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): December 7, 2012
SEQUENTIAL BRANDS GROUP,
INC.
(Exact name of registrant
as specified in its charter)
Delaware
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000-16075
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86-0449546
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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17383 Sunset Boulevard, Suite A310
Pacific Palisades, CA
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90272
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(Address of principal executive offices)
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(Zip Code)
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(213) 745-2123
Registrant’s telephone
number, including area code
N/A
(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:
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¨
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Written
communications pursuant
to Rule 425 under
the Securities Act (17
CFR 230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12
under the Exchange Act
(17 CFR 240.14a-12)
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¨
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Pre-commencement
communications pursuant
to Rule 14d-2(b)
under the Exchange Act
(17 CFR 240.14d-2(b))
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¨
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Pre-commencement
communications
pursuant
to
Rule 13e-4(c)
under
the
Exchange
Act
(17
CFR
240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement.
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On December 7, 2012, Sequential Brands
Group, Inc. (“
Sequential
”), Heelys, Inc., a Delaware corporation (“
Heelys
”), and Wheels
Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Sequential (“
Merger Sub
”), entered into
an agreement and plan of merger (the “
Merger Agreement
”) pursuant to which, among other things, Merger Sub
will be merged (the “
Merger
”) with and into Heelys, with Heelys surviving the Merger as a wholly-owned subsidiary
of Sequential, subject to the terms and conditions of the Merger Agreement.
Under the terms of the Merger Agreement,
Heelys’ stockholders will receive $2.25 in cash (the “
Per Share Merger Consideration
”) for each share
of Heelys common stock upon the closing of the Merger.
The Merger Agreement contains representations
and warranties customary for transactions of this type. Heelys has agreed to various customary covenants and agreements, including,
among others, (1) to conduct its business in the ordinary course consistent with past custom and practice during the interim
period between the execution of the Merger Agreement and the closing date of the Merger, (2) not to engage in certain kinds
of transactions during this period, (3) to convene and hold a meeting of its stockholders to consider and vote upon the Merger,
and (4) not to (A