ZAGG, Inc. (ZAGG) Enters Merger Agreement with mophie

ZAGG Inc (Nasdaq: ZAGG) and mophie inc. (“mophie”) announced the signing of a definitive merger agreement under which ZAGG will acquire mophie. The transaction will leverage the unique strengths of two industry leaders in the mobile accessories sector to create a business with greater product diversification and improved operational capabilities.

“This strategic combination of two industry innovators with complementary product, brand and distribution platforms will enable us to deliver increased value for our customers and shareholders,” said Randy Hales, President and Chief Executive Officer of ZAGG. “We see numerous opportunities to drive revenue growth and increase profitability by leveraging the strengths of both organizations to strengthen product development, improve brand presence, and expand distribution.”

Daniel Huang, mophie Chief Executive Officer, said, “ZAGG and mophie represent two companies with strong brands and shared values. The rationale for the merger is powerful and the combination enhances each company’s growth strategy while offering a truly compelling value proposition. Together, we intend to build on our market leadership to deliver great products, advance the brand strength, and increase our global presence in mobile accessories.”

Key Strategic and Financial BenefitsZAGG and mophie anticipate that the merger will deliver the following benefits:

• Enhanced Capabilities for Profitable Growth: The combination will create an improved technology platform, strengthened engineering and manufacturing resources in China, along with a global distribution network with facilities in the U.S., Europe, and Asia.
• Best in Class Product Development: Retail customers and mobile consumers will benefit from the alignment of strong product development teams that are focused on delivering Creative Product Solutions.
• Improved Brand Strength: The brand strength of the combined companies will be leveraged to increase consumer awareness through an expanded global platform and focus on always being the Preferred Brand.
• Expanded Global Distribution Channels: The combined entity intends to further increase its Targeted Global Distribution through a broader retail presence and new product introductions.
• Improved Financial Profile: The combination is expected to increase net sales and adjusted EBITDA with a focus on leveraging operational efficiencies and performance.

Transaction Structure

ZAGG has agreed to pay $100 million at closing, plus the amount by which 5X Adjusted EBITDA exceeds $100 million over a 12-month earn-out period. The 12-month earn-out period will run from April 1, 2016 to March 31, 2017. The purchase price at closing will be funded with cash and debt. The earn-out will be financed through a combination of cash, debt and up to $5 million in ZAGG common stock. The agreement also allows mophie to collect approximately $15 million from certain pre-merger tax and custom duties refunds and real estate sale proceeds, if received post-closing.

During the earn-out period the management teams will work collaboratively to identify operational efficiencies through the adoption of best practices from both companies.

Management, Governance and Integration

Upon closing of the transaction and throughout the earn-out period, both Daniel Huang (CEO) and Shawn Dougherty (COO) will continue in their current roles and report directly to Randy Hales. The composition of ZAGG’s board of directors will not change in connection with this transaction.

Approvals and Time to Close

The transaction is expected to close during the first quarter of 2016 subject to customary closing conditions, including regulatory approvals. The board of directors of each company have unanimously approved the transaction.

Advisors

ZAGG received legal advice from Durham Jones & Pinegar, P.C., and financial advice from D.A. Davidson; mophie received legal advice from Buchalter Nemer LLP, and financial advice from Wunderlich Securities.

Conference Call and Webcast Details

ZAGG will host a conference call and webcast Tuesday, February 2nd at 6:30 p.m. Eastern Time (U.S.) to discuss the proposed merger. Randy Hales, President and CEO, will discuss the announcement and facilitate a brief question and answer session. The general public is invited to listen to the call via a live webcast through the Investor Relations section of the ZAGG website. For those unable to listen to the live broadcast, a replay will be available on the ZAGG website beginning approximately two hours after the event. The webcast and a podcast will be archived and available online on ZAGG’s website for at one year following the call.

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