MSC Industrial signs agreement with shareholders for dual class share structure

MSC Industrial has approved, and will recommend to shareholders for approval, the reclassification of the company’s equity structure, including the elimination of the company’s Class B Common Stock which is held by the Jacobson/Gershwind family and entities affiliated with the family. Under the terms of the reclassification agreement, each outstanding share of the company’s high-voting Class B shares – 10 votes per share – will be exchanged for 1.225 Class A shares – 1 vote per share – in stock. The agreement follows the Jacobson/Gershwind family’s proposal to exchange each Class B share for 1.35 Class A shares. Beneficial voting and governance changes as a result of the reclassification include limitations on family voting – the Jacobson/Gershwind family has agreed to limit its voting to 15% of shares outstanding, and any shares it owns in excess of 15% will be voted pro rata with the votes of the unaffiliated Class A shareholders. Following the reclassification, the Jacobson/Gershwind family will own approximately 21% of the company’s Class A shares. The Jacobson/Gershwind family will also be subject to standstill and lock-up provisions. The company will adopt a majority of the shares outstanding standard to approve significant transactions and a majority of the votes cast standard for uncontested Board elections. The Board intends to add a new independent director. The board will explore a share repurchase to offset dilution from the proposed transaction. The company will be seeking shareholder approval of the reclassification at a special meeting of shareholders, to be held following effectiveness of a registration statement. The proposed reclassification is also subject to approval by the holders of a majority of the unaffiliated Class A shares.