Skullcandy Agrees to Be Acquired by Incipio

Headphones maker Skullcandy Inc. agreed to be acquired by consumer-technology provider Incipio LLC. for $177 million.

The deal values Skullcandy at $5.75 a share, a 23% premium over Thursday's closing price of $4.68. The stock, which had risen 19% since Skullcandy's founder reported takeover talks June 7, rose 22% to $5.71 in morning trading in New York on Friday.

The closely held Incipio has a number of owned and licensed fashion and technology-accessory brands, such as Incase smartphone cases and Tavik swimwear. Skullcandy makes headphones and videogame accessories aimed at the intersection of music, sports and technology.

Excluding Skullcandy's cash, cash equivalents and short-term investments, the deal's enterprise value is $131 million. The deal is being funded with debt, and the boards from both companies have approved the agreement.

Skullcandy will have a one month "go-shop" period to look for higher offers. The deal, expected to close in the third quarter, has a termination fee of $6.2 million that Skullcandy could pay to Incipio.

In a securities filing, Skullcandy said it had amended its employment agreements with its named executives, including with Chief Executive Hoby Darling. The new agreement includes a lump-sum payment of up to two-times the executive's salary and target bonus as well as an accelerated vesting of share awards if there is a "change in control" of the company.

Since pricing its initial public offering at $20 in 2011, Skullcandy's shares have fallen as revenue growth has slowed in recent years. The stronger dollar, among other things, has weighed on the company as a large chunk of its sales come from outside the U.S.

Earlier this month, the investment firm of Skullcandy founder and former Chief Executive Rick Alden said it was exploring whether to pursue taking the headphone maker private.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

June 24, 2016 10:55 ET (14:55 GMT)

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