MOCON INC

Our provision for income tax expense was 103 percent and 33 percent of income before income taxes for the three-months ended March 31, 2017 and March 31, 2016, respectively. The rate in the three-months ended March 31, 2017 was higher than the statutory rate due primarily to discrete events occurring in the quarter. These discrete events include transaction costs incurred during the quarter and additional reserves for uncertain tax positions accrued.

  As of March 31, 2017 and December 31, 2016, the liability for gross unrecognized tax benefits was $403,000 and $126,000. The increase in the gross unrecognized tax benefits is a result of the recording of an estimated exposure for a ruling we received from the Danish taxing authority. The amount of unrecognized tax benefits is likely to change in the next twelve months as a result of examination conclusion. It is expected that the amount of the unrecognized tax benefits for all other positions we have identified will not materially change in the next twelve months, with the exception of lapsing statutes of l

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On April 16, 2017, we entered into an Agreement and Plan of Merger (“Merger Agreement”), with AMETEK, Inc. Under the terms of the Merger Agreement, at the effective time of the Merger, contemplated by the Merger Agreement, each share of MOCON’s common stock issued and outstanding at the time of the Merger, other than shares owned by AMETEK or any of its subsidiaries or shares for which dissenter’s rights are validly asserted and not withdrawn, will be automatically cancelled and converted into the right to receive $30.00 in cash, without interest, less any applicable taxes required to be withheld. At the effective time of the Merger, each outstanding stock option to purchase MOCON common stock will vest in full and will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to the option multiplied by (ii) the excess of $30.00 over the exercise price per share of such option, less any required tax withholding. The closing of the Merger is subject to customary closing conditions, including the approval of MOCON's shareholders and applicable regulatory approvals. The merger is expected to be completed in the late second quarter or early third quarter of calendar year 2017.

On April 16, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with AMETEK Inc. (“AMETEK”) and AMETEK ATOM, Inc., a Minnesota corporation and a wholly owned subsidiary of AMETEK (“Merger Sub”), pursuant to which, among other things, Merger Sub will merge with and into MOCON, with MOCON surviving as a wholly owned subsidiary of AMETEK (the “Merger”). 

We can provide no assurance that the Merger will be completed, or completed in the timeframe or manner currently anticipated. There are a number of risks surrounding the Merger, including, among other things, the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement, including a termination under circumstances that would require us to pay a termination fee of $5.6 million. The closing of the Merger is subject to customary conditions, including without limitation, (i) the approval by the holders of a majority of the voting power of all shares of MOCON common stock entitled to vote on the Merger, (ii) waiting periods under the anti-trust laws of the United States and Germany expiring and (iii) the absence of any law or order enjoining or otherwise prohibiting or making illegal the Merger. Further, each party’s obligation to consummate the Merger is subject to certain other conditions, including (a) the accuracy of the other party’s representations and warranties (subject in some instances to materiality or “material adverse effect” qualifiers) and (b) the other party’s performance of its material obligations Merger Agreement. In addition, AMETEK’s obligations to consummate the Merger are subject to the absence of any event, circumstance, change, condition, occurrence or effect since the date of the Merger Agreement that, individually or in the aggregate with any other directly related event, circumstance, change, condition, occurrence or effect, (A) has had, or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of MOCON and its subsidiaries, taken as a whole, or (B) prevents or materially delays the ability of MOCON to consummate the Merger. There can be no assurance that approval of our shareholders will be obtained, that the other conditions to closing of the Merger will be satisfied or waived or that other events will not intervene to delay or result in the termination of the Merger. If the Merger is not completed, the price of our common stock may change to the extent that the current market price of our common stock may reflect an assumption that the Merger will be consummated.

Pending the closing of the Merger, the Merger Agreement restricts us from engaging in certain actions without AMETEK’s consent, which could prevent us from pursuing opportunities that may arise prior to the closing of the Merger. Any delay in completing the Merger or a failure to complete the Merger could have a negative impact on our business and our relationships with our customers, vendors and employees. In addition, if the Merger Agreement is terminated, depending on the circumstances giving rise to termination, we may be required to pay a termination fee of $5.6 million.