, who is President and a significant shareholder of MCC.

Frequently Asked Questions

The primary event reported is the consummation of W.W. Grainger, Inc.'s (GWW) acquisition of substantially all of the assets of Mountain Capital Corporation (MCC). This acquisition included GWW's own shares held by MCC and cash, in exchange for GWW stock.

GWW acquired 4,801,600 shares of its own common stock and cash from MCC. In return, GWW transferred 4,695,725 shares of its common stock to MCC. The number of shares GWW transferred was subject to a 1.5% discount from the shares it received, with other adjustments for expenses and debt.

Yes, a conflict of interest was disclosed. GWW director James D. Slavik is also the President, a director, and a significant beneficial owner of MCC. Mr. Slavik did not participate in GWW's board deliberations regarding this acquisition.

GWW has entered into an Escrow Agreement and a Share Transfer Restriction Agreement. The Escrow Agreement involves holding 10% of the GWW shares received by MCC as security for MCC's and its shareholders' indemnification obligations. The Share Transfer Restriction Agreement imposes limitations on the transfer of GWW shares by MCC shareholders.