As filed with the Securities and Exchange Commission on February 27, 2020

Registration No. 333-            

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

 

 

Woodward, Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware		4581		36-1984010
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

1081 Woodward Way

Fort Collins, Colorado 80524

(970) 482-5811

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

A. Christopher Fawzy

Corporate Vice President, General Counsel,

Corporate Secretary and Chief Compliance Officer

1081 Woodward Way

Fort Collins, Colorado 80524

(970) 482-5811

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Larry W. Sonsini Martin W. Korman Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94034 (650) 493-9300		Gail E. Lehman Executive Vice President, General Counsel and Secretary Hexcel Corporation 281 Tresser Boulevard Two Stamford Plaza Stamford, Connecticut 06901 (203) 969-0666		Andrew J. Nussbaum Gordon S. Moodie Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 (212) 403-1000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered		Amount to be registered		Proposed maximum offering price per share		Proposed maximum aggregate offering price		Amount of registration fee(3)
Common Stock, par value $0.001455 per share		53,429,015(1)		N/A		$6,034,059,238(2)		$783,220.89

(1)

The number of shares of common stock, par value $0.001455 per share, of Woodward, Inc. (“Woodward” and such shares, the “Woodward common stock”) being registered is based upon an estimate of (x) the maximum number of shares of common stock, par value $0.01 per share, of Hexcel Corporation (“Hexcel” and such shares, the “Hexcel common stock”) outstanding as of February 21, 2020 or issuable or expected to be exchanged in connection with the merger of Hexcel with and into a subsidiary of Woodward, including shares of Woodward common stock that may be issuable in respect of outstanding Hexcel equity awards, collectively equal to 85,486,424, multiplied by (y) the exchange ratio of 0.6250 shares of Woodward common stock for each share of Hexcel common stock.

(2)

Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended and calculated in accordance with Rules 457(c), 457(f)(1) and 457(i) promulgated thereunder. The aggregate offering price is (x) the average of the high and low prices of Hexcel common stock as reported on the New York Stock Exchange on February 26, 2020 ($70.59) multiplied by (y) the maximum number of shares of Hexcel common stock to be exchanged in the merger (85,486,424).

(3)	Calculated by multiplying the estimated aggregate offering price of securities to be registered by .0001298.

 

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

 

 

 

The information in this joint proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this joint proxy statement/prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This joint proxy statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED FEBRUARY 27, 2020

 

 

To the stockholders of Woodward, Inc. and Hexcel Corporation

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

On behalf of the boards of directors of Woodward, Inc. (“Woodward”) and Hexcel Corporation (“Hexcel”), we are pleased to enclose the accompanying joint proxy statement/prospectus relating to the proposed business combination of Woodward and Hexcel. We are requesting that you take certain actions as a Woodward stockholder or a Hexcel stockholder.

Pursuant to the Agreement and Plan of Merger, dated as of January 12, 2020 (which we refer to as the “merger agreement,” including as it may be amended from time to time), by and among Woodward, Hexcel and Genesis Merger Sub, Inc., a newly formed wholly owned subsidiary of Woodward (“Merger Sub”), Merger Sub will merge with and into Hexcel (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Hexcel continuing as the surviving entity in the merger and a wholly owned subsidiary of Woodward. We sometimes refer to Woodward following the merger and in its capacity as parent company of Hexcel as “Woodward Hexcel” or the “combined company.”

The proposed merger will establish one of the world’s largest independent aerospace and defense suppliers globally by revenue. The combined company will have more than 16,000 employees, manufacturing operations in 14 countries on five continents, and a diversified customer base across multiple markets, and will focus on technology-rich innovations to deliver smarter, cleaner, and safer customer solutions.

In the merger, Hexcel stockholders will be entitled to receive 0.6250 shares (the “exchange ratio”) of Woodward common stock for each share of Hexcel common stock they own (and, if applicable, cash in lieu of fractional shares). Although the number of shares of Woodward common stock that Hexcel stockholders will receive per share of Hexcel common stock is fixed, the market value of the merger consideration will fluctuate with the market price of Woodward common stock and will not be known at the time Hexcel stockholders vote on the merger. Based on the closing price of Woodward’s common stock on the NASDAQ Global Select Market (“Nasdaq”) on January 10, 2020, the last trading day before public announcement of the merger, the exchange ratio represented approximately $76.23 in value for each share of Hexcel common stock. Based on the closing price of Woodward’s common stock on Nasdaq on [                    ], 2020 of $[        ], the exchange ratio represented approximately $[        ] in value for each share of Hexcel common stock. The value of the Woodward common stock at the time of completion of the merger could be greater than, less than or the same as the value of Woodward common stock on the date of the accompanying joint proxy statement/prospectus. We urge you to obtain current market quotations of Woodward common stock (trading symbol “WWD”) and Hexcel common stock (trading symbol “HXL”). Following the completion of the merger, the common stock of the combined company will be listed on either Nasdaq or the New York Stock Exchange (the “NYSE”), as the parties mutually agree, under the symbol “WXL.”

We expect the merger will qualify as a reorganization for federal income tax purposes. Accordingly, Hexcel stockholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of shares of Hexcel common stock for Woodward common stock in the merger, except with respect to any cash received instead of fractional shares of common stock of the combined company.

Based on the number of shares of Hexcel common stock outstanding and reserved for issuance as of [                    ], 2020, Woodward expects to issue approximately [            ] million shares of Woodward common stock to Hexcel stockholders in the aggregate in the merger, representing total aggregate consideration of approximately $[        ] in value, based on the closing price of Woodward’s common stock on Nasdaq on [                    ], 2020 of $[        ]. Upon completion of the merger, we estimate that Hexcel stockholders as of immediately prior to the merger will collectively own approximately 45% and Woodward stockholders as of immediately prior to the merger will own approximately 55% of the outstanding shares of common stock of the combined company (in each case, on a fully diluted basis and without regard to the fact that immediately prior to the merger, certain stockholders may own both Woodward and Hexcel stock).

Woodward and Hexcel will each hold a special meeting of its stockholders in connection with the merger. Woodward stockholders will be asked to vote to approve the issuance of shares of Woodward common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement (which we refer to as the “Woodward share issuance proposal”), which requires the approval of the holders of a majority of the outstanding shares of stock entitled to vote thereon present in person or by proxy at the Woodward special meeting, to adopt an amendment and restatement of the certificate of incorporation of Woodward, which requires the approval of the holders of two-thirds of the outstanding shares of Woodward common stock, and to approve certain other matters related to the merger. Hexcel stockholders will be asked to approve the merger agreement and approve the merger (which we refer to as the “Hexcel merger proposal”), which requires the approval of the holders of a majority of the outstanding shares of Hexcel common stock, and to approve certain other matters related to the merger.

 

 

The special meeting of Hexcel stockholders will be held on [                    ], 2020 at [            ], at [            ] local time. The special meeting of Woodward stockholders will be held on [                    ], 2020 at [            ], at [             ] local time. Information about these meetings and the merger is contained in this joint proxy statement/prospectus. In particular, see “Risk Factors” beginning on page 32. We urge you to read this joint proxy statement/prospectus carefully and in its entirety.

Your vote is very important regardless of the number of shares of Woodward common stock or Hexcel common stock that you own. The merger cannot be completed without the approval of the Woodward share issuance proposal by Woodward stockholders and the approval of the Hexcel merger proposal by the Hexcel stockholders. Whether or not you plan to attend your special meeting, please vote as soon as possible to make sure that your shares are represented at the meeting.

Each of our boards of directors recommends that holders of common stock vote “FOR” each of the proposals to be considered at the respective meetings. We strongly support this combination of our companies and join our boards in their recommendations.

 

Thomas A. Gendron		Nick L. Stanage
Chairman of the Board,		Chairman of the Board,
Chief Executive Officer and President		Chief Executive Officer and President
Woodward, Inc.		Hexcel Corporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated [                    ], 2020, and is first being mailed to Woodward stockholders and Hexcel stockholders on or about [                    ], 2020.

ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus incorporates important business and financial information about Woodward and Hexcel from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in this joint proxy statement/prospectus through the Securities and Exchange Commission website at http://www.sec.gov or by requesting them in writing, by e-mail or by telephone at the appropriate address below:

 

if you are a Woodward stockholder: Woodward, Inc. 1081 Woodward Way Fort Collins, Colorado 80524 Attn: Investor Relations Email: Investor.Relations@woodward.com		if you are a Hexcel stockholder: Hexcel Corporation 281 Tresser Boulevard Two Stamford Plaza Stamford, Connecticut 06901 Attn: Investor Relations Email: InvestorRelations@hexcel.com

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the applicable special meeting. This means that Woodward stockholders requesting documents must do so by [            ], 2020 in order to receive them before the Woodward special meeting, and Hexcel stockholders requesting documents must do so by [            ], 2020 in order to receive them before the Hexcel special meeting.

No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [            ], 2020, and you should assume that the information in this joint proxy statement/prospectus is accurate only as of such date. You should assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of the date of such incorporated document. Neither the mailing of this joint proxy statement/prospectus to Woodward stockholders or Hexcel stockholders nor the issuance by Woodward of shares of Woodward common stock in connection with the merger will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in, or incorporated by reference into, this joint proxy statement/prospectus regarding Woodward has been provided by Woodward, and information contained in, or incorporated by reference into, this document regarding Hexcel has been provided by Hexcel.

See “Where You Can Find More Information” beginning on page 160 of the accompanying joint proxy statement/prospectus for further information.

 

Woodward, Inc.

1081 Woodward Way

Fort Collins, Colorado 80524

Notice of Special Meeting of Stockholders

To Woodward Stockholders:

On January 12, 2020, Woodward, Inc. (“Woodward”), Hexcel Corporation (“Hexcel”) and Genesis Merger Sub, Inc., a newly formed wholly owned subsidiary of Woodward (“Merger Sub”), entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement,” including as it may be amended from time to time), pursuant to which Merger Sub will merge with and into Hexcel (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Hexcel continuing as the surviving entity in the merger and a wholly owned subsidiary of Woodward. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of Woodward stockholders (which we refer to as the “Woodward special meeting,” including any adjournments or postponements thereof) will be held on [                    ], 2020 at [            ], local time at [            ]. We are pleased to notify you of and invite you to the Woodward special meeting.

At the Woodward special meeting you will be asked to vote on the following matters:

 

•

Proposal to approve the issuance of Woodward common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement (which we refer to as the “Woodward share issuance proposal”).

 

•

Proposal to approve and adopt an amendment and restatement of Woodward’s certificate of incorporation (which we refer to as the “Woodward charter”) to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding (such amendment and restatement being referred to as the “Woodward charter amendment” and such proposal being referred to as the “Woodward charter amendment proposal”).

 

•

Proposal to adjourn the Woodward special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Woodward share issuance proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Woodward stockholders (the “Woodward adjournment proposal”).

The board of directors of Woodward has fixed the close of business on [                    ], 2020 as the record date for the Woodward special meeting. Only holders of record of Woodward common stock as of the close of business on the record date for the Woodward special meeting are entitled to notice of, and to vote at, the Woodward special meeting or any adjournment or postponement thereof.

Your vote is very important regardless of the number of shares of Woodward common stock that you own. The merger cannot be completed without the approval of the Woodward share issuance proposal by Woodward stockholders.

Woodward’s board of directors recommends that holders of common stock vote “FOR” each of the proposals to be considered at the Woodward special meeting.

Whether or not you plan to attend the Woodward special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

By Order of the Board of Directors

Thomas A. Gendron

Chairman of the Board, Chief Executive Officer and President

[                    ], 2020

 

Hexcel Corporation

281 Tresser Blvd., Two Stamford Plaza

Stamford, CT 06901

Notice of Special Meeting of Stockholders

To Hexcel Stockholders:

On January 12, 2020, Hexcel Corporation (“Hexcel”), Woodward, Inc. (“Woodward”) and Genesis Merger Sub, Inc., a newly formed wholly owned subsidiary of Woodward (“Merger Sub”), entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement,” including as it may be amended from time to time), pursuant to which Merger Sub will merge with and into Hexcel (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Hexcel continuing as the surviving entity in the merger and a wholly owned subsidiary of Woodward. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of Hexcel stockholders (which we refer to as the “Hexcel special meeting,” including any adjournments or postponements thereof) will be held on [                    ], 2020 at [            ], local time at [            ]. We are pleased to notify you of and invite you to the Hexcel special meeting. The purpose of the Hexcel special meeting is to consider and vote upon the following matters:

 

•

Proposal to approve the merger agreement (which we refer to as the “Hexcel merger proposal”).

 

•

Proposal to approve, on an advisory (non-binding) basis, the executive officer compensation that will or may be paid to Hexcel’s named executive officers in connection with the transactions contemplated by the merger agreement (which we refer to as the “Hexcel compensation proposal”).

 

•

Proposal to approve, on an advisory (non-binding) basis, an amendment and restatement of Woodward’s certificate of incorporation (which we refer to as the “Woodward charter”) to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding (such amendment and restatement being referred to as the “Woodward charter amendment” and such proposal being referred to as the “Hexcel charter amendment proposal”).

 

•

Proposal to adjourn the Hexcel special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Hexcel merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Hexcel stockholders (which we refer to as the “Hexcel adjournment proposal”).

The board of directors of Hexcel has fixed the close of business on [            ], 2020 as the record date for the Hexcel special meeting. Only holders of record of Hexcel common stock as of the close of business on the record date for the Hexcel special meeting are entitled to notice of, and to vote at, the Hexcel special meeting or any adjournment or postponement thereof.

Your vote is very important regardless of the number of shares of Hexcel common stock that you own. The merger cannot be completed without the approval of the Hexcel merger proposal by Hexcel stockholders.

Hexcel’s board of directors recommends that holders of common stock vote “FOR” each of the proposals to be considered at the Hexcel special meeting.

