UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 5, 2018

 

STANDARD DIVERSIFIED INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (516) 248-1100

 

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(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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Item 1.01.

Entry into a Material Definitive Agreement.

The information set forth in Item 2.01 is incorporated by reference herein.

Item 2.01.

Completion of Acquisition or Disposition of Assets.

On September 5, 2018, Turning Point Brands, Inc. (“Turning Point”), a majority-owned subsidiary of Standard Diversified Inc. (the “Registrant”), completed the acquisition (the “Acquisition”) of International Vapor Group, LLC (“IVG”) pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”) dated as of September 5, 2018, by and among (i) Turning Point Brands, LLC, as Buyer, (ii) Pegasus Real Estate Investment Group, LLC, David Epstein, Milander Investments, LLC, David Herrera, David Mardini, John M. Scott, Martin Flumenbaum, Elizabeth McColm, Robert Schumer, Daniel Kramer, Durlan Bergnes, Angelo Bonvino, John Lange and Mark Wlazlo (collectively, the “Shareholders”), (iii) IVG Holdings S Corporation, as Seller, and (iv) Nicolas Molina, as Seller’s Representative.

Pursuant to the Stock Purchase Agreement, Turning Point purchased the 100% membership interest in IVG held by the Seller for an aggregate purchase price of $24 million, subject to a working capital adjustment. The $24 million purchase price consists of: (i) $15,000,000 in cash at the closing, (ii) 153,079 shares of Turning Point’s common stock valued at $5,000,000, and (iii) $4,000,000 in the form of an 18-month unsecured promissory note (the “Note”) issued by Turning Point.

The Note bears interest at a rate equal to 6% per annum, compounded monthly, and has a maturity date 18 months following the closing date. The Note may be prepaid at any time without penalty and is subject to a default rate of 11% per annum. The Note is subject to customary defaults, including defaults for nonpayment, nonperformance and bankruptcy or insolvency of IVG. Upon an event of default and notice by the Seller, the obligations under the Note may accelerate and become immediately due and payable.

In connection with the transaction, IVG will enter into employment agreements with IVG’s two founders, which agreements provide for an aggregate of $4.5 million in contingent earnouts based on performance metrics paid out at the end of two years.

Upon the closing of the Acquisition, the Shareholders and a fund managed by Standard General L.P. have agreed that the Shareholders will exchange the 153,079 shares of Turning Point’s common stock for 345,525 previously-issued shares of Class A Common Stock of the Registrant. Standard General L.P. (and its related funds) constitute the largest shareholder of the Registrant. Turning Point is not a party to this exchange transaction between Standard General L.P. and the Shareholders.

Except as described in this Item 2.01, there are no material relationships between Turning Point or the Registrant and any of the other parties involved in the Acquisition.

Item 7.01.

Regulation FD Disclosure.

On September 6, 2018, the Registrant issued a press release announcing the Acquisition. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 7.01 and the Exhibit attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information will not be incorporated by reference into any registration statement filed by the Registrant under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

 

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Exhibit 99.1

 

STANDARD DIVERSIFIED SUBSIDIARY TURNING POINT BRANDS ACQUIRES INTERNATIONAL VAPOR GROUP, INC.

NEW YORK, NY, September 6, 2018 – Standard Diversified Inc. (“Standard Diversified” or the “Company”) (NYSE American: SDI) announced that its majority-owned subsidiary, Turning Points Brands, Inc. (NYSE: TPB), an industry leading provider of NewGen Products and Other Tobacco Products, has acquired International Vapor Group, Inc. (“IVG”), a seller of a broad array of proprietary and third-party vapor products direct to adult consumers via a best-in-class online platform and in retail stores under brand names, such as VaporFi, South Beach Smoke, and DirectVapor. The company was founded in 2012 and is headquartered in Miami Lakes, Florida.

TPB values the acquisition of IVG at $24 million and expects the transaction to be immediately accretive. According to TPB, for the twelve-month period ended June 30, 2018, IVG had revenue of approximately $47.7 million.

TPB President and Chief Executive Officer, Larry Wexler, commented, “IVG has played an important role in shaping the vaping industry since its inception through its commitment to the consumer experience with a world class B2C infrastructure.”

Standard Diversified Inc. is a holding company that owns and operates subsidiaries in a variety of industries, including other tobacco products, insurance and outdoor advertising.  For more information about the Company, please visit the Company’s website at www.standarddiversified.com.

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, are forward-looking statements. These forward-looking statements address, among other things activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including the Company’s expected acquisition activity. These forward-looking statements are subject to a number of risks that could cause actual results to differ materially from those contained in the forward-looking statements, including those risks described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, as well as the Company’s subsequent Quarterly Reports on Form 10-Q.

Currently unknown or unanticipated risks, or risks that emerge in the future, could cause actual results to differ materially from those described in forward-looking statements, and it is not possible for the Company to predict all such risks, or the extent to which this may cause actual results to differ from those contained in any forward-looking statement. Except as required by law, the Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.

Adam Prior

The Equity Group Inc.

Phone: (212) 836-9606