CECO ENVIRONMENTAL CORP 8-K

What Happened

• CECO Environmental Corp. (CECO) and Thermon Group Holdings, Inc. entered into a definitive Agreement and Plan of Merger on February 23, 2026. The deal is structured as two sequential mergers that will result in Thermon becoming a wholly owned subsidiary of CECO. CECO’s board unanimously approved the transaction and will submit the required stock issuance for shareholder approval.

Key Details

• Merger consideration (per Thermon share, election subject to proration): Mixed = 0.6840 CECO shares + $10.00 cash; Cash = $63.89 cash; Stock = 0.8110 CECO shares.
• Treatment of equity awards: Thermon restricted stock units and performance units will be assumed and converted to CECO RSUs (performance units converted based on target/actual then time‑vesting). Thermon options with exercise price below $63.89 will be cashed out for the difference; all other options cancelled for no consideration.
• Financing: Bank of America committed, subject to conditions, to a $200 million incremental term loan facility and contemplated use of up to $365 million of CECO’s revolver; a $700 million revolver backstop is included if needed. Funding is subject to closing of the transaction.
• Approvals & timing: Closing requires Thermon shareholder approval, CECO shareholder approval of the stock issuance, HSR clearance, Nasdaq listing approval for shares issued in the merger, effectiveness of a Form S‑4, and other customary conditions. Outside termination date is August 24, 2026 (limited extension to Nov 23, 2026 for antitrust clearances).
• Break fees: Thermon may owe CECO a $74.70 million termination fee in certain circumstances; CECO may owe Thermon $105 million in reciprocal circumstances.
• Governance: CECO’s board will increase from 8 to 10 members at closing; two Thermon directors will join (one designated by Thermon, one by mutual agreement). Supporting CECO stockholders holding ~15.2% signed voting agreements to vote in favor of the stock issuance.

Why It Matters

• The transaction combines Thermon into CECO with a mix of cash and CECO stock as possible consideration. CECO shareholders will vote on a stock issuance required by the merger, which could dilute existing ownership depending on the elected consideration mix and proration. The company plans to use a mix of cash on hand, amended credit facilities, and the committed loan to fund the deal, which may increase leverage. Closing remains subject to shareholder and regulatory approvals and customary conditions.