Whether or not you plan to attend the Hexcel special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

By Order of the Board of Directors

Nick L. Stanage

Chairman of the Board, Chief Executive Officer and President

[                    ], 2020

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			14
The Parties to the Merger			14
The Merger and the Merger Agreement			15
Merger Consideration			15
Treatment of Hexcel Equity Awards			15
Treatment of Woodward Equity Awards			16
Material U.S. Federal Income Tax Consequences			17
Woodward’s Reasons for the Merger; Recommendation of the Woodward Board			17
Hexcel’s Reasons for the Merger; Recommendation of the Hexcel Board			17
Opinion of Woodward’s Financial Advisor			17
Opinion of Hexcel’s Financial Advisor			18
Appraisal Rights in the Merger			18
Interests of Woodward’s Directors and Executive Officers in the Merger			18
Interests of Hexcel’s Directors and Executive Officers in the Merger			19
Governance and Leadership of the Combined Company After the Merger			20
Name and Headquarters of the Combined Company After the Merger			20
Regulatory Approvals			21
Conditions to Completion of the Merger			21
Termination of the Merger Agreement			22
Termination Fee			23
Accounting Treatment			23
The Rights of Hexcel Stockholders Will Change as a Result of the Merger			23
Listing of Woodward Common Stock; Delisting and Deregistration of Hexcel Common Stock			23
The Woodward Special Meeting			23
The Hexcel Special Meeting			24
Certain Beneficial Owners of Woodward Common Stock			24
Certain Beneficial Owners of Hexcel Common Stock			25
Risk Factors			25
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF WOODWARD			26
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HEXCEL			28
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL DATA			29
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			30
RISK FACTORS			32
THE WOODWARD SPECIAL MEETING			37
Date, Time and Place of the Meeting			37
Matters to Be Considered			37
Recommendation of the Woodward Board			37
Record Date and Quorum			37
Vote Required; Treatment of Abstentions and Failure to Vote			37
Attending the Special Meeting			38
Proxies			38
Shares Held in Street Name			39
Revocability of Proxies			39
Delivery of Proxy Materials			40
Solicitation of Proxies			40
Other Matters to Come Before the Woodward Special Meeting			40
Assistance			40
WOODWARD PROPOSALS			41
Proposal 1: Woodward Share Issuance Proposal			41
Proposal 2: Woodward Charter Amendment Proposal			41

Proposal 3: Woodward Adjournment Proposal			41
THE HEXCEL SPECIAL MEETING			43
Date, Time and Place of the Meeting			43
Matters to Be Considered			43
Recommendation of the Hexcel Board			43
Record Date and Quorum			43
Vote Required; Treatment of Abstentions and Failure to Vote			44
Attending the Special Meeting			44
Proxies			45
Shares Held in Street Name			45
Revocability of Proxies			46
Delivery of Proxy Materials			46
Solicitation of Proxies			46
Other Matters to Come Before the Hexcel Special Meeting			47
Assistance			47
HEXCEL PROPOSALS			48
Proposal 1: Hexcel Merger Proposal			48
Proposal 2: Hexcel Compensation Proposal			48
Proposal 3: Hexcel Charter Amendment Proposal			48
Proposal 4: Hexcel Adjournment Proposal			49
INFORMATION ABOUT WOODWARD AND MERGER SUB			51
INFORMATION ABOUT HEXCEL			52
THE MERGER			53
Terms of the Merger			53
Background of the Merger			53
Hexcel’s Reasons for the Merger; Recommendation of the Hexcel Board			60
Opinion of Hexcel’s Financial Advisor			65
Woodward’s Reasons for the Merger; Recommendation of the Woodward Board			72
Opinion of Woodward’s Financial Advisor			75
Certain Unaudited Prospective Financial Information			84
Interests of Woodward’s Directors and Executive Officers in the Merger			88
Interests of Hexcel’s Directors and Executive Officers in the Merger			96
Name and Headquarters of the Combined Company After the Merger			104
Dividends of Hexcel and Woodward Prior to the Merger			104
Accounting Treatment			104
Regulatory Approvals			104
Stock Exchange Listings			105
Appraisal Rights in the Merger			105
THE MERGER AGREEMENT			106
Explanatory Note Regarding the Merger Agreement			106
Structure of the Merger			106
Merger Consideration			107
Fractional Shares			107
Governing Documents			107
Treatment of Hexcel Equity Awards			108
Treatment of Woodward Equity Awards			108
Closing of the Merger			109
Effective Time of the Merger			109
Conversion of Shares; Exchange of Hexcel Stock Certificates			109
Representations and Warranties			110
Covenants and Agreements			112
Combined Company Governance and Headquarters Matters			117
Stockholder Meetings and Recommendation of Woodward’s and Hexcel’s Boards of Directors			118

Agreement Not to Solicit Other Offers			119
Conditions to Complete the Merger			120
Termination of the Merger Agreement			121
Effect of Termination			121
Termination Fee			122
Expenses and Fees			123
Amendment, Waiver and Extension of the Merger Agreement			123
Governing Law			123
Specific Performance			124
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER			125
Tax Consequences of the Merger Generally			126
Information Reporting and Backup Withholding			127
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			129
COMPARISON OF STOCKHOLDERS’ RIGHTS			142
SECURITY OWNERSHIP OF WOODWARD BENEFICIAL OWNERS AND MANAGEMENT			154
SECURITY OWNERSHIP OF HEXCEL BENEFICIAL OWNERS AND MANAGEMENT			156
LEGAL MATTERS			158
EXPERTS			158
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS			158
WHERE YOU CAN FIND MORE INFORMATION			160

 

Annex A		Merger Agreement			A-1
Annex B		Proposed Amended and Restated Woodward Charter			B-1
Annex C		Opinion of J.P. Morgan LLC			C-1
Annex D		Opinion of Goldman Sachs & Co. LLC			D-1

 

PART II INFORMATION NOT REQUIRED IN  PROSPECTUS			II-1
Item 20. Indemnification of Directors and Officers			II-1
Item 21. Exhibits and Financial Statement Schedules			II-1
Item 22. Undertakings			II-2

QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger, the Woodward special meeting or the Hexcel special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the Woodward special meeting or the Hexcel special meeting. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 160.

In this joint proxy statement/prospectus, unless the context otherwise requires:

 

•

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

•

“DGCL” refers to the General Corporation Law of the State of Delaware, as amended;

 

•

“effective time” refers to the effective time of the merger;

 

•

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

•

“exchange ratio” refers to 0.6250 shares of Woodward common stock per share of Hexcel common stock;

 

•

“Goldman Sachs” refers to Goldman Sachs & Co. LLC;

 

•

“Hexcel” refers to Hexcel Corporation;

 

•

“Hexcel adjournment proposal” refers to the proposal to adjourn the Hexcel special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Hexcel special meeting to approve the Hexcel merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Hexcel stockholders;

 

•

“Hexcel board” refers to the board of directors of Hexcel;

 

•

“Hexcel charter amendment proposal” refers to the proposal that Hexcel stockholders approve, by advisory (non-binding) vote, the Woodward charter amendment;

 

•

“Hexcel common stock” refers to the common stock of Hexcel, par value $0.01 per share;

 

•

“Hexcel compensation proposal” refers to the proposal that Hexcel stockholders approve, by advisory (non-binding) vote, certain compensation arrangements that may be paid or become payable to Hexcel’s named executive officers in connection with the merger contemplated by the merger agreement;

 

•

“Hexcel merger proposal” refers to the proposal that Hexcel stockholders approve the merger agreement and approve the merger;

 

•

“Hexcel special meeting” refers to the special meeting of Hexcel stockholders to consider and vote upon the Hexcel merger proposal and related matters, including any adjournments or postponements thereof;

 

•

“Hexcel stockholder” refers to one or more holders of Hexcel common stock, as applicable;

 

•

“J.P. Morgan” refers to J.P. Morgan Securities LLC;

 

•

“merger” refers to the merger of Merger Sub with and into Hexcel, on the terms and subject to the conditions of the merger agreement, with Hexcel continuing as the surviving entity in the merger and a wholly owned subsidiary of Woodward;

 

•

“merger agreement” refers to the Agreement and Plan of Merger, dated as of January 12, 2020, by and among Woodward, Hexcel and Merger Sub, as it may be amended from time to time in accordance with its terms;

 

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•

“merger consideration” means the shares of Woodward common stock the Hexcel stockholders are entitled to receive pursuant to the merger agreement;

 

•

“NYSE” refers to the New York Stock Exchange;

 

•

“SEC” refers to the Securities and Exchange Commission;

 

•

“Securities Act” refers to the Securities Act of 1933, as amended;

 

•

“Woodward” refers to Woodward, Inc.;

 

•

“Woodward adjournment proposal” refers to the proposal to adjourn the Woodward special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Woodward special meeting to approve the Woodward share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Woodward stockholders;

 

•

“Woodward board” refers to the board of directors of Woodward;

 

•

“Woodward charter” means the certificate of incorporation of Woodward as in effect as of the date of this joint proxy statement/prospectus;

 

•

“Woodward charter amendment” means the amendment and restatement of the Woodward charter to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares, to change the name of the combined company to “Woodward Hexcel, Inc.” and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding;

 

•

“Woodward charter amendment proposal” refers to the proposal that Woodward stockholders adopt the Woodward charter amendment;

 

•

“Woodward common stock” refers to the common stock of Woodward, par value $0.001455 per share;

 

•

“Woodward Hexcel” or the “combined company” refers to Woodward following the merger, including in its capacity as the parent company of Hexcel;

 

•

“Woodward Hexcel board” refers to the board of directors of Woodward Hexcel following the merger;

 

•

“Woodward Hexcel stockholder” refers to one or more holders of Woodward Hexcel common stock, as applicable;

 

•

“Woodward Series A preferred stock” refers to the Series A preferred stock of Woodward, par value $0.003 per share;

 

•

“Woodward share issuance proposal” refers to the proposal that Woodward stockholders approve the issuance of shares of Woodward common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement;

 

•

“Woodward special meeting” refers to the special meeting of Woodward stockholders to consider and vote upon the Woodward share issuance proposal and related matters, including any adjournments or postponements thereof; and

 

•

“Woodward stockholder” refers to one or more holders of Woodward common stock, as applicable.

 

Q:	Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because Woodward and Hexcel have agreed to combine their companies in a merger of equals, structured as a merger of Merger Sub with and into Hexcel (the “merger”), with Hexcel continuing as the surviving entity in the merger and a wholly owned subsidiary of Woodward. Subject to the approval of Woodward stockholders of the Woodward charter amendment proposal, the combined company will be named “Woodward Hexcel, Inc.” A copy of the Agreement and Plan of Merger, dated as of January 12, 2020, by and among Woodward, Hexcel and Merger Sub (the “merger agreement”), which provides for the merger, is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein.

 

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In order to complete the merger, among other things:

 

•

Woodward stockholders must approve the issuance of shares of Woodward common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement (the “Woodward share issuance proposal”); and

 

•

Hexcel stockholders must approve the merger agreement and approve the merger (the “Hexcel merger proposal”).

Woodward is holding a special meeting of Woodward stockholders (the “Woodward special meeting,” including any adjournments or postponements thereof) to obtain approval of the Woodward share issuance proposal. Woodward stockholders will also be asked to approve and adopt an amendment and restatement of Woodward’s certificate of incorporation (which we refer to as the “Woodward charter”) to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding, subject to and effective only upon the completion of the merger (such amendment being referred to as the “Woodward charter amendment” and such proposal being referred to as the “Woodward charter amendment proposal”). Woodward stockholders will also be asked to approve the proposal to adjourn the Woodward special meeting to solicit additional proxies if there are not sufficient votes at the time of the Woodward special meeting to approve the Woodward share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Woodward stockholders (the “Woodward adjournment proposal”). Neither the approval of the Woodward charter amendment proposal nor the approval of the Woodward adjournment proposal by the Woodward stockholders is required in order to complete the merger.

Hexcel is holding a special meeting of Hexcel stockholders (the “Hexcel special meeting,” including any adjournments or postponements thereof) to obtain approval of the Hexcel merger proposal. Hexcel stockholders will also be asked to approve, on an advisory (non-binding) basis, the merger-related executive officer compensation payments that will or may be paid by Hexcel to its named executive officers in connection with the merger (the “Hexcel compensation proposal”), to approve, on an advisory (non-binding) basis, an amendment and restatement of the Woodward charter, subject to and effective only upon the completion of the merger, to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding (the “Hexcel charter amendment proposal”) and to approve the proposal to adjourn the Hexcel special meeting to solicit additional proxies if there are not sufficient votes at the time of the Hexcel special meeting to approve the Hexcel merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Hexcel stockholders (the “Hexcel adjournment proposal”). None of approval of the Hexcel compensation proposal, the approval of the Hexcel charter amendment proposal, nor the approval of the Hexcel adjournment proposal by the Hexcel stockholders is required in order to complete the merger.

This document is also a prospectus that is being delivered to Hexcel stockholders because, in connection with the merger, Woodward is offering shares of Woodward common stock to Hexcel stockholders.

This joint proxy statement/prospectus contains important information about the merger agreement, the merger and the other proposals being voted on at the Woodward and Hexcel special meetings. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

Q:	What will happen in the merger?

 

A:

In the merger, Merger Sub will merge with and into Hexcel, with Hexcel continuing as the surviving entity in the merger as a wholly owned subsidiary of Woodward. Each share of Hexcel common stock issued and outstanding immediately prior to the effective time of the merger (the “effective time”) (other than certain

 

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shares owned by Woodward, Hexcel or Merger Sub) will be converted into the right to receive 0.6250 shares (the “exchange ratio” and such shares, the “merger consideration”) of Woodward common stock. After completion of the merger, Hexcel will no longer be a public company, and Hexcel common stock will be delisted from the New York Stock Exchange (the “NYSE”), will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will cease to be publicly traded. Woodward stockholders will continue to own their existing shares of common stock. Following the merger, shares of Woodward Hexcel common stock will be traded on either Nasdaq or the NYSE, as the parties mutually agree. See “The Merger Agreement—Structure of the Merger” beginning on page 106 and the merger agreement for more information about the merger.

 

Q:	When and where will each of the special meetings take place?

 

A:	The Woodward special meeting will be held at [            ] on [                    ], 2020 at [                ] local time.

The Hexcel special meeting will be held at [            ] on [            ], 2020 at [            ] local time.

Even if you plan to attend your respective company’s special meeting, Woodward and Hexcel recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting. Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares.

 

Q:	What matters will be considered at each of the special meetings?

