Turning Point Brands (TPB) and Standard Diversified (SDI) enter agreement under which SDI will be merged into wholly-owned subsidiary of TPB

Turning Point Brands, Inc. (the “TPB”) (NYSE: TPB) and Standard Diversified Inc. (“SDI”) (NYSE: SDI) announced today that they have entered into a definitive agreement under which SDI will be merged into a wholly-owned subsidiary of TPB in a tax-free downstream merger, in a transaction first announced by the companies in November 2019.

Under the terms of the agreement, the holders of SDI’s Class A Common Stock and SDI’s Class B Common Stock (collectively, the “SDI Common Stock”) will receive in the aggregate, in return for their SDI Common Stock, TPB Voting Common Stock (“TPB Common Stock”) at a ratio of 0.97 of a share of TPB Common Stock for each share of TPB Common Stock held by SDI.

SDI has divested, or will prior to the merger divest, its assets of SDI other than its TPB Common Stock and has agreed that its net liabilities at closing will not exceed $25,000. These divestitures include the disposition of SDI’s interest in Maidstone Insurance Company (“Maidstone”), through a disposition to the New York State Department of Financial Services (“NYSDFS”), and the disposition of its interest in Standard Outdoor LLC (“Standard Outdoor”) through a sale transaction. Maidstone is currently subject to an Order of Liquidation filed by the NYSDFS on January 14, 2020 and approved by the Supreme Court of the State of New York, County of Nassau, on February 13, 2020. At such time, the control and assets of Maidstone vested with the NYS Liquidation Bureau and were no longer under SDI’s control, and all Maidstone assets and liabilities were removed from SDI’s financial statements. On April 7, 2020, SDI entered in a definitive agreement with Billboards LLC, a wholly-owned subsidiary of SDI’s largest stockholder, whereby SDI sold all of its equity interests in Standard Outdoor.

Each of TPB and SDI appointed a special committee to negotiate the merger, composed of independent, disinterested directors. Each special committee appointed its own independent legal counsel and financial advisors. After receiving the favorable recommendation of their respective special committees, the Boards of Directors of both companies approved the transaction, which is subject to, customary closing conditions, including approval by holders of a majority of the aggregate voting power of the SDI Common Stock and the receipt of any applicable regulatory approvals. The Board of Directors of SDI has recommended that its stockholders vote in favor of the transaction. The companies expect the transaction to close in the summer of 2020.

Duff & Phelps, LLC served as financial advisor to the TPB special committee and Houlihan Lokey, Inc. served as financial advisor to the SDI special committee.

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