The Board Continues to Act in the Best
Interests of All Shareholders
Leading gaming accessory maker Turtle Beach Corporation (Nasdaq:
HEAR) (the “Company”), today issued the following response on
behalf of its Board of Directors (the “Board”) to misleading
statements made by Donerail Group and its representatives
(“Donerail”):
The Board remains committed to dutifully pursuing the best
interests of the Company and its shareholders to maximize long-term
value:
- The Board continues to be open to strategic alternatives that
maximize shareholder value. This is a normal, ongoing
responsibility which does not necessarily benefit from public
disclosures that could be damaging to the continuing operation of
the business and employee retention.
- Maximizing shareholder value with respect to a strategic
alternative necessitates a careful weighing of the intrinsic value
of the Company’s business against a one-time, near-term “exit”
price. Short-term fluctuations in the share price, especially ones
that are market or sector-wide, should be understood as such when
evaluating the value of a business.
- The Board remains highly engaged in overseeing the strategy of
the Company, which has generated significant shareholder value
(over 350% return in 5 years). As a result of that strategy, the
Company is well-positioned for continued value creation, given its
commanding leadership in console gaming headsets, successful
diversification into new gaming accessory categories and strong
profitability and cashflow.
The Board believes this response is necessary to provide its
shareholders with accurate information about Donerail’s activities
and address its continuing dissemination of false and misleading
information. On December 15th, 2021, Donerail claimed in a public
statement that it had recently re-affirmed its previously disclosed
bid to acquire the Company, while also stating an intention to
submit a new proposal that would “likely include an offer at a
lower price” than its recently “re-affirmed” price. Donerail
further called on the Company to publicly disclose a strategic
review process, although it would be “potentially disadvantageous
to [its] efforts of acquiring the Company.”
This contradictory messaging is just the most recent of
Donerail’s attempts to mislead investors to advance its own private
agenda; a campaign that has also been accompanied by a number of
articles repeating unsubstantiated, false and misleading rumors
strikingly similar to the disinformation promulgated by Donerail.
Even its repeated claim to be “one of the largest shareholders” of
the Company exaggerates its ownership position as more than a
majority of its “ownership” is through out-of-the-money call
options, which may not align its interests with those of Turtle
Beach shareholders. The Company is in frequent contact with its
investors, including over 80 investors calls and meetings in 2021
to date, and has not found investor sentiment to be supportive of
Donerail or its proposals.
Consistent with its fiduciary duties, the Board has attempted to
engage constructively with Donerail over the past 10 months. In
fact, members of the Board and management have readily made
themselves available and spent significant amounts of time meeting
with Donerail to listen to its views on the Company and evaluate
its acquisition proposal. During that entire period, Donerail’s
behavior has not been consistent with the actions of a credible,
legitimate buyer truly interested in, or capable of, effecting an
acquisition of the Company. The Board has also made numerous
efforts to objectively and independently consider Donerail’s
proposal to acquire the Company. This includes authorizing the
Company’s financial advisor, BofA Securities, to speak with
Donerail to ascertain its sources of equity and debt financing in
order to complete a transaction. To date, Donerail, which has never
actually closed an acquisition of any company, much less of this
size, has remained unwilling or unable to provide adequate
substantive proof of financing despite claiming otherwise. As an
example, Shareholders can view one of the “financing commitment”
documents in the exact redacted form that it was submitted by
Donerail, available with the Company's Form 8-K filing on the SEC
website here. The Company previously on August 23, 2021, publicized
the Board’s efforts to engage with Donerail on its offer, which
shareholders can view again here.
Most recently, on December 14th, 2021, in response to Donerail’s
claims that it had re-affirmed its offer that was previously
disclosed to the public, the Board communicated to Donerail via a
letter that:
“The Board continues to remain open to
considering any credible offer that would create value for
shareholders, so we had authorized Bank of America to send you a
bid procedure letter for you to comply with in order for us to
fully and objectively evaluate your interest in pursuing a
transaction. We took this step since the Board had received and
carefully reviewed the materials that you had previously provided,
and as we communicated to you in the past, we continue to have
significant concerns regarding your financing capabilities.”
Instead of responding to the bid procedure letter provided by
BofA Securities with the information requested in order for the
Board to evaluate its purported offer, Donerail chose to publish
another misleading public statement.
In light of the foregoing, the Board felt it was necessary to
respond to Donerail’s misstatements about the Board’s willingness
to engage on its proposal. Donerail has given the Board many
reasons to question whether it has a genuine interest in buying the
Company or the ability to finance an acquisition of the Company.
Nevertheless, the Board remains willing to entertain further
engagement consistent with its fiduciary duties on Donerail’s
acquisition proposal under customary processes and procedures to
determine if Donerail is able to demonstrate an ability to credibly
and adequately finance an offer at a price that maximizes value to
all shareholders.
About Turtle Beach Corporation
Turtle Beach Corporation (https://corp.turtlebeach.com) is one
of the world’s leading gaming accessory providers. The Turtle Beach
brand (www.turtlebeach.com) is known for pioneering first-to-market
features and patented innovations in high-quality, comfort-driven
headsets for all levels of gamer, making it a fan-favorite brand
and the market leader in console gaming audio for the last decade.
Turtle Beach’s ROCCAT brand (www.roccat.org) combines detail-loving
German innovation with a genuine passion for designing the best PC
gaming products. Under the ROCCAT brand, Turtle Beach creates
award-winning keyboards, mice, headsets, mousepads, and other PC
accessories. Turtle Beach’s Neat Microphones brand
(www.neatmic.com) creates high-quality USB and analog microphones
for gamers, streamers, and professionals that embrace cutting-edge
technology and design. Turtle Beach’s shares are traded on the
Nasdaq Exchange under the symbol: HEAR.
Cautionary Note on Forward-Looking Statements
This press release includes forward-looking information and
statements within the meaning of the federal securities laws.
Except for historical information contained in this release,
statements in this release may constitute forward-looking
statements regarding assumptions, projections, expectations,
targets, intentions or beliefs about future events. Statements
containing the words “may”, “could”, “would”, “should”, “believe”,
“expect”, “anticipate”, “plan”, “estimate”, “target”, “goal”,
“project”, “intend” and similar expressions, or the negatives
thereof, constitute forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties, which
could cause actual results to differ materially from those
contained in any forward-looking statement. Forward-looking
statements are based on management’s current belief and
expectations, as well as assumptions made by, and information
currently available to, management.
While the Company believes that its expectations are based upon
reasonable assumptions, there can be no assurances that its goals
and strategy will be realized. Numerous factors, including risks
and uncertainties, may affect actual results and may cause results
to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these
factors include, but are not limited to, risks related to, the
substantial uncertainties inherent in the acceptance of existing
and future products, the difficulty of commercializing and
protecting new technology, the impact of competitive products and
pricing, general business and economic conditions, risks associated
with the expansion of our business including the integration of any
businesses we acquire and the integration of such businesses within
our internal control over financial reporting and operations, our
indebtedness, the Company’s liquidity, and other factors discussed
in our public filings, including the risk factors included in the
Company’s most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, and the Company’s other periodic reports. Except as
required by applicable law, including the securities laws of the
United States and the rules and regulations of the Securities and
Exchange Commission, the Company is under no obligation to publicly
update or revise any forward-looking statement after the date of
this release whether as a result of new information, future
developments or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211220005231/en/
For Investor Information, Contact: Alex Thompson Gateway
Investor Relations On Behalf of Turtle Beach 949.574.3860
HEAR@gatewayir.com
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