Skullcandy Board of Directors Determines Revised Proposal from Mill Road Capital Management at $6.35 per Share is Superior to...
August 18 2016 - 8:00AM
Skullcandy, Inc. (NASDAQ:SKUL), which creates world-class audio
experiences through its Skullcandy® and Astro Gaming® brands,
announced that, on August 17, 2016, Skullcandy received a written
proposal from Mill Road Capital Management LLC (“Mill Road”) to
acquire Skullcandy for $6.35 per share in cash (the “August 17 Mill
Road Proposal”). Later that day, on August 17, 2016,
Skullcandy’s Board of Directors (the “Skullcandy Board”), after
consultation with its outside legal counsel and financial advisors,
determined that the August 17 Mill Road Proposal constitutes a
“Superior Proposal” as defined in Skullcandy’s previously announced
definitive merger agreement, as amended (the “Incipio Agreement”),
with Incipio, LLC (“Incipio”).
As part of the August 17 Mill Road Proposal, Mill Road delivered
to Skullcandy a draft merger agreement that is not subject to due
diligence or financing conditions and is on substantively the same
terms as the Incipio Agreement and the prior unsolicited proposal
from Mill Road dated August 15, 2016, other than the increased
price. Mill Road indicated that it has received the approval of its
proposed debt financing sources in connection with the August 17
Mill Road Proposal, and Mill Road delivered into escrow its
signature pages to the proposed merger agreement.
Also on August 17, 2016, pursuant to the terms of the Incipio
Agreement, Skullcandy delivered notice to Incipio of the Skullcandy
Board’s determination and intention, at or after 12:00 a.m.,
Eastern Time, on August 23, 2016, to terminate the Incipio
Agreement and change its recommendation to Skullcandy’s
stockholders to recommend the August 17 Mill Road Proposal, subject
to Incipio’s rights pursuant to the Incipio Agreement to negotiate
with and make revised proposals to Skullcandy during that
period.
There can be no assurance that the August 17 Mill Road Proposal
will ultimately lead to a transaction between Mill Road and
Skullcandy or that Incipio will propose any adjustments to the
Incipio Agreement. The Skullcandy Board has not changed its
recommendation that Skullcandy stockholders tender their shares
pursuant to the offer by Powder Merger Sub, Inc., a wholly owned
subsidiary of Incipio, nor has it made any recommendation with
respect to the August 17 Mill Road Proposal.
About Skullcandy, Inc.
Skullcandy, Inc. creates world-class audio experiences through
its Skullcandy® and Astro Gaming® brands. Founded at the
intersection of music, sports, technology and creative culture, the
Skullcandy brand creates world-class audio and gaming products for
the risk takers, innovators, and pioneers who inspire us all to
live life at full volume. From new innovations in the science of
sound and human potential, to collaborations with up-and-coming
musicians and athletes, Skullcandy lives by its mission to inspire
life at full volume through forward-thinking technologies and
ideas, and leading edge design and materialization. Astro Gaming
creates premium video gaming equipment for professional gamers,
leagues, and gaming enthusiasts. Astro Gaming was founded in the
pits of competitive gaming and has become synonymous with pinnacle
gaming experiences. Skullcandy and Astro Gaming products are sold
and distributed through a variety of channels around the world from
Skullcandy’s global locations in Park City, San Francisco, Tokyo,
Zurich, Mexico City, and Shanghai, as well as through partners in
some of the most important culture, sports, and gaming hubs in the
world. The Skullcandy brand website can be found at
http://www.skullcandy.com. The Astro Gaming website can be found at
http://www.astrogaming.com.
Cautions regarding Forward-Looking
Statements
The statements included in this press release that are not a
description of historical facts are forward-looking statements.
Words or phrases such as “believe,” “may,” “could,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,”
“expect,” “should,” “would” or similar expressions are intended to
identify forward-looking statements and are based on Skullcandy’s
current beliefs and expectations. These forward-looking statements
include, but are not limited to, statements related to the
consummation of the tender offer and the merger as well as any
benefits of the acquisition by Incipio of Skullcandy. These
forward-looking statements are based on information available to us
as of the date of this release and current expectations, forecasts
and assumptions and involve a number of risks and uncertainties
that could cause actual results to differ materially from those
anticipated by these forward-looking statements. Such risks and
uncertainties include a variety of factors, some of which are
beyond our control. In particular, such risks and uncertainties
include, but are not limited to: the risk that one or more closing
conditions to the transaction may not be satisfied or waived, on a
timely basis or otherwise; the unsuccessful completion of the
tender offer; the risk that the transaction does not close when
anticipated, or at all, including the risk that the requisite
regulatory approvals may not be obtained; matters arising in
connection with the parties’ efforts to comply with and satisfy
applicable regulatory approvals and closing conditions relating to
the transaction; there may be a material adverse change of
Skullcandy or its business may suffer as a result of uncertainty
surrounding the transaction; the transaction may involve unexpected
costs, liabilities or delays; the adverse impact of competitive
product announcements; revenues and operating performance; changes
in overall economic conditions and markets, including the current
credit markets; changes in demand for our products; changes in
inventories at customers and distributors; technological and
product development risks; availability of raw materials;
competitors’ actions; pricing and gross margin pressures; loss of
key customers; order cancellations or reduced bookings; control of
costs and expenses; significant litigation, including with respect
to intellectual property matters; risks associated with
acquisitions and dispositions; risks associated with international
operations including foreign employment and labor matters
associated with unions and collective bargaining agreements; the
threat or occurrence of international armed conflict and terrorist
activities both in the United States and internationally; changes
in generally accepted accounting principles; risks related to new
legal requirements; risks and costs associated with increased and
new regulation of corporate governance and disclosure standards;
and risks involving environmental or other governmental regulation.
Information concerning additional factors that could cause results
to differ materially from those projected in the forward-looking
statements is contained in Skullcandy’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other of Skullcandy’s filings with the Securities and Exchange
Commission. These forward-looking statements are as of the date
hereof and should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made. For additional
information, visit Skullcandy’s corporate website,
www.skullcandy.com, or for official filings visit the Securities
and Exchange Commission (“SEC”) website, www.sec.gov.
Notice to Investors
This news release and the description contained herein is for
informational purposes only and is not an offer to buy or the
solicitation of an offer to sell any shares of Skullcandy. Incipio
and its wholly-owned subsidiary, Powder Merger Sub, Inc.
(“Purchaser”), have filed with the SEC a Tender Offer Statement on
Schedule TO containing an offer to purchase, a form of letter of
transmittal and other documents relating to the tender offer, and
Skullcandy has filed with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the tender offer.
Skullcandy, Purchaser and Incipio mailed these documents to the
stockholders of Skullcandy. THESE DOCUMENTS, AS EACH MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME, CONTAIN IMPORTANT INFORMATION
ABOUT THE TENDER OFFER AND SKULLCANDY STOCKHOLDERS ARE URGED TO
READ THEM CAREFULLY. Stockholders of Skullcandy may obtain a free
copy of these documents and other documents filed by Skullcandy,
Incipio or Purchaser with the SEC at the website maintained by the
SEC at www.sec.gov. In addition, stockholders of Skullcandy may
obtain a free copy of these documents by contacting Innisfree
M&A Incorporated, the information agent for the tender offer,
toll-free at (888) 750-5834.
Contact for Investors:
ICR
Brendon Frey
203-682-8200
Brendon.Frey@icrinc.com
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