skullcandy

Skullcandy, the action-sports inspired audio company, has chosen to enter a merger with Mill Road Capital Management LLC rather than Incipio

SGB Media reports that Skullcandy, Inc. has terminated its merger agreement with Incipio LLC and has instead chosen Mill Road Capital Management LLC, after Mill Road produced an unsolicited offer.

Under the terms of the new merger agreement approved by Skullcandy’s board of directors on August 23, “outstanding shares of common stock of Skullcandy will be exchanged for $6.35 per share in cash at the completion of the merger, or a total of approximately $196.6 million.” Skullcandy will pay a $6.6 million termination fee to Incipio to clear the way for the agreement to go through.

It had been previously reported that the audio company had entered into a tentative agreement with Incipio LLC, in which Incipio would acquire Skullcandy for $5.75 per share. Skullcandy had until July 23, 2016 to partake in a “go-shop”period, and seems to have taken advantage of the opportunity to seek a better offer.

From Skullcandy’s investor relations site:

PARK CITY, Utah and SOUTH SAN FRANCISCO, Calif., Aug. 24, 2016 (GLOBE NEWSWIRE) — Skullcandy, Inc. (Nasdaq:SKUL), which creates world-class audio experiences through its Skullcandy® and Astro Gaming® brands, today announced the termination of the previously announced merger agreement (the “Incipio Merger Agreement”) with Incipio, LLC (“Incipio”), and the entry into a new merger agreement (the “Mill Road Merger Agreement”) with MRSK Hold Co. and MRSL Merger Co., entities affiliated with Mill Road Capital Management LLC (collectively, “Mill Road”). Under the terms of the Mill Road Merger Agreement, outstanding shares of common stock of Skullcandy will be exchanged for $6.35 per share in cash at the completion of the merger, or a total of approximately $196.6 million.

On August 17, 2016, Skullcandy’s Board of Directors (the “Skullcandy Board”) received a written offer from Mill Road to acquire all outstanding shares of Skullcandy’s common stock for a price of $6.35 per share in cash, which the Skullcandy Board determined constituted a “Superior Proposal” under the Incipio Merger Agreement. On August 23, 2016, the period during which Incipio was entitled to negotiate with Skullcandy to amend the Incipio Merger Agreement pursuant to its terms expired, and Incipio informedSkullcandy that it did not intend to submit a proposed amendment to the Incipio Merger Agreement. As a result, later on August 23, 2016, the Skullcandy Board authorized Skullcandy to terminate the Incipio Merger Agreement, pay the termination fee to Incipio and enter into the Mill Road Merger Agreement.

Hoby Darling, Skullcandy, Inc. President and CEO commented, “We are extremely pleased with Mill Road’s interest in partnering with Skullcandy. For our public stockholders, the merger represents a significant premium to the share price prior to the initial announcement of a potential strategic transaction in June. At the same time, returning to private ownership under Mill Road provides us with the flexibility and resources to continue to expand our uniquely positioned business. We believe Mill Road’s experience stewarding branded consumer companies will help accelerate the growth of our Skullcandy and Astro brands. We look forward to accessing the experience, operational expertise and capital that partnering with Mill Road affords as we step up our efforts to excite our consumers and retail partners through our world-class audio and gaming platforms.”

 You can read the full release here.

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