 

A:	At the Woodward special meeting, Woodward stockholders will be asked to consider and vote on the following proposals:

 

•

Woodward Proposal 1: The Woodward share issuance proposal. Approval of the issuance of shares of Woodward common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement (which we refer to in this joint proxy statement/prospectus as the “Woodward share issuance proposal”);

 

•

Woodward Proposal 2: The Woodward charter amendment proposal. Adoption and approval of an amendment and restatement of the Woodward charter, subject to and effective only upon the completion of the merger, to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding (which we refer to in this joint proxy statement/prospectus as the “Woodward charter amendment proposal”);

 

•

Woodward Proposal 3: The Woodward adjournment proposal. Approval of the adjournment of the Woodward special meeting to solicit additional proxies if there are not sufficient votes at the time of the Woodward special meeting to approve the Woodward share issuance or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Woodward stockholders (which we refer to in this joint proxy statement/prospectus as the “Woodward adjournment proposal”).

At the Hexcel special meeting, Hexcel stockholders will be asked to consider and vote on the following proposals:

 

•

Hexcel Proposal 1: The Hexcel merger proposal. Approval of the merger agreement (which we refer to in this joint proxy statement/prospectus as the “Hexcel merger proposal”);

 

•

Hexcel Proposal 2: The Hexcel compensation proposal. Approval of, on an advisory (non-binding) basis, the merger-related named executive officer compensation payments that will or may be paid by Hexcel to its named executive officers in connection with the merger (which we refer to in this joint proxy statement/prospectus as the “Hexcel compensation proposal”);

 

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•

Hexcel Proposal 3: The Hexcel charter amendment proposal. Approval of, on an advisory (non-binding) basis, an amendment and restatement of the Woodward charter, subject to and effective only upon the completion of the merger, to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding (which we refer to in this joint proxy statement/prospectus as the “Hexcel charter amendment proposal”);

 

•

Hexcel Proposal 4: The Hexcel adjournment proposal. Approval of the adjournment of the Hexcel special meeting to solicit additional proxies if there are not sufficient votes at the time of the Hexcel special meeting to approve the Hexcel merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Hexcel stockholders (which we refer to in this joint proxy statement/prospectus as the “Hexcel adjournment proposal”).

In order to complete the merger, among other things, Woodward stockholders must approve the Woodward share issuance proposal and Hexcel stockholders must approve the Hexcel merger proposal. None of the approvals of the Woodward charter amendment proposal, the Woodward adjournment proposal, the Hexcel compensation proposal, the Hexcel charter amendment proposal or the Hexcel adjournment proposal are conditions to the obligations of Woodward or Hexcel to complete the merger, and the merger may be completed even if approval of one or more of those proposals is not obtained.

 

Q:	What will Hexcel stockholders receive in the merger?

 

A:

In the merger, Hexcel stockholders will be entitled to receive 0.6250 shares of Woodward common stock for each share of Hexcel common stock held immediately prior to the completion of the merger. Woodward will not issue any fractional shares of Woodward common stock in the merger. Hexcel stockholders who would otherwise be entitled to a fractional share of Woodward common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the average closing-sale price per share of Woodward common stock for the consecutive period of five (5) trading days immediately preceding (but not including) the day on which the merger is completed (the “Woodward closing share value”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of Woodward common stock that such stockholder would otherwise be entitled to receive.

 

Q:	What will Woodward stockholders receive in the merger?

 

A:

In the merger, Woodward stockholders will not receive any consideration, and their shares of Woodward common stock will remain outstanding and will constitute shares of the combined company. Following the merger, shares of Woodward Hexcel common stock will be traded on either Nasdaq or the NYSE, as the parties mutually agree.

 

Q:	Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

Yes. Although the number of shares of Woodward common stock that Hexcel stockholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value of Woodward common stock. Based on the closing price of Woodward common stock on Nasdaq on January 10, 2020, the last trading day before public announcement of the merger, the exchange ratio represented approximately $76.23 in value for each share of Hexcel common stock. Based on the closing price of Woodward’s common stock on Nasdaq on [                    ], 2020 of $[        ], the exchange ratio represented approximately $[        ] in value for each share of Hexcel common stock. Any fluctuation in the market price of Woodward common stock after the date of this joint proxy statement/prospectus will change the value of the shares of Woodward common stock that Hexcel stockholders will receive. We urge you to obtain current market quotations of Woodward common stock (trading symbol “WWD”) and Hexcel common stock (trading symbol “HXL”).

 

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Q:	How will the merger affect Hexcel equity awards?

 

A:

At the effective time, each outstanding Hexcel equity award (other than equity awards granted by Hexcel after the date of the merger agreement and equity awards that do not automatically vest as a result of the merger) will vest and, in the case of Hexcel restricted stock units (other than vested Hexcel restricted stock units with a deferred settlement date) and Hexcel performance stock units, be converted into the right to receive the merger consideration in respect of each share of Hexcel common stock underlying such equity award and, in the case of unexercised Hexcel options, be converted into vested Woodward options, with adjustments to the number of shares and the per share exercise price based on the exchange ratio. The performance goals applicable to Hexcel performance stock units outstanding as of the date of the merger agreement will be deemed satisfied at the effective time based on the greater of target and actual performance. Hexcel restricted stock unit awards granted after the date of the merger agreement, Hexcel performance stock units granted after the date of the merger agreement and Hexcel restricted stock units with a deferred settlement date will be converted into corresponding Woodward equity awards based on the exchange ratio, except that Hexcel performance stock units will convert into Woodward restricted stock units measured at target performance and will remain subject to service-based vesting. For Hexcel equity awards granted to employees after the date of the merger agreement, vesting would generally accelerate with respect to such employees, including executive officers, upon a termination of employment without “cause” or, with respect to executive officers, resignation for “good reason,” as applicable, during the twenty-four (24) months following the effective time.

For details on the treatment of Hexcel equity awards, see “The Merger Agreement—Treatment of Hexcel Equity Awards” beginning on page 108.

 

Q:	What will happen to the Hexcel Employee Stock Purchase Plan?

 

A:

Any Hexcel employee who is not a participant in the Hexcel Corporation 2016 Employee Stock Purchase Plan (the “ESPP”) as of the date of the merger agreement may not become a participant in any offering periods in effect under the ESPP as of the date of the merger agreement (“the current ESPP offering periods”) and no participant may increase the percentage of his or her payroll deduction election from that in effect on the date of the merger agreement for such current ESPP offering periods. If the current ESPP offering periods terminate prior to the effective time, then the ESPP will be suspended and no new offering period will commence under the ESPP prior to the termination of the merger agreement. Subject to the consummation of the merger, the ESPP will terminate effective immediately prior to the effective time.

For details on the Hexcel ESPP, see “The Merger Agreement—Treatment of Hexcel Equity Awards” beginning on page 108.

 

Q:	How will the merger affect Woodward equity awards?

 

A:

Each option to purchase shares of Woodward common stock and each restricted stock unit covering shares of Woodward common stock (collectively, the “Woodward equity awards”) granted under Woodward’s 2017 Omnibus Incentive Plan or 2006 Omnibus Incentive Plan, as applicable, will not be impacted by the merger and will continue to be an award in respect of Woodward common stock following the effective time, subject to the same terms and conditions that were applicable to such award before the effective time, except as follows.

The compensation committee of the Woodward board has retained the right, under Woodward’s 2017 Omnibus Incentive Plan, to accelerate the vesting of any equity-based award or other compensation in connection with the termination of any Woodward service provider’s (including the directors and executive officers) service in anticipation of the completion of the merger. In addition, at the effective time, each Woodward equity award that (i) was granted on or before January 12, 2020, and is held by a Woodward employee other than (A) Woodward’s chief executive officer and (B) any other Woodward employee who qualifies for post-termination continued vesting pursuant to the terms of such award, and (ii) is outstanding

 

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and unvested as of the date of a certain qualifying termination of employment, will be amended to provide that upon such qualifying termination, which consists of a termination of such individual’s employment without “Cause” or a termination of employment by the individual for “Good Reason,” in either event, that occurs upon or within 24 months following the effective time, such award will become fully vested and exercisable, as applicable. For Woodward’s officers (including executive officers), Cause and Good Reason are as defined in the Amended and Restated Executive Change-in-Control Severance Agreements entered into between Woodward and Woodward’s executive officers, and for employees other than Woodward’s officers, the same Cause definition applicable to Woodward’s executive officers will apply and the Good Reason definition will consist of any resignation by such individual for any reason other than in anticipation of a termination for “Cause.”

For details on the treatment of Woodward equity awards, see “The Merger Agreement—Treatment of Woodward Equity Awards” beginning on page 108.

 

Q:	How does the Woodward board recommend that I vote at the Woodward special meeting?

 

A:	The Woodward board recommends that you vote “FOR” the Woodward share issuance proposal, “FOR” the Woodward charter amendment proposal and “FOR” the Woodward adjournment proposal.

In considering the recommendations of the Woodward board, Woodward stockholders should be aware that Woodward directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Woodward stockholders generally. For a more complete description of these interests, see “The Merger—Interests of Woodward’s Directors and Executive Officers in the Merger” beginning on page 88.

 

Q:	How does the Hexcel board recommend that I vote at the Hexcel special meeting?

 

A:	The Hexcel board recommends that you vote “FOR” the Hexcel merger proposal, “FOR” the Hexcel compensation proposal, “FOR” the Hexcel charter amendment proposal and “FOR” the Hexcel adjournment proposal.

In considering the recommendations of the Hexcel board, Hexcel stockholders should be aware that Hexcel directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Hexcel stockholders generally. For a more complete description of these interests, see “The Merger—Interests of Hexcel’s Directors and Executive Officers in the Merger” beginning on page 96.

 

Q:	Who is entitled to vote at the Woodward special meeting?

 

A:	The record date for the Woodward special meeting is [            ], 2020. All Woodward stockholders who held shares at the close of business on the record date for the Woodward special meeting are entitled to receive notice of, and to vote at, the Woodward special meeting.

Each Woodward stockholder is entitled to cast one (1) vote on each matter properly brought before the Woodward special meeting for each share of Woodward common stock that such holder owned of record as of the record date. As of the close of business on the record date for the Woodward special meeting, there were [            ] outstanding shares of Woodward common stock. Physical attendance at the special meeting is not required to vote. See below and “The Woodward Special Meeting—Proxies” beginning on page 38 for instructions on how to vote your shares without attending the Woodward special meeting.

 

Q:	Who is entitled to vote at the Hexcel special meeting?

 

A:	The record date for the Hexcel special meeting is [            ], 2020. All Hexcel stockholders who held shares at the close of business on the record date for the Hexcel special meeting are entitled to receive notice of, and to vote at, the Hexcel special meeting.

 

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Each Hexcel stockholder is entitled to cast one (1) vote on each matter properly brought before the Hexcel special meeting for each share of Hexcel common stock that such holder owned of record as of the record date. As of the close of business on the record date for the Hexcel special meeting, there were [            ] outstanding shares of Hexcel common stock. Physical attendance at the special meeting is not required to vote. See below and “The Hexcel Special Meeting—Proxies” beginning on page 45 for instructions on how to vote your shares without attending the Hexcel special meeting.

 

Q:	What constitutes a quorum for the Woodward special meeting?

 

A:

Holders of a majority of the shares of Woodward common stock entitled to vote at the special meeting, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the Woodward special meeting. If you fail to submit a proxy or to vote in person at the Woodward special meeting, your shares of Woodward common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum. Broker non-votes, which occur when a stockholder’s broker or nominee does not have voting instructions or discretionary authority to vote on the matter, will not be counted for the purpose of determining the presence of a quorum for the transaction of business at the Woodward special meeting.

 

Q:	What constitutes a quorum for the Hexcel special meeting?

 

A:

Holders of a majority of the shares of Hexcel common stock entitled to vote at the special meeting, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the Hexcel special meeting. If you fail to submit a proxy or to vote in person at the Hexcel special meeting, your shares of Hexcel common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum. Broker non-votes, which occur when a stockholder’s broker or nominee does not have voting instructions or discretionary authority to vote on the matter, will not be counted for the purpose of determining the presence of a quorum for the transaction of business at the Hexcel special meeting.

 

Q:	What vote is required for the approval of each proposal at the Woodward special meeting?

 

A:

Woodward Proposal 1: Woodward share issuance proposal. Approval of the Woodward share issuance proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward share issuance proposal present in person or by proxy at the Woodward special meeting. Shares of Woodward common stock not present (in person or by proxy) at the Woodward special meeting and broker non-votes will have no effect on the outcome of the Woodward share issuance proposal. Abstentions will have the same effect as votes cast “AGAINST” the Woodward share issuance proposal.

Woodward Proposal 2: Woodward charter amendment proposal. Adoption and approval of the Woodward charter amendment proposal requires the affirmative vote of the holders of two-thirds of the outstanding shares of Woodward common stock. Shares of Woodward common stock not present (in person or by proxy) at the Woodward special meeting, and shares present but not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Woodward charter amendment proposal.

Woodward Proposal 3: Woodward adjournment proposal. Approval of the Woodward adjournment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward adjournment proposal present in person or by proxy at the Woodward special meeting. Shares of Woodward common stock not present (in person or by proxy) at the Woodward special meeting and broker non-votes will have no effect on the outcome of the Woodward adjournment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Woodward adjournment proposal.

 

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Q:	What vote is required for the approval of each proposal at the Hexcel special meeting?

 

A:

Hexcel Proposal 1: Hexcel merger proposal. Approval of the Hexcel merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Hexcel common stock entitled to vote on the Hexcel merger proposal. Shares of Hexcel common stock not present (in person or by proxy) at the Hexcel special meeting, and shares present but not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Hexcel merger proposal.

Hexcel Proposal 2: Hexcel compensation proposal. Approval of the Hexcel compensation proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Hexcel compensation proposal. Shares of Hexcel common stock not present (in person or by proxy) at the Hexcel special meeting and broker non-votes will have no effect on the outcome of the Hexcel compensation proposal. Abstentions will have the same effect as votes cast “AGAINST” the Hexcel compensation proposal.

Hexcel Proposal 3: Hexcel charter amendment proposal. Approval of the Hexcel charter amendment proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Hexcel charter amendment proposal. Shares of Hexcel common stock not present (in person or by proxy) at the Hexcel special meeting and broker non-votes will have no effect on the outcome of the Hexcel charter amendment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Hexcel charter amendment proposal.

