Skullcandy (SKUL) Receives Revised $6.25/Share Takeover Proposal from Mill Road Capital

August 16, 2016 8:06 AM EDT

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Skullcandy, Inc. (Nasdaq: SKUL) announced that, on August 15, 2016, it received a revised unsolicited acquisition proposal from Mill Road Capital Management LLC (“Mill Road”) to acquire Skullcandy for $6.25 per share in cash (the “August 15 Mill Road Proposal”). The August 15 Mill Road Proposal represents a premium to the price of the current transaction with Incipio, LLC (“Incipio”) pursuant to the previously announced definitive merger agreement, as amended (the “Merger Agreement”), of $0.15 per share, or 2.5%. Skullcandy received the August 15 Mill Road Proposal the day following its receipt of an unsolicited proposal from Mill Road to acquire Skullcandy for $6.25 per share in cash (the “August 14 Mill Road Proposal”), and two days following the receipt of an unsolicited proposal from Mill Road to acquire Skullcandy for $6.50 per share in cash (the “August 13 Mill Road Proposal”). Mill Road rescinded the August 13 Mill Road Proposal upon delivery of the August 14 Mill Road Proposal. On August 14, 2016, the Strategic Transactions Committee of the Skullcandy Board of Directors (the “Skullcandy Board”) determined that the August 14 Mill Road Proposal was not reasonably likely to lead to a “Superior Proposal” as defined in the Merger Agreement.

The August 15 Mill Road Proposal is substantively identical to the August 14 Mill Road Proposal, except that Mill Road indicated that it has received the approval of its proposed debt financing sources in connection with the August 15 Mill Road Proposal, and that it is prepared to deliver into escrow its signature pages to the proposed merger agreement if the Skullcandy Board were to determine that the August 15 Mill Road Proposal constituted or was reasonably likely to lead to a Superior Proposal.

Later on August 15, 2016, the Strategic Transactions Committee of the Skullcandy Board determined that the August 15 Mill Road Proposal was reasonably likely to lead to a Superior Proposal. Skullcandy therefore intends to discuss and negotiate with Mill Road in accordance with the terms of the Merger Agreement to determine whether such negotiations could lead to a Superior Proposal.

Subject to the terms of the Merger Agreement, Skullcandy has the right to terminate the Merger Agreement in order to accept a Superior Proposal. There can be no assurance that the proposal Skullcandy received from Mill Road will ultimately lead to a Superior Proposal. The Skullcandy Board has not changed its recommendation that Skullcandy stockholders tender their shares pursuant to the offer by Powder Merger Sub, Inc., a wholly owned subsidiary of Incipio.



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