Skullcandy (SKUL) Receives Unsolicited Acquisition Proposal from Mill Road; Continues to Recommend Incipio Transaction
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Skullcandy, Inc. (NASDAQ: SKUL), which creates world-class audio experiences through its Skullcandy® and Astro Gaming® brands, announced that, on August 14, 2016, it received an unsolicited acquisition proposal from Mill Road Capital Management LLC (“Mill Road”) to acquire Skullcandy for $6.25 per share in cash (the “August 14 Mill Road Proposal”). The August 14 Mill Road Proposal represented a premium to the price of the current transaction with Incipio, LLC (“Incipio”) pursuant to the previously announced definitive merger agreement (the “Merger Agreement”) of $0.15 per share, or 2.5%. Skullcandy received the August 14 Mill Road Proposal the day following its receipt of an unsolicited proposal from Mill Road to acquire Skullcandy for $6.50 per share in cash (the “August 13 Mill Road Proposal”), but the August 13 Mill Road Proposal was rescinded concurrently with the delivery of the August 14 Mill Road Proposal. Mill Road had not obtained the approval of its proposed debt financing sources in connection with the August 14 Mill Road Proposal, and Mill Road indicated to Skullcandy that it was not currently prepared to execute the proposed merger agreement if the Skullcandy Board of Directors (the “Skullcandy Board”) were to determine to enter into a transaction with Mill Road. Mill Road also informed Skullcandy that it would be unwilling to pay the $6.6 million termination fee that would become payable to Incipio if Skullcandy were to terminate the Merger Agreement to enter into a transaction with Mill Road. The Strategic Transactions Committee (the “Strategic Transactions Committee”) of the Skullcandy Board, upon evaluation of, among other things, the additional potential risks involved with closing the potential transaction contemplated by the August 14 Mill Road Proposal, including Skullcandy’s obligation to pay the termination fee to Incipio, Mill Road’s history of negotiations with Skullcandy and the timing of such a transaction relative to the current transaction with Incipio, and weighing those factors against the proposed increase in purchase price, determined that the August 14 Mill Road Proposal was not reasonably likely to lead to a “Superior Proposal” as defined in the Merger Agreement.
As indicated above, on August 13, 2016, Skullcandy received the August 13 Mill Road Proposal, which offered to acquire Skullcandy at a price of $6.50 per share in cash, but Mill Road rescinded the August 13 Mill Road Proposal concurrently with its delivery of the August 14 Mill Road Proposal. The Strategic Transactions Committee had determined that the August 13 Mill Road Proposal was reasonably likely to lead to a Superior Proposal prior to its rescission.
Based on the Strategic Transactions Committee’s determination that the August 14 Mill Road Proposal was not reasonably likely to lead to a Superior Proposal, pursuant to the terms of the Merger Agreement, Skullcandy is obligated to cease negotiations and discussions with Mill Road.
The Skullcandy Board continues to recommend that Skullcandy stockholders tender their shares pursuant to the transaction with Incipio.
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Create E-mail Alert Related CategoriesCorporate News, Mergers and Acquisitions
Related EntitiesMill Road Capital, Definitive Agreement, 14D9
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