Hexcel Proposal 4: Hexcel adjournment proposal. Approval of the Hexcel adjournment proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Hexcel adjournment proposal. Shares of Hexcel common stock not present (in person or by proxy) at the Hexcel special meeting and broker non-votes will have no effect on the outcome of the Hexcel adjournment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Hexcel adjournment proposal.

 

Q:	Why are Hexcel stockholders being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, merger-related compensation arrangements for the Hexcel named executive officers (i.e., the Hexcel compensation proposal)?

 

A:

Under Securities and Exchange Commission (“SEC”) rules, Hexcel is required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to Hexcel’s named executive officers that is based on or otherwise relates to the merger, or “golden parachute” compensation.

 

Q:	What happens if Hexcel stockholders do not approve, by non-binding, advisory vote, merger-related compensation arrangements for Hexcel’s named executive officers (i.e., the Hexcel compensation proposal?)

 

A:

The vote on the proposal to approve the merger-related compensation arrangements for each of Hexcel’s named executive officers is separate and apart from the votes to approve the other proposals being presented at the Hexcel special meeting. Because the vote on the proposal to approve the merger-related executive compensation is advisory in nature only, it will not be binding upon Woodward, Hexcel, or the combined company. Accordingly, the merger-related compensation will be paid to Hexcel’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if the holders of Hexcel common stock do not approve the Hexcel compensation proposal.

 

Q:	Why are Hexcel stockholders being asked to consider and vote on a proposal to approve the Woodward charter amendment (i.e., the Hexcel charter amendment proposal)?

 

A:	Even though approval by Hexcel stockholders of the Woodward charter amendment is not a condition to the closing of the merger, the SEC has issued interpretive guidance with respect to the “unbundling” of proposals

 

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under the Exchange Act that requires Hexcel stockholders (in their capacity as stockholders of Hexcel) to also separately vote on the Woodward charter amendment. As further described below, this vote by Hexcel stockholders is advisory (non-binding) and will have no impact on whether the Woodward charter amendment is approved by Woodward stockholders under applicable law.

 

Q:	What if I hold shares in both Woodward and Hexcel?

 

A:

If you hold shares of both Woodward common stock and Hexcel common stock, you will receive two (2) separate packages of proxy materials. A vote cast as a Woodward stockholder will not count as a vote cast as a Hexcel stockholder, and a vote cast as a Hexcel stockholder will not count as a vote cast as a Woodward stockholder. Therefore, please submit separate proxies for your shares of Woodward common stock and your shares of Hexcel common stock.

 

Q:	How can I vote my shares in person at my respective special meeting?

 

A:

Record holders. Shares held directly in your name as the holder of record of Woodward or Hexcel may be voted in person at the Woodward special meeting or the Hexcel special meeting, as applicable. If you choose to vote your shares in person at the respective special meeting, please bring your enclosed proxy card and proof of identification.

Shares in “street name.” Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares. If you choose to vote your shares in person at the Woodward special meeting or the Hexcel special meeting, as applicable, please bring the signed legal proxy and proof of identification.

Even if you plan to attend the Woodward special meeting or the Hexcel special meeting, as applicable, Woodward and Hexcel recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the respective special meeting.

Additional information on attending the special meetings can be found under the section entitled “The Woodward Special Meeting” on page 37 and under the section entitled “The Hexcel Special Meeting” on page 43.

 

Q:	How can I vote my shares without attending my respective special meeting?

 

A:

Whether you hold your shares directly as the holder of record of Woodward or Hexcel or beneficially in “street name,” you may direct your vote by proxy without attending the Woodward special meeting or the Hexcel special meeting, as applicable. If you are a holder of record, you can vote by proxy over the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

Additional information on voting procedures can be found under the section entitled “The Woodward Special Meeting” on page 37 and under the section entitled “The Hexcel Special Meeting” on page 43.

 

Q:	What do I need to do now?

 

A:

After carefully reading and considering the information contained in this joint proxy statement/prospectus, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the Internet, as soon as possible so that your shares may be represented at your meeting. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

 

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Q:	If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

 

A:

No. Your bank, broker or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instructions provided by your bank, broker or other nominee.

 

Q:	Why is my vote important?

 

A:

If you do not vote, it will be more difficult for Woodward or Hexcel to obtain the necessary quorum to hold its respective special meeting. In addition, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, will have the same effect as a vote “AGAINST” the Woodward charter amendment proposal and the Hexcel merger proposal, as applicable. The merger cannot be completed without the approval of the Woodward share issuance proposal by Woodward stockholders and the approval of the Hexcel merger proposal by the Hexcel stockholders. The Woodward board and the Hexcel board recommend that you vote “FOR” for each of the proposals submitted at the Woodward special meeting and the Hexcel special meeting, respectively.

 

Q:	Can I change my vote after I have delivered my proxy or voting instruction card?

 

A:	Yes. You can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

•

submitting a written statement that you would like to revoke your proxy to the corporate secretary of Woodward or Hexcel, as applicable;

 

•

signing and returning a proxy card with a later date;

 

•

attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting; or

 

•

voting by telephone or the Internet at a later time.

If your shares are held by a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

Q:	Will Woodward be required to submit the Woodward share issuance proposal to its stockholders even if the Woodward board has withdrawn, modified or qualified its recommendation?

 

A:	Yes. Unless the merger agreement is terminated before the Woodward special meeting, Woodward is required to submit the Woodward share issuance proposal to its stockholders even if the Woodward board has withdrawn or modified its recommendation.

 

Q:	Will Hexcel be required to submit the Hexcel merger proposal to its stockholders even if the Hexcel board has withdrawn, modified or qualified its recommendation?

 

A:	Yes. Unless the merger agreement is terminated before the Hexcel special meeting, Hexcel is required to submit the Hexcel merger proposal to its stockholders even if the Hexcel board has withdrawn or modified its recommendation.

 

Q:	Are Woodward stockholders entitled to appraisal rights?

 

A:	No. Woodward stockholders are not entitled to appraisal rights under the General Corporation Law of the State of Delaware, as amended (the “DGCL”). For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 105.

 

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Q:	Are Hexcel stockholders entitled to appraisal rights?

 

A:	No. Hexcel stockholders are not entitled to appraisal rights under the DGCL. For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 105.

 

Q:	Are there any risks that I should consider in deciding whether to vote?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 32. You also should read and carefully consider the risk factors of Woodward and Hexcel contained in the documents that are incorporated by reference into this joint proxy statement/prospectus.

 

Q:	What are the material U.S. federal income tax consequences of the merger to Hexcel stockholders?

 

A:

The merger has been structured to qualify as a reorganization for U.S. federal income tax purposes. Accordingly, Hexcel stockholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of their Hexcel common stock for Woodward common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of Woodward common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisors for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 125.

 

Q:	When is the merger expected to be completed?

 

A:

Woodward and Hexcel expect the merger to close in the third calendar quarter of 2020. However, neither Woodward nor Hexcel can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. Woodward and Hexcel must first obtain the required approvals of Woodward stockholders and Hexcel stockholders, as well as obtain necessary regulatory approvals and satisfy certain other closing conditions.

 

Q:	What happens if the merger is not completed?

 

A:

If the merger is not completed, Hexcel stockholders will not receive any consideration for their shares of Hexcel common stock in connection with the merger. Instead, Hexcel and Woodward will remain independent public companies, Hexcel common stock will continue to be listed and traded on the NYSE, and Woodward will not complete the issuance of shares of Woodward common stock pursuant to the merger agreement. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $250 million will be payable by either Woodward or Hexcel, as applicable. See “The Merger Agreement—Termination Fee” beginning on page 122 for a more detailed discussion of the circumstances under which a termination fee will be required to be paid.

 

Q:	Should I send in my stock certificates now?

 

A:

No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent designated by Woodward and reasonably acceptable to Hexcel (the “exchange agent”) will send you instructions for exchanging Hexcel stock certificates for the consideration to be received in the merger. See “The Merger Agreement—Conversion of Shares; Exchange of Hexcel Stock Certificates” beginning on page 109.

 

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Q:	What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:

If you hold shares of Woodward common stock or Hexcel common stock in “street name” and also directly in your name as a holder of record or otherwise or if you hold shares of Woodward common stock or Hexcel common stock in more than one (1) brokerage account, you may receive more than one (1) set of voting materials relating to the same special meeting.

Record holders. For shares held directly, please complete, sign, date and return each proxy card by mail (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus in order to ensure that all of your shares of Woodward common stock or Hexcel common stock are voted.

Shares in “street name.” For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to vote your shares.

 

Q:	Who can help answer my questions?

 

A:

Woodward stockholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Investor Relations at 970-498-3580 or Investor.Relations@woodward.com or Woodward’s proxy solicitor, Innisfree M&A Incorporated, at the following address or phone number: 501 Madison Avenue, 20th Floor, New York, NY 10022, or stockholders may call toll-free at (877) 456-3507 (from the U.S. and Canada) or +1 (412) 232-3651 (from other countries), and banks & brokers may call collect at +1 (212) 750-5833.

Hexcel stockholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Hexcel’s Investor Relations at 203-352-6826 or InvestorRelations@Hexcel.com or Hexcel’s proxy solicitor, MacKenzie Partners, Inc., at the following address or phone number: 1407 Broadway, 27th Floor, New York, New York 10018 or telephone at 212-929-5500 or toll-free at 800-322-2885.

 

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SUMMARY

This summary highlights selected information in this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the matters being considered at the special meetings. In addition, we incorporate by reference important business and financial information about Woodward and Hexcel into this joint proxy statement/prospectus. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 160 of this joint proxy statement/prospectus.

The Parties to the Merger (pages 51 and 52)

Woodward, Inc.

1081 Woodward Way

Fort Collins, Colorado 80524

(970) 482-5811

Woodward is an independent designer, manufacturer, and service provider of control solutions for the aerospace and industrial markets, headquartered in Fort Collins, Colorado. Woodward’s innovative fluid, combustion, electrical, and motion control systems help customers offer cleaner, more reliable, and more efficient equipment. Woodward’s customers include leading original equipment manufacturers and end users of their products. Woodward has production and assembly facilities in the United States, Europe and Asia, and promotes its products and services through its worldwide locations.

Woodward’s common stock is traded on Nasdaq under the symbol “WWD.”

Genesis Merger Sub, Inc.

1081 Woodward Way

Fort Collins, Colorado 80524

(970) 482-5811

Genesis Merger Sub, Inc., a wholly owned subsidiary of Woodward, is a Delaware corporation incorporated on January 9, 2020 for the purpose of effecting the merger. Genesis Merger Sub, Inc. has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.

Hexcel Corporation

281 Tresser Boulevard

Two Stamford Plaza

Stamford, Connecticut 06901

(203) 969-0666

Hexcel Corporation is a leading advanced composites company headquartered in Stamford, Connecticut. Hexcel develops, manufactures, and markets lightweight, high-performance structural materials, including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, radio frequency / electromagnetic interference and microwave absorbing materials, engineered honeycomb and composite structures, for use in Commercial Aerospace, Space & Defense and Industrial markets. Hexcel’s products are used in a wide variety of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive and recreational products and other industrial applications.

 

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Hexcel’s common stock is traded on the NYSE under the symbol “HXL.”

The Merger and the Merger Agreement (pages 53 and 106)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the merger.

Subject to the terms and conditions of the merger agreement, at the completion of the merger, Merger Sub will merge with and into Hexcel, with Hexcel surviving the merger as a wholly owned subsidiary of Woodward.

Merger Consideration (page 107)

In the merger, Hexcel stockholders will receive 0.6250 shares of Woodward common stock for each share of Hexcel common stock they hold immediately prior to the effective time. Woodward will not issue any fractional shares of Woodward common stock in the merger. Hexcel stockholders who would otherwise be entitled to a fraction of a share of Woodward common stock in the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) based on the Woodward closing share value.

Woodward common stock is listed on Nasdaq under the symbol “WWD,” and Hexcel common stock is listed on the NYSE under the symbol “HXL.” The following table shows the closing sale prices of Woodward common stock and Hexcel common stock as reported on Nasdaq and NYSE respectively on January 10, 2020, the last full trading day before the public announcement of the merger agreement, and on [            ], 2020, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of Hexcel common stock, which was calculated by multiplying the closing price of Woodward common stock on those dates by the exchange ratio of 0.6250.

 

		Woodward Common Stock				Hexcel Common Stock				Implied Value of One Share of Hexcel Common Stock
January 10, 2020		$	121.96			$	72.91			$	76.23
[            ], 2020		$	[	]		$	[	]		$	[	]

For more information on the exchange ratio, see “The Merger—Terms of the Merger” beginning on page 53 and “The Merger Agreement—Merger Consideration” beginning on page 107.

Treatment of Hexcel Equity Awards (page 108)

Hexcel Stock Options. At the effective time, each outstanding option to purchase shares of Hexcel common stock (“Hexcel option”) will be converted into an option to purchase shares of Woodward common stock (“Woodward option”), with adjustments to the number of shares and the per share exercise price based on the exchange ratio. The Woodward option will have the same terms and conditions as applied to the corresponding Hexcel option, including any extended post-termination exercise period that applies following the effective time; provided that any then unvested Hexcel options granted prior to January 12, 2020 will vest at the effective time.

Hexcel RSU Awards Granted Prior to January 12, 2020. At the effective time, each award of Hexcel restricted stock units (“Hexcel RSU award”) granted prior to January 12, 2020 will be cancelled and converted into the right to receive a number of shares of Woodward common stock (rounded to the nearest whole share) equal to the number of shares of Hexcel common stock covered by such Hexcel RSU award immediately prior to the effective time multiplied by the exchange ratio.

 

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Hexcel RSU Awards Granted After January 12, 2020. At the effective time, each Hexcel RSU Award granted after January 12, 2020 will be assumed and converted into a restricted stock unit award covering a number of shares (rounded to the nearest whole share) of Woodward common stock (“Woodward RSU award”) equal to the number of shares of Hexcel common stock covered by such Hexcel RSU award immediately prior to the effective time multiplied by the exchange ratio. Such converted award will otherwise continue on the same terms and conditions as were applicable under such Hexcel RSU award, including any provisions for acceleration of vesting.

Hexcel PSU Awards Granted Prior to January 12, 2020. At the effective time, each outstanding award of Hexcel performance stock units (“Hexcel PSU award”) granted prior to January 12, 2020 will be cancelled and converted into the right to receive a number of shares of Woodward common stock (rounded to the nearest whole share) equal to the number of shares of Hexcel common stock covered by such Hexcel PSU award based on the greater of actual performance and performance at target multiplied by the exchange ratio.

Hexcel PSU Awards Granted After January 12, 2020. At the effective time, each outstanding Hexcel PSU award granted after January 12, 2020 will be assumed and converted into a Woodward RSU award covering a number of shares of Woodward common stock (rounded to the nearest whole share) equal to the number of shares of Hexcel common stock covered by such Hexcel PSU award (assuming performance at target) multiplied by the exchange ratio. Such converted award will otherwise continue on the same terms and conditions as were applicable under such Hexcel PSU award, including any provisions for acceleration of vesting, except that the Woodward RSU award will no longer be subject to performance-based vesting and will only be subject to service-based vesting.

For additional information on Hexcel’s equity-based awards, see “The Merger Agreement—Treatment of Hexcel Equity Awards” beginning on page 108.

Treatment of Woodward Equity Awards (page 108)

Each Woodward equity award granted under Woodward’s 2017 Omnibus Incentive Plan or 2006 Omnibus Incentive Plan, as applicable, will not be impacted by the merger and will continue to be an award in respect of Woodward common stock following the effective time, subject to the same terms and conditions that were applicable to such award before the effective time, except as follows:

The compensation committee of the Woodward board has retained the right, under Woodward’s 2017 Omnibus Incentive Plan, to accelerate the vesting of any equity-based award or other compensation in connection with the termination of any Woodward service provider’s (including the directors and executive officers) service in anticipation of the completion of the merger. In addition, at the effective time, each Woodward equity award that (i) was granted on or before January 12, 2020, and is held by a Woodward employee other than (A) Woodward’s chief executive officer and (B) any other Woodward employee who qualifies for post-termination continued vesting pursuant to the terms of such award, and (ii) is outstanding and unvested as of the date of a certain qualifying termination of employment, will be amended to provide that upon such qualifying termination, which consists of a termination of such individual’s employment without “Cause” or a termination of employment by the individual for “Good Reason,” in either event, that occurs upon or within 24 months following the effective time, such award will become fully vested and exercisable, as applicable. For Woodward’s officers (including executive officers), Cause and Good Reason are as defined in the Amended and Restated Executive Change-in-Control Severance Agreements entered into between Woodward and Woodward’s executive officers, and for employees other than Woodward’s officers, the same Cause definition applicable to Woodward’s executive officers will apply and the Good Reason definition will consist of any resignation by such individual for any reason other than in anticipation of a termination for “Cause.”

For additional information on Woodward’s equity-based awards, see “The Merger Agreement—Treatment of Woodward Equity Awards” beginning on page 108.

 

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Material U.S. Federal Income Tax Consequences (page 125)

The merger has been structured to qualify as a reorganization for U.S. federal income tax purposes, and it is a condition to Hexcel’s obligations to complete the merger that Hexcel receive a legal opinion to the effect that the merger will so qualify. Accordingly, Hexcel stockholders generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Hexcel common stock for Woodward common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of Woodward common stock.

You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisors for a full understanding of the tax consequences to you of the merger.

Woodward’s Reasons for the Merger; Recommendation of the Woodward Board (page 72)

The Woodward board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Woodward and its stockholders and has adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Woodward board recommends that Woodward stockholders vote “FOR” the approval of the share issuance and “FOR” the other proposals presented at the Woodward special meeting. For a more detailed discussion of the Woodward board’s recommendation, see “The Merger—Woodward’s Reasons for the Merger; Recommendation of the Woodward Board” beginning on page  72.

Hexcel’s Reasons for the Merger; Recommendation of the Hexcel Board (page 60)

The Hexcel board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Hexcel and its stockholders and has adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Hexcel board recommends that Hexcel stockholders vote “FOR” the approval of the merger agreement and “FOR” the other proposals presented at the Hexcel special meeting. For a more detailed discussion of the Hexcel board’s recommendation, see “The Merger—Hexcel’s Reasons for the Merger; Recommendation of the Hexcel Board” beginning on page 60.

Opinion of Woodward’s Financial Advisor (page 75)

J.P. Morgan Securities LLC (“J.P. Morgan”) delivered its written opinion to the Woodward board that, as of January 12, 2020 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Woodward.

The full text of the written opinion of J.P. Morgan, dated January 12, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. J.P. Morgan provided advisory services and its opinion for the information and assistance of Woodward and the Woodward board in connection with its consideration of the merger. J.P. Morgan’s opinion is not a recommendation as to how any Woodward stockholder should vote with respect to the Woodward share issuance proposal or any other matter. Pursuant to an engagement letter between Woodward and J.P. Morgan, Woodward has agreed to pay J.P. Morgan a transaction fee equal to $22,500,000, of which $5,000,000 became payable upon delivery of J.P. Morgan’s opinion to the Woodward board, and the remainder of which is contingent upon completion of the merger.

For a further discussion of J.P. Morgan’s opinion, Woodward’s relationship with J.P. Morgan and the terms of J.P. Morgan’s engagement, see “The Merger—Opinion of Woodward’s Financial Advisor” beginning on page 75 of this joint proxy statement/prospectus.

 

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Opinion of Hexcel’s Financial Advisor (page 65)

Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its opinion to the Hexcel board that, as of January 12, 2020 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Woodward and its affiliates) of shares of Hexcel common stock.

The full text of the written opinion of Goldman Sachs, dated January 12, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Hexcel board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Hexcel common stock should vote with respect to the merger or any other matter. Pursuant to an engagement letter between Hexcel and Goldman Sachs, Hexcel has agreed to pay Goldman Sachs a transaction fee equal to $24,000,000, $6,000,000 of which became payable at the announcement of the merger, and the remainder of which is contingent upon the completion of the merger.

For a further discussion of Goldman Sachs’ opinion, Hexcel’s relationship with Goldman Sachs and the terms of Goldman Sachs’ engagement, see “The Merger—Opinion of Hexcel’s Financial Advisor” beginning on page 65 of this joint proxy statement/prospectus.

Appraisal Rights in the Merger (page 105)

Woodward stockholders and Hexcel stockholders are not entitled to appraisal rights under the General Corporation Law of the State of Delaware. For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 105.

Interests of Woodward’s Directors and Executive Officers in the Merger (page 88)

In considering the Woodward board’s recommendation to vote for the Woodward share issuance proposal and the Woodward charter amendment proposal, Woodward stockholders should be aware that Woodward’s directors and executive officers may have interests in the merger that are different from, or in addition to, those of Woodward stockholders generally. These interests include:

 

•

On January 11, 2020, the Woodward board approved an amendment to Woodward options that had been previously awarded to Woodward employees other than the chief executive officer or any other employee who qualifies for post-termination continued vesting pursuant to the terms of such award. Such amendment provides that if on or within 24 months following the effective time, the award holder’s employment is terminated without “Cause” or the award holder terminates employment for “Good Reason” (for Woodward officers, including its executive officers, as such terms are defined in their Amended and Restated Executive Change-in-Control Severance Agreements (or substantially similarly titled agreement)), any option awards granted prior to January 11, 2020 that are outstanding and unvested as of the date of such termination will become fully vested (the “double-trigger vesting”). As of July 1, 2020 (which, solely for purposes of this joint proxy statement/prospectus, is the expected date used for the estimated closing of the merger), among Woodward’s executive officers, Jonathan W. Thayer, Thomas G. Cromwell, Sagar A. Patel, Chad R. Preiss and A. Christopher Fawzy would be eligible to receive the double-trigger vesting provided by the amendment, assuming their continued employment through the effective time. Woodward’s other executive officers, non-employee directors, and former executive officer Matthew F. Taylor, would not be eligible to receive the double-trigger vesting provided by the amendment.

 

•

On January 11, 2020, the Woodward board approved that at the effective time, each award granted under the cash component of Woodward’s long-term incentive program, including such awards held by

 

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each of the current executive officers of Woodward, Thomas A. Gendron, Robert F. Weber, Jr., and Messrs. Thayer, Cromwell, Patel, Preiss and Fawzy, as well as Mr. Taylor, that is outstanding as of immediately prior to the effective time, will be converted into the right to receive a cash amount, based on the greater of target or actual performance and prorated based on the portion of the applicable performance period that is completed through the effective time.

 

•

In connection with the merger, Woodward may establish a cash-based compensation program in the aggregate amount of $5 million to promote retention and to reward extraordinary effort (the “retention program”). Amounts under the retention program may be allocated to employees of Woodward (including Woodward’s executive officers) and payment of such amounts will be on the schedule and other terms determined by Woodward’s chief executive officer (or his designee), although neither the chief executive officer nor his designee may allocate any portion of the retention pool to himself or herself. Any retention bonus for an executive officer would be subject to approval by the compensation committee of the Woodward board.

 

•

The compensation committee of the Woodward board retains the discretion at any time to accelerate the vesting of any equity-based award or other compensation in connection with the termination of a Woodward service provider’s (including Woodward’s directors and executive officers) service, including in anticipation of the completion of the merger.

 

•

In the event that, prior to the closing of the merger, Woodward terminates an employee’s employment and such event otherwise would have constituted a qualifying termination, for purposes of eligibility for severance benefits, had it occurred during the two-year protected period in connection with a change in control, then Woodward retains the discretion to pay the change in control severance benefits to the terminated employee (including a terminated executive officer) upon such pre-change in control termination, subject to the discretion of the compensation committee of the Woodward board.

 

•

At closing of the merger, certain of Woodward’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company.

 

•

Woodward’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement.

 

•

In connection with an Amended and Restated Executive Change-in-Control Severance Agreement (or substantially similarly titled agreement) entered into with each Woodward executive officer (other than Messrs. Weber and Taylor), such Woodward executive officer would become entitled to certain severance benefits if such executive officer’s employment is terminated without “Cause” or the executive officer terminates employment for “Good Reason” (as such terms are defined therein) on or within two years following the effective time.

The Woodward board was aware of and considered these respective interests when deciding to adopt the merger agreement. For more information, see “The Merger—Interests of Woodward’s Directors and Executive Officers in the Merger” beginning on page 88.

Interests of Hexcel’s Directors and Executive Officers in the Merger (page 96)

In considering the recommendations of the Hexcel board with respect to the merger, Hexcel stockholders should be aware that Hexcel’s executive officers and directors have certain interests in the merger that may be different from, or in addition to, the interests of Hexcel stockholders generally. The Hexcel board was aware of these interests and considered them, among other matters, in making its recommendations. These interests include, among others, the accelerated vesting and payment of Hexcel’s equity awards and certain severance and other separation benefits that may be payable following termination of an executive officer’s employment after the effective time under severance agreements and the provision of indemnification and insurance arrangements pursuant to the merger agreement. For more information, see “The Merger—Interests of Hexcel’s Directors and Executive Officers in the Merger” beginning on page 96.

 

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Governance and Leadership of the Combined Company After the Merger

Charter

If the Woodward charter amendment proposal is approved by the Woodward stockholders, the Woodward charter will be amended and restated effective upon the completion of the merger to effect the name change of Woodward to “Woodward Hexcel, Inc.,” to increase the number of authorized shares of Woodward common stock from 150 million to 290 million shares and to remove references to Woodward’s Series A preferred stock, which are no longer outstanding. If the charter amendment proposal is not approved at the Woodward special meeting, the existing Woodward charter would continue to be the certificate of incorporation of Woodward and, following the completion of the merger, of the combined company.

Bylaws

On January 11, 2020, the Woodward board approved the amendment and restatement of the bylaws of Woodward, which became effective immediately, to include a forum selection clause that establishes the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain legal claims and actions, unless Woodward consents in writing to the selection of an alternate forum. Pursuant to the terms of the merger agreement, effective upon the completion of the merger, Woodward will amend the bylaws of the combined company to give effect to the agreement of Woodward and Hexcel with respect to governance and leadership of the combined company, as described below.

Board of Directors

Pursuant to the terms of the merger agreement, following the completion of the merger, the board of directors of the combined company after the merger will have ten (10) members, consisting of:

 

•

Mr. Stanage, the current Chairman, Chief Executive Officer and President of Hexcel;

 

•

Mr. Gendron, the current Chairman, Chief Executive Officer and President of Woodward;

 

•

four (4) additional members of the Woodward board prior to the completion of the merger, designated by Woodward prior to the completion of the merger; and

 

•

four (4) additional members of the Hexcel board prior to the completion of the merger, designated by Hexcel prior to the completion of the merger.

Chief Executive Officer; Chairman; Lead Independent Director

Following completion of the merger, Mr. Stanage will serve as Chief Executive Officer of the combined company. Following completion of the merger, Mr. Gendron will serve as Executive Chairman of the combined company until the first anniversary of the closing of the merger, at which time Mr. Gendron intends to retire from the combined company and will then serve as non-executive Chairman of the combined company until the second anniversary of the completion of the merger. At that point, Mr. Stanage will assume the role of Chairman of the board of directors of the combined company in addition to his role as Chief Executive Officer of the combined company. A lead independent director will also be designated from among the members of the board of directors of the combined company as mutually agreed by Woodward and Hexcel prior to the completion of the merger.

Name and Headquarters of the Combined Company After the Merger

If the Woodward charter amendment proposal is approved by Woodward stockholders, the name of the combined company will be changed effective upon the completion of the merger to be “Woodward Hexcel, Inc.” Following the merger, shares of Woodward Hexcel common stock will be traded on either Nasdaq or the NYSE, as the parties mutually agree, under the symbol “WXL.”

 

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As of the effective time, the headquarters of the combined company will be located in Fort Collins, Colorado.

Regulatory Approvals (page 104)

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), certain transactions, including the merger, may not be completed until notifications have been given and information furnished to the Antitrust Division of the United States Department of Justice, referred to as the Antitrust Division, and the United States Federal Trade Commission, referred to as the FTC, and all statutory waiting period requirements have been satisfied. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar day waiting period following the parties’ filings of their respective HSR Act notification forms or the early termination of that waiting period. Woodward and Hexcel each filed their respective HSR Act notification forms on January 27, 2020, and the waiting period expired on February 26, 2020.

Completion of the merger is further subject to the receipt of other required regulatory approvals or clearances under the competition laws of the European Union, the People’s Republic of China and Turkey, and under the foreign investment laws of France.

There can be no assurance that a challenge to the merger on antitrust or other regulatory grounds will not be made or, if such a challenge is made, that it would not be successful.

Conditions to Complete the Merger (page 120)

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

•

approval of the Woodward share issuance proposal by Woodward stockholders and the Hexcel merger proposal by Hexcel stockholders;

 

•

authorization for listing of the shares of Woodward common stock to be issued in the merger, subject to official notice of issuance;

 

•

the expiration or termination of any waiting period applicable to the merger under the HSR Act (which expired on February 26, 2020) and the receipt of certain other required regulatory approvals;

 

•

effectiveness of the registration statement on Form S-4 for the Woodward common stock to be issued in the merger;

 

•

the absence of any law, order, injunction, decree or other legal restraint preventing the completion of the merger or making the completion of the merger illegal;

 

•

subject to certain exceptions, the accuracy of the representations and warranties of each of Woodward and Hexcel;

 

•

performance by each of Woodward and Hexcel of its obligations under the merger agreement in all material respects;

 

•

the absence of any material adverse effect on the other party, as defined in the merger agreement; and

 

•

receipt by Hexcel of an opinion from its counsel to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

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Termination of the Merger Agreement (page 121)

The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the receipt of the required vote by Woodward stockholders or Hexcel stockholders, as applicable, in the following circumstances:

 

•

by mutual written consent of Hexcel and Woodward;

 

•

by either Woodward or Hexcel if any governmental entity that must grant regulatory approvals (referred to as the “requisite regulatory approvals”) has denied approval of the merger and such denial has become final and nonappealable or any court or governmental entity of competent jurisdiction has issued a final and nonappealable order, injunction or decree or other legal restraint or prohibition permanently enjoining or preventing the consummation of the merger, unless the failure to obtain a requisite regulatory approval or the issuance of such order, injunction, decree or other legal restraint, as applicable, is principally due to the failure of the party seeking to terminate the merger agreement to perform or observe the obligations, covenants and agreements of such party set forth in the merger agreement;

 

•

by either Woodward or Hexcel if the merger has not been consummated on or before December 31, 2020 (the “termination date”), unless the failure of the merger to occur by such date is principally due to the failure of the party seeking to terminate the merger agreement to perform or observe the obligations, covenants and agreements of such party set forth in the merger agreement;

 

•

by either Woodward or Hexcel (provided, that the terminating party is not then in material breach of any obligation, covenant or other agreement contained in the merger agreement) if there has been a breach of any of the obligations, covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of Hexcel, in the case of a termination by Woodward, or Woodward, in the case of a termination by Hexcel, which breach or failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party and which is not cured within thirty (30) days (or such fewer days as remain prior to the termination date) following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date);

 

•

by either Woodward or Hexcel if (i) the approval of the Woodward share issuance proposal by Woodward stockholders has not been obtained following a vote taken at the Woodward special meeting (unless the Woodward special meeting has been validly adjourned or postponed, or validly requested by Hexcel to be adjourned or postponed, in accordance with the merger agreement, in which case at the final adjournment or postponement thereof) or (ii) the approval of the Hexcel merger agreement proposal by Hexcel stockholders has not been obtained following a vote taken at the Hexcel special meeting (unless the Hexcel special meeting has been validly adjourned or postponed, or validly requested by Woodward to be adjourned or postponed, in accordance with the merger agreement, in which case at the final adjournment or postponement thereof);

 

•

by Woodward, at any time prior to the approval of the Hexcel merger proposal by Hexcel stockholders, if (i) Hexcel or the Hexcel board has made a board recommendation change or (ii) there has been a willful breach by Hexcel (including by the Hexcel board) of its obligations relating to non-solicitation of acquisition proposals or its obligations related to stockholder approval and the Hexcel board recommendation; or

 

•

by Hexcel, at any time prior to the approval of the Woodward share issuance proposal by Woodward stockholders, if (i) Woodward or Woodward board has made a board recommendation change or (ii) there has been a willful breach by Woodward (including by the Woodward board) of its obligations relating to non-solicitation of acquisition proposals or its obligations related to stockholder approval and the Woodward board recommendation in any material respect.

 

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Termination Fee (page 122)

If the merger agreement is terminated under certain circumstances, including circumstances involving alternative acquisition proposals and changes in the recommendation of Hexcel’s or Woodward’s respective boards, Hexcel or Woodward may be required to pay a termination fee to the other equal to $250 million.

Accounting Treatment (page 104)

Woodward and Hexcel each prepare their respective financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The merger will be accounted for using the acquisition method of accounting, and Woodward will be treated as the accounting acquirer.

The Rights of Hexcel Stockholders Will Change as a Result of the Merger (page 142)

The rights of Hexcel stockholders are governed by Delaware law and by the certificate of incorporation and bylaws of Hexcel. In the merger, Hexcel stockholders will become holders of common stock of the combined company, and their rights will continue to be governed by Delaware law and the certificate of incorporation of Woodward as amended by the Woodward charter amendment (subject to the approval of Woodward stockholders of the Woodward charter amendment proposal) and the bylaws of Woodward, as amended pursuant to the terms of the merger agreement. Hexcel stockholders will have different rights once they become holders of common stock of the combined company due to differences between the Hexcel governing documents and the Woodward governing documents. These differences are described in more detail under the section entitled “Comparison of Stockholders’ Rights” beginning on page 142.

Listing of Woodward Common Stock; Delisting and Deregistration of Hexcel Common Stock

The shares of Woodward common stock to be issued in the merger will be listed for trading on either Nasdaq or the NYSE, as the parties mutually agree. Following the merger, shares of Woodward common stock will be traded on either Nasdaq or the NYSE, as the parties mutually agree, under the symbol “WXL.” In addition, following the merger, Hexcel common stock will be delisted from the NYSE, deregistered under the Exchange Act and cease to be publicly traded.

The Woodward Special Meeting (page 37)

The Woodward special meeting will be held at [            ] on [            ], 2020, at [            ], local time. At the Woodward special meeting, Woodward stockholders will be asked to vote on the following matters:

 

•

approve the Woodward share issuance proposal;

 

•

approve the Woodward charter amendment proposal; and

 

•

approve the Woodward adjournment proposal.

You may vote at the Woodward special meeting if you owned shares of Woodward common stock at the close of business on [            ], 2020. On that date there were [            ] shares of Woodward common stock outstanding, approximately [    ]% of which were owned and entitled to be voted by Woodward directors and executive officers and their affiliates. We currently expect that Woodward’s directors and executive officers will vote their shares in favor of the Woodward share issuance proposal, the Woodward charter amendment proposal and the Woodward adjournment proposal, although none of them have entered into any agreements obligating them to do so.

The Woodward share issuance proposal will be approved if the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward share issuance proposal present in person or by proxy at the Woodward special meeting vote “FOR” such proposal. The Woodward charter amendment proposal will be approved if the holders of two-thirds of the outstanding shares of Woodward common stock vote “FOR” such

 

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proposal. The Woodward adjournment proposal will be approved if the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward adjournment proposal present in person or by proxy at the Woodward special meeting vote “FOR” such proposal.

If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Woodward share issuance proposal or the Woodward adjournment proposal, as applicable. If you fail to submit a proxy or to vote in person at the Woodward special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Woodward share issuance proposal or the Woodward adjournment proposal, your shares will not be deemed to be represented at the Woodward special meeting, and it will have no effect on the Woodward share issuance proposal or the Woodward adjournment proposal, as applicable. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Woodward special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Woodward charter amendment proposal, it will have the same effect as a vote “AGAINST” the Woodward charter amendment proposal.

The Hexcel Special Meeting (page 43)

The Hexcel special meeting will be held at [            ] on [            ], 2020, at [            ], local time. At the Hexcel special meeting, Hexcel stockholders will be asked to vote on the following matters:

 

•

approve the Hexcel merger proposal;

 

•

approve the Hexcel compensation proposal;

 

•

approve the Hexcel charter amendment proposal; and

 

•

approve the Hexcel adjournment proposal.

You may vote at the Hexcel special meeting if you owned shares of Hexcel common stock at the close of business on [            ], 2020. On that date there were [            ] shares of Hexcel common stock outstanding, approximately [            ] percent ([    ]%) of which were owned and entitled to be voted by Hexcel directors and executive officers and their affiliates. We currently expect that Hexcel’s directors and executive officers will vote their shares in favor of the merger, although none of them has entered into any agreements obligating them to do so.

The Hexcel merger proposal will be approved if the holders of a majority of the outstanding shares of Hexcel common stock entitled to vote on the Hexcel merger proposal vote “FOR” such proposal. The Hexcel compensation proposal and the Hexcel charter amendment proposal will be approved if the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Hexcel compensation proposal and the Hexcel charter amendment proposal, respectively, vote “FOR” such proposal. The Hexcel adjournment proposal will be approved if the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Hexcel adjournment proposal vote “FOR” such proposal.

If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Hexcel special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Hexcel merger proposal, it will have the same effect as a vote “AGAINST” the Hexcel merger proposal. If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Hexcel compensation proposal, the Hexcel charter amendment proposal and the Hexcel adjournment proposal, as applicable. If you fail to submit a proxy or to vote in person at the Hexcel special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Hexcel compensation proposal, the Hexcel charter amendment proposal or the Hexcel adjournment proposal, your shares will not be deemed to be represented at the Hexcel special meeting, and it will have no effect on the Hexcel compensation proposal, the Hexcel charter amendment proposal or the Hexcel adjournment proposal, as applicable.

Certain Beneficial Owners of Woodward Common Stock (page 154)

At the close of business on [            ], 2020, directors and executive officers of Woodward beneficially owned and were entitled to vote approximately [            ] shares of Woodward common stock, collectively

 

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representing [    ]% of the shares of Woodward common stock outstanding on [            ], 2020. Although none of them has entered into any agreement obligating them to do so, Woodward currently expects that all of its directors and executive officers will vote their shares “FOR” the Woodward share issuance proposal, “FOR” the Woodward charter amendment proposal and “FOR” the Woodward adjournment proposal. For more information regarding the security ownership of Woodward directors and executive officers, see “Security Ownership of Woodward Beneficial Owners and Management” beginning on page 154.

Certain Beneficial Owners of Hexcel Common Stock (page 156)

At the close of business on [            ], 2020, directors and executive officers of Hexcel beneficially owned and were entitled to vote approximately [            ] shares of Hexcel common stock, collectively representing [    ]% of the shares of Hexcel common stock outstanding on [            ], 2020. Although none of them has entered into any agreement obligating them to do so, Hexcel currently expects that all of its directors and executive officers will vote their shares “FOR” the Hexcel merger proposal, “FOR” the Hexcel compensation proposal, “FOR” the Hexcel charter amendment proposal and “FOR” the Hexcel adjournment proposal. For more information regarding the security ownership of Hexcel directors and executive officers, see “Security Ownership of Hexcel Beneficial Owners and Management” beginning on page 156.

Risk Factors (page 32)

In evaluating the merger agreement, the merger or the issuance of shares of Woodward common stock in the merger, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” beginning on page 32.

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF WOODWARD

The following table presents selected historical consolidated financial data for Woodward as of and for the fiscal years ended September 30, 2019, 2018, 2017, 2016 and 2015, as of December 31, 2019 and for the three months ended December 31, 2019 and December 31, 2018. The statement of operations information for each of the three years in the period ended September 30, 2019 and the balance sheet information as of September 30, 2019 and 2018 have been obtained from Woodward’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended September 30, 2019, which is incorporated by reference into this joint proxy statement/prospectus. The statements of operations data for the years ended September 30, 2016 and 2015 and the balance sheet data as of September 30, 2017, 2016 and 2015 have been derived from Woodward’s consolidated financial statements for such years, which have not been incorporated into this joint proxy statement/prospectus by reference. The financial data as of December 31, 2019 and for the three months ended December 31, 2019 and December 31, 2018 have been obtained from Woodward’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2019, which is incorporated by reference into this joint proxy statement/prospectus.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Woodward’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and Woodward’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2019, including “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the consolidated financial statements and related notes therein. See “Where You Can Find More Information” beginning on page 160 of this joint proxy statement/prospectus.

 

		Three-Months Ended December 31,								Years Ended September 30,
		2019				2018				2019				2018				2017				2016				2015
		(In thousands except per share amounts)
Net sales (1)(2)		$	720,355			$	652,811			$	2,900,197			$	2,325,873			$	2,098,685			$	2,023,078			$	2,038,303
Net earnings (1)(2)(3)(4)(5)(6)(7)(11)(12)			53,373				49,120				259,602				180,378				200,507				180,838				181,452
Earnings per share:
Basic earnings per share			0.86				0.79				4.19				2.93				3.27				2.92				2.81
Diluted earnings per share			0.83				0.77				4.02				2.82				3.16				2.85				2.75
Cash dividends per share			0.1625				0.1425				0.630				0.553				0.485				0.430				0.380
Income taxes (7)			8,175				12,395				61,010				39,200				52,240				45,648				59,497
Interest expense (8)			9,009				11,878				44,001				40,465				35,639				34,697				34,181
Interest income			487				371				1,413				1,674				1,725				2,025				787
Depreciation expense			22,546				21,169				85,982				71,389				55,140				41,550				45,994
Amortization expense			9,905				17,472				56,022				44,742				25,777				27,486				29,241
Capital expenditures			17,232				31,346				99,066				127,140				92,336				175,692				286,612
Weighted-average shares outstanding
Basic shares outstanding			61,991				61,818				61,950				61,493				61,366				61,893				64,684
Diluted shares outstanding			64,673				64,059				64,498				63,876				63,512				63,556				66,056
						At December 31,				At September 30,
						2019				2019				2018				2017				2016				2015
										(Dollars in thousands)
Working Capital						$	537,152			$	563,792			$	523,619			$	593,955			$	463,811			$	579,211
Total assets							4,007,169				3,956,526				3,790,649				2,757,109				2,642,362				2,512,404
Long-term debt, less current portion (9)							729,176				864,899				1,092,397				580,286				577,153				848,488
Total debt (9)							1,113,942				1,084,899				1,246,032				612,886				727,153				850,918
Total liabilities (10)							2,208,566				2,229,785				2,252,545				1,385,726				1,429,767				1,359,300
Stockholders’ equity							1,798,603				1,726,741				1,538,104				1,371,383				1,212,595				1,153,104
Full-time worker members							9,087				9,023				8,277				6,829				6,852				6,955

Notes:

1.	Woodward adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and all subsequently issued supplemental and/or clarifying ASUs related to ASU 2014-09 (collectively “ASC 606”) on October 1, 2018 and elected the

 

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modified retrospective transition method. The results for periods prior to fiscal year 2019 were not adjusted for the new standard and the cumulative effect of the change in accounting of $38,745 was recognized as a net increase to retained earnings at the date of adoption.

2.

On June 1, 2018, Woodward and its wholly-owned subsidiary, Woodward Aken GmbH acquired from Rolls-Royce PLC all of the outstanding shares of stock of L’Orange GmbH, together with its wholly-owned subsidiaries in China and Germany, as well as all of the outstanding equity interests of its affiliate, Fluid Mechanics LLC, and their related operations (collectively, “L’Orange” and subsequent to acquisition, “Woodward L’Orange”). As Woodward L’Orange was acquired during the third quarter of fiscal year 2018, net sales for fiscal year 2019 included sales of $332,009 from Woodward L’Orange and net sales for fiscal year 2018 included $102,905 of sales from Woodward L’Orange during the period June 1, 2018 through September 30, 2018.

3.

In fiscal year 2018, Woodward recorded restructuring charges, net of tax, totaling $12,674, the majority of which relate to Woodward’s decision to relocate its Duarte, California operations to Woodward’s newly renovated Drake Campus in Fort Collins, Colorado. The remaining restructuring charges recognized during the second quarter of fiscal year 2018 consist of workforce management costs related to aligning Woodward’s industrial turbomachinery business with current market conditions.

4.

In fiscal year 2019, Woodward recorded total charges, net of tax, of $44,286 related to (i) move costs associated with the relocation of its Duarte, California operations to Woodward’s newly renovated Drake Campus in Fort Collins, Colorado (“Duarte move related costs”), (ii) the purchase accounting impacts related to the amortization of the Woodward L’Orange backlog intangible, and (iii) charges associated with the impairment of accounts receivable, inventory and certain other assets in connection with the insolvency of Senvion, a significant customer of Woodward’s renewables business.

5.

In fiscal year 2018, Woodward recorded total charges, net of tax, of $42,018 related to (i) Duarte move related costs (ii) the purchase accounting impacts recognized in cost of goods sold related to the revaluation of the Woodward L’Orange inventory and the amortization of the backlog intangible, (iii) the transaction and integration costs associated with the acquisition of Woodward L’Orange, (iv) cost associated with an at-the-money-forward option, (v) warranty and indemnity insurance costs associated with the acquisition of Woodward L’Orange, and (vi) German real estate transfer tax costs associated with the acquisition of Woodward L’Orange.

6.	In fiscal year 2016, Woodward recorded special charges, net of tax, totaling approximately $10,478 related to its efforts to consolidate facilities, reduce costs and address current market conditions.

7.

In fiscal year 2019, Woodward recognized a tax expense of $10,588, or $0.17 per basic and diluted share, related to final regulations issued by the Internal Revenue Service that modified the one-time repatriation tax on deferred foreign income computation required by the change in U.S. tax regulation in December 2017. In fiscal year 2018, Woodward recognized a tax expense of $10,860, or $0.18 and $0.17 per basic and diluted share, respectively, related to the transition impacts of the change in U.S. tax legislation in December 2017. In fiscal year 2016, Woodward recognized a tax benefit of $6,500, or $0.10 per basic and diluted share, related to the retroactive impact of the permanent reinstatement of the U.S. research and experimentation credit (“R&E Credit”) pertaining to fiscal year 2015. In fiscal year 2015, Woodward recognized a tax benefit of $5,818, or $0.09 per basic and diluted share, related to the retroactive impact of the reinstatement of the R&E Credit pertaining to fiscal year 2014.

8.

Interest expense for fiscal years 2018, 2017, 2016 and 2015 includes an increase of $8,695, $8,209, $7,921, and $9,317 respectively, due to the impact of retrospectively applying Accounting Standards Update (“ASU”) 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The interest cost component of net periodic benefit costs included in interest expense for fiscal year 2019 was $9,444.

9.	In addition to the use of cash on hand, to finance the acquisition of L’Orange, in May 2018 Woodward issued an aggregate principal amount of $400,000 of senior unsecured notes in a series of private placement transactions and borrowed $167,420 under its existing revolving credit agreement.

10.

On January 4, 2016, Woodward and General Electric Company (“GE”), acting through its GE Aviation business unit, consummated the formation of a strategic joint venture between Woodward and GE (the “JV”). Woodward determined that the JV formation was not the culmination of an earnings event because Woodward has significant performance obligations to support the future operations of the JV. Therefore, Woodward recorded the $250,000 consideration received from GE for its purchase of a 50% equity interest in the JV as deferred income. The $250,000 deferred income will be recognized as an increase to net sales in proportion to revenue realized on sales of applicable fuel systems within the scope of the JV in a particular period as a percentage of total revenue expected to be realized by Woodward over the estimated remaining lives of the underlying commercial aircraft engine programs assigned to the JV. Total liabilities include $237,197 as of December 31, 2019, $238,905 as of September 30, 2019, $242,387 as of September 30, 2018, $243,347 as of September 30, 2017, and $244,739 as of September 30, 2016 of unamortized deferred income realized related to the JV.

11.	On December 30, 2019, Woodward closed on the sale of one of two parcels of real property at its former Duarte, California operations and recorded a gain on sale of assets, net of tax, of $10,175.

12.	In the first quarter of fiscal year 2020, Woodward recorded a non-cash impairment charge, net of tax, of $28,016 related to the approved plan to divest of Woodward’s renewable power systems business and related other businesses (the “Woodward wind business”).

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HEXCEL

The following table presents selected historical consolidated financial data for Hexcel as of and for the fiscal years ended December 31, 2019, 2018, 2017, 2016 and 2015. The statement of operations information for each of the three years in the period ended December 31, 2019 and the balance sheet information as of December 31, 2019 and 2018 have been obtained from Hexcel’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which is incorporated by reference into this joint proxy statement/prospectus. The statements of operations data for the years ended December 31, 2016 and 2015 and the balance sheet data as of December 31, 2017, 2016 and 2015 have been derived from Hexcel’s audited consolidated financial statements for such years, which have not been incorporated into this joint proxy statement/prospectus by reference.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Hexcel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, including “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the consolidated financial statements and related notes therein. See “Where You Can Find More Information” beginning on page 160 of this joint proxy statement/prospectus.

 

		Years Ended December 31,
(In millions, except per share data)		2019				2018				2017				2016				2015
Results of Operations:
Net sales		$	2,355.7			$	2,189.1			$	1,973.3			$	2,004.3			$	1,861.2
Cost of sales:			1,715.3				1,608.3				1,421.5				1,439.7				1,328.4
Gross margin			640.4				580.8				551.8				564.6				532.8
Selling, general and administrative expenses			158.7				146.0				151.8				157.6				156.1
Research and technology expenses			56.5				55.9				49.4				46.9				44.3
Other expense (income), net			—				7.7				—				—				—
Operating income			425.2				371.2				350.6				360.1				332.4
Interest expense, net			45.5				37.7				27.4				22.1				14.2
Non-operating expense, net			—				—				—				0.4				—
Income before income taxes and equity in earnings			379.7				333.5				323.2				337.6				318.2
Provision for income taxes			76.8				62.5				42.5				90.3				83.0
Income before equity in earnings			302.9				271.0				280.7				247.3				235.2
Equity in earnings from affiliated companies			3.7				5.6				3.3				2.5				2.0
Net income		$	306.6			$	276.6			$	284.0			$	249.8			$	237.2
Basic net income per common share		$	3.61			$	3.15			$	3.13			$	2.69			$	2.48
Diluted net income per common share		$	3.57			$	3.11			$	3.09			$	2.65			$	2.44
Weighted-average shares outstanding:
Basic			84.9				87.9				90.6				92.8				95.8
Diluted			85.8				89.0				91.9				94.2				97.2
Financial Position:
Total assets		$	3,128.6			$	2,824.1			$	2,780.9			$	2,400.6			$	2,187.4
Working capital		$	382.3			$	349.1			$	394.6			$	335.1			$	341.2
Long-term notes payable and capital lease obligations		$	1,050.6			$	947.4			$	805.6			$	684.4			$	576.5
Dividends per share of common stock		$	0.64			$	0.55			$	0.47			$	0.44			$	0.40
Stockholders’ equity		$	1,446.1			$	1,322.0			$	1,495.1			$	1,244.9			$	1,179.6
Other Data:
Depreciation and amortization		$	141.7			$	123.1			$	104.5			$	93.3			$	76.4
Accrual basis capital expenditures		$	191.0			$	179.1			$	284.4			$	320.2			$	289.0
Shares outstanding at year-end, less treasury stock			83.6				84.8				89.6				91.4				93.5

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL DATA

The following table sets forth selected historical per share information of Woodward and Hexcel and unaudited pro forma combined per share information after giving effect to the merger as contemplated by the merger agreement. The pro forma per share information gives effect to the merger as if it had been completed on December 31, 2019 with respect to the book value per share data, and on October 1, 2018 with respect to basic and diluted net earnings per share data. The pro forma per share financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the merger actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma per share financial information.

The following historical and unaudited pro forma per share financial data should be read in conjunction with the audited financial statements as of and for the year ended September 30, 2019 of Woodward, the unaudited financial statements as of and for the three months ended December 31, 2019 of Woodward, the audited financial statements as of and for the year ended December 31, 2019 of Hexcel, the unaudited financial statements as of and for the nine months ended September 30, 2019 of Hexcel, and the section titled “Selected Unaudited Pro Forma Condensed Combined Financial Data” and related notes included in this joint proxy statement/prospectus.

 

		Three months ended December 31, 2019				Year ended September 30, 2019
Woodward Historical Data
Basic net earnings per share		$	0.86			$	4.19
Diluted net earnings per share		$	0.83			$	4.02
Book value per share		$	28.94			$	27.89
Dividends per share (i)		$	0.16			$	0.63
Hexcel Historical Data
Basic net earnings per share		$	0.87			$	3.61
Diluted net earnings per share		$	0.86			$	3.57
Book value per share		$	17.30			$	16.76
Dividends per share		$	0.17			$	0.64
Combined Company Unaudited Pro Forma Data
Basic net earnings per share		$	0.90			$	4.17
Diluted net earnings per share		$	0.88			$	4.06
Book value per share		$	71.11			$	N/A
Dividends per share (i)		$	0.28			$	1.12
Hexcel Unaudited Pro Forma Equivalent Data (ii)
Basic net earnings per share		$	0.56			$	2.61
Diluted net earnings per share		$	0.55			$	2.54
Book value per share		$	44.44			$	N/A
Dividends per share (i)		$	0.18			$	0.70

 

i)	On February 3, 2020, Woodward announced that it is increasing its quarterly cash dividend to $0.28 per share starting with its next dividend.

ii)	The Hexcel unaudited pro forma equivalent data was calculated by multiplying the combined company unaudited pro forma data by the exchange ratio of 0.6250.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference into this joint proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as “anticipate,” “estimate,” “continue,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “objective,” “goal,” “positions,” “prospects,” “potential,” “will,” “would,” “should,” “could,” “may” and words and terms of similar substance identify forward-looking statements, including any statements or discussions regarding timing of completion of the merger, expected benefits of the merger and the future operating or financial performance of Woodward, Hexcel or the combined company identify forward-looking statements. All forward-looking statements are management’s present expectations or forecasts of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the factors relating to the merger discussed under the caption “Risk Factors” beginning on page 32 and the factors previously disclosed in Woodward’s and Hexcel’s reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

•

the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the merger agreement;

 

•

the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the future, including litigation related to the merger;

 

•

delays in completing the merger;

 

•

the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the merger) and stockholder approvals or to satisfy any of the other conditions to the closing of the merger on a timely basis or at all;

 

•

the possibility that the anticipated benefits of the merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Woodward and Hexcel do business;

 

•

the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

•

diversion of management’s attention from ongoing business operations and opportunities;

 

•

potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the merger;

 

•

the ability to complete the merger and integration of Woodward and Hexcel successfully;

 

•

the challenges of integrating, retaining and hiring key personnel;

 

•

failure to attract new customers and retain existing customers in the manner anticipated;

 

•

failure to attract new suppliers and retain existing suppliers in the manner anticipated;

 

•

the effect of divestitures that may be required by regulatory authorities in certain markets in which Woodward and Hexcel compete;

 

•

any interruption or breach of security as a result of systems integration resulting in failures or disruptions in customer account management, general ledger, deposit, loan or other systems;

 

•

changes in Woodward’s stock price before closing, including as a result of the financial performance of Hexcel prior to closing;

 

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•

the dilution caused by Woodward’s issuance of additional shares of its capital stock in connection with the merger;

 

•

operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to information technology systems, on which Woodward and Hexcel are highly dependent;

 

•

changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental or legislative action and other changes pertaining to banking, securities, taxation and financial accounting and reporting, government contracting, environmental protection and insurance, and the ability to comply with such changes in a timely manner;

 

•

changes in the monetary and fiscal policies of any government, including policies of the U.S. Department of the Treasury and the Federal Reserve Board;

 

•

changes in interest rates, which may affect Woodward’s or Hexcel’s net income and other future cash flows, or the market value of Woodward’s or Hexcel’s assets, including its investment securities;

 

•

changes in accounting principles, policies, practices or guidelines;

 

•

changes in any negative credit ratings or actions related to Woodward, or any other circumstance that could adversely affect Woodward’s ability to access the capital markets;

 

•

natural disasters, war, terrorist activities, epidemics or pandemics, including the Coronavirus; and

 

•

other economic, competitive, governmental, regulatory, technological and geopolitical factors affecting Woodward’s or Hexcel’s operations, pricing, costs and services, including the grounding of the Boeing 737 MAX aircraft.

For any forward-looking statements made in this joint proxy statement/prospectus or in any documents incorporated by reference into this joint proxy statement/prospectus, Woodward and Hexcel claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the dates of the documents incorporated by reference in this joint proxy statement/prospectus. Except as required by applicable law, neither Woodward nor Hexcel undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, see the reports that Woodward and Hexcel have filed with the SEC as described under “Where You Can Find More Information” beginning on page 160.

We expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 30, you should carefully consider the following risk factors in deciding whether to vote for the approval of the merger agreement.

Because the market price of Woodward common stock may fluctuate, Hexcel stockholders cannot be certain of the market value of the merger consideration they will receive.

In the merger, each share of Hexcel common stock issued and outstanding immediately prior to the effective time (other than certain shares owned by Woodward, Hexcel or Merger Sub) will be converted into 0.6250 shares of Woodward common stock. This exchange ratio will not be adjusted for changes in the market price of either Woodward common stock or Hexcel common stock between the date of the merger agreement and the effective time. Changes in the price of Woodward common stock prior to the merger will affect the value that Hexcel stockholders will receive in the merger.

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Hexcel’s and Woodward’s businesses, operations and prospects and regulatory considerations, many of which factors are beyond Hexcel’s and Woodward’s control. Therefore, at the time of the Hexcel special meeting, Hexcel stockholders will not know the market value of the consideration to be received at the effective time. Hexcel stockholders should obtain current market quotations for shares of Woodward common stock and for shares of Hexcel common stock.

The market price of Woodward common stock after the merger may be affected by factors different from those affecting the shares of Hexcel or Woodward currently.

In the merger, Hexcel stockholders will become Woodward stockholders. Woodward’s business differs from that of Hexcel. Accordingly, the results of operations of the combined company and the market price of Woodward common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Woodward and Hexcel. For a discussion of the businesses of Woodward and Hexcel and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 160.

Woodward and Hexcel have not obtained updated fairness opinions from J.P. Morgan and Goldman Sachs, respectively, reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

Woodward and Hexcel have not obtained updated fairness opinions either as of the date of this joint proxy statement/prospectus or as of any other date subsequent to the dates of such opinions from J.P. Morgan and Goldman Sachs, which are Woodward’s and Hexcel’s respective financial advisors. Changes in the operations and prospects of Woodward or Hexcel, general market and economic conditions and other factors which may be beyond the control of Woodward and Hexcel, and on which the fairness opinions were based, may have altered the value of Woodward or Hexcel or the prices of shares of Woodward common stock and shares of Hexcel common stock as of the date of this joint proxy statement/prospectus, or may alter such values and prices by the time the merger is completed. The opinions do not speak as of any date other than the dates of those opinions.

Combining Woodward and Hexcel may be more difficult, costly or time-consuming than expected and Woodward and Hexcel may fail to realize the anticipated benefits of the merger, including expected financial and operating performance of the combined company.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of Woodward and Hexcel. To realize the anticipated benefits and cost savings from the

 

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merger, Woodward and Hexcel must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized. If Woodward and Hexcel are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger could be less than anticipated.

Woodward and Hexcel have operated and, until the completion of the merger, must continue to operate independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, suppliers and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of Woodward and Hexcel during this transition period and for an undetermined period after completion of the merger on the combined company. All projections regarding the combined company’s business are, by their nature, estimates which are subject to risks and uncertainties. Business and financial measures of the combined company, including, but not limited to, revenue, free cash flow, synergies and dividend yield, are uncertain and subject to change based on changes in assumptions underlying such measures or other changes in circumstances, many of which may be outside of Woodward’s or Hexcel’s control.

The combined company may be unable to retain Woodward and/or Hexcel personnel successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by Woodward and Hexcel. It is possible that these employees may decide not to remain with Woodward or Hexcel, as applicable, while the merger is pending or with the combined company after the merger is consummated. If key employees terminate their employment, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Woodward and Hexcel to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Woodward and Hexcel may not be able to locate or retain suitable replacements for any key employees who leave either company.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger may be completed, applicable waiting periods must expire or terminate and applicable approvals must be obtained under certain antitrust, competition and foreign investment laws and regulations. In deciding whether to grant regulatory clearances and approvals, the relevant governmental entities may consider, among other things, the effect of the merger on competition within their relevant jurisdiction. The terms and conditions of the approvals that are granted may impose requirements, limitations or costs or place restrictions on the conduct of the combined company’s business. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the merger or imposing additional material costs on or materially limiting the revenues of the combined company following the merger. In addition, neither Woodward nor Hexcel can provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. For a more detailed description of the regulatory review process, see “The Merger—Regulatory Approvals” beginning on page 104.

The unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus are preliminary and estimated, and the actual financial condition and results of operations of the combined company after the merger may differ materially.

The unaudited pro forma condensed combined financial statements in this joint proxy statement/prospectus are presented for illustrative purposes only and are not necessarily indicative of what the combined company’s

 

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actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial statements reflect adjustments, which are based upon preliminary estimates, to record the Hexcel identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Hexcel as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 129.

Certain of Woodward’s and Hexcel’s directors and executive officers may have interests in the merger that may differ from the interests of Woodward stockholders and Hexcel stockholders.

Woodward stockholders and Hexcel stockholders should be aware that some of Woodward’s and Hexcel’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of Woodward stockholders and Hexcel stockholders generally. These interests and arrangements may create potential conflicts of interest. The Woodward board and the Hexcel board were aware of these respective interests and considered these interests, among other matters, when making their decisions to approve the merger agreement, and in recommending that holders of common stock vote to for the merger agreement and the Woodward share issuance, as applicable. For a more complete description of these interests, see “The Merger—Interests of Woodward’s Directors and Executive Officers in the Merger” beginning on page 88 and “The Merger—Interests of Hexcel’s Directors and Executive Officers in the Merger” beginning on page 96.

Termination of the merger agreement could negatively impact Woodward or Hexcel.

If the merger agreement is terminated, there may be various consequences. For example, Woodward’s or Hexcel’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Woodward’s or Hexcel’s common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, either Woodward or Hexcel may be required to pay a termination fee of $250 million to the other party.

Additionally, each of Woodward and Hexcel has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus, and filing and other fees paid or to be paid to the SEC and other regulatory agencies in connection with the merger. If the merger is not completed, Woodward and Hexcel would nonetheless have to recognize these expenses but without realizing the expected benefits of the merger.

Woodward and Hexcel will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees, suppliers and customers may have an adverse effect on Woodward or Hexcel. These uncertainties may impair Woodward’s or Hexcel’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Woodward or Hexcel to seek to change existing business relationships with Woodward or Hexcel. In addition, subject to certain exceptions, Woodward and Hexcel have agreed to operate their respective businesses in the ordinary course consistent with past practice prior to closing. See “The Merger Agreement—Covenants and Agreements” beginning on page 112 for a description of the restrictive covenants applicable to Woodward and Hexcel.

 

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Holders of Woodward and Hexcel common stock will have a reduced ownership and voting interest in the combined company after the merger and will therefore have less voting influence over the combined company.

Holders of Woodward and Hexcel common stock currently have the right to vote in the election of the board of directors and on other matters involving Woodward and Hexcel, respectively. In the merger, each Hexcel stockholder who receives shares of Woodward common stock will become a holder of common stock of the combined company, with a percentage ownership of the combined company that is smaller than such holder’s percentage ownership of Hexcel. Upon completion of the merger, Hexcel stockholders as of immediately prior to the merger will collectively own approximately forty-five percent (45%) of the outstanding shares of the combined company immediately after the merger and Woodward stockholders as of immediately prior to the merger will collectively own approximately fifty-five percent (55%) of the outstanding shares of the combined company immediately after the merger (in each case, on a fully diluted basis and without regard to the fact that immediately prior to the merger, certain stockholders may own both Woodward and Hexcel stock). As a result, Hexcel stockholders will have less voting influence on the combined company and may have less influence on its management and policies than they now have on Hexcel, and Woodward stockholders will have less voting influence on the combined company and may have less influence on its management and policies than they now have on Woodward.

Woodward stockholders and Hexcel stockholders will not have appraisal rights in the merger.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction.

Under Section 262 of the DGCL, neither the Woodward stockholders nor the Hexcel stockholders will be entitled to appraisal rights in connection with the merger with respect to their shares of Woodward common stock or Hexcel common stock, respectively. Under Section 262 of the DGCL, stockholders do not have appraisal rights with respect to shares of any class or series of stock if such shares of stock, or depositary receipts in respect thereof, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders, unless the stockholders receive in exchange for their shares anything other than shares of stock of the surviving or resulting corporation (or depositary receipts in respect thereof), or of any other corporation that is publicly listed or held by more than 2,000 holders of record, cash in lieu of fractional shares or fractional depositary receipts described above or any combination of the foregoing. Because Woodward common stock is listed on Nasdaq, a national securities exchange, and because Hexcel stockholders will receive as merger consideration only shares of Woodward common stock, which will be publicly listed on either Nasdaq or the NYSE, as the parties mutually agree, upon the completion of the merger, and cash in lieu of fractional shares, Woodward stockholders and Hexcel stockholders will not be entitled to appraisal rights in connection with the merger.

Stockholder litigation could prevent or delay the closing of the merger or otherwise negatively impact the business and operations of Woodward and Hexcel.

Woodward and Hexcel may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial condition and results of operations of Woodward and Hexcel and could prevent or delay the consummation of the merger.

Risks Relating to Woodward’s Business

You should read and consider risk factors specific to Woodward’s business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in Woodward’s Annual

 

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Report on Form 10-K for the year ended September 30, 2019 and in other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 160 of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

Risks Relating to Hexcel’s Business

You should read and consider risk factors specific to Hexcel’s business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in Hexcel’s Annual Report on Form 10-K for the year ended December 31, 2019 and in other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 160 of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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THE WOODWARD SPECIAL MEETING

This section contains information for Woodward stockholders about the special meeting that Woodward has called to allow Woodward stockholders to consider and vote on the Woodward share issuance, the Woodward charter amendment and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of Woodward stockholders and a form of proxy card that the Woodward board is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The Woodward special meeting will be held on [                    ], 2020 at [            ], at [            ] local time.

Matters to Be Considered

At the Woodward special meeting, Woodward stockholders will be asked to consider and vote upon the following proposals:

 

•

the Woodward share issuance proposal;

 

•

the Woodward charter amendment proposal; and

 

•

the Woodward adjournment proposal.

Recommendation of the Woodward Board

The Woodward board recommends that you vote “FOR” the Woodward share issuance proposal, “FOR” the Woodward charter amendment proposal and “FOR” the Woodward adjournment proposal. See “The Merger—Woodward’s Reasons for the Merger; Recommendation of the Woodward Board” beginning on page 72 for a more detailed discussion of the Woodward board’s recommendation.

Record Date and Quorum

The Woodward board has fixed the close of business on [                    ], 2020 as the record date for determination of Woodward stockholders entitled to notice of and to vote at the Woodward special meeting. On the record date for the Woodward special meeting, there were [            ] shares of Woodward common stock outstanding.

Holders of a majority of the shares of Woodward common stock outstanding on the record date must be present, either in person or by proxy, to constitute a quorum at the Woodward special meeting. If you fail to submit a proxy or to vote in person at the Woodward special meeting, your shares of Woodward common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

Each share of Woodward common stock is entitled to one (1) vote on all matters properly submitted to Woodward stockholders at the Woodward special meeting.

As of [    ], 2020 the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, Woodward directors and executive officers and their affiliates owned and were entitled to vote approximately [    ] shares of Woodward common stock, representing [    ] percent ([    ]%) of the outstanding shares of Woodward common stock outstanding as of the Woodward record date. We currently expect that Woodward’s directors and executive officers will vote their shares in favor of the

Woodward share issuance proposal, the Woodward charter amendment proposal and the Woodward adjournment proposal, although none of them has entered into any agreements obligating them to do so.

Vote Required; Treatment of Abstentions and Failure to Vote

Woodward share issuance proposal:

 

•

Vote required: Approval of the Woodward share issuance proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward share issuance proposal present in person or by proxy at the Woodward special meeting.

 

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•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Woodward share issuance proposal. If you fail to submit a proxy or to vote in person at the Woodward special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Woodward share issuance proposal, your shares will not be deemed to be represented at the Woodward special meeting, and it will have no effect on the Woodward share issuance proposal.

Woodward charter amendment proposal:

 

•

Vote required: Approval of the Woodward charter amendment proposal requires the affirmative vote of the holders of two-thirds of the outstanding shares of Woodward common stock.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or to vote in person at the Woodward special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Woodward charter amendment proposal, it will have the same effect as a vote “AGAINST” the Woodward charter amendment proposal.

Woodward adjournment proposal:

 

•

Vote required: Approval of the Woodward adjournment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Woodward adjournment proposal present in person or by proxy at the Woodward special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Woodward adjournment proposal. If you fail to submit a proxy or to vote in person at the Woodward special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Woodward adjournment proposal, your shares will not be deemed to be represented at the Woodward special meeting, and it will have no effect on the Woodward adjournment proposal.

Attending the Special Meeting

Your proxy card is your admission ticket. When you arrive at the Woodward special meeting, you will be asked to present photo identification, such as a driver’s license. If you are a beneficial owner of Woodward common stock held by a broker, bank or other nominee, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your Woodward common stock held in nominee name in person, you must get a “legal proxy” in your name from the broker, bank or other nominee that holds your shares and present it with your identification at the meeting. You should indicate that you plan to attend the Woodward special meeting when submitting your proxy card by checking the box under the caption “Meeting Attendance” on the proxy card. If you are a beneficial owner of Woodward common stock held by a broker, bank or other nominee, or if you are a record holder and have not submitted your proxy card or did not indicate on your submitted proxy card that you plan to attend the Woodward special meeting, please contact the office of the Corporate Secretary at Woodward, Inc., 1081 Woodward Way, Fort Collins, Colorado 80524 to request an admission ticket. If you do not have an admission ticket, you must present proof of ownership in order to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership.

Proxies

A Woodward stockholder may vote by proxy or in person at the Woodward special meeting. If you hold your shares of Woodward common stock in your name as a holder of record, to submit a proxy, you, as a Woodward stockholder, may use one of the following methods:

 

•

By telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions.

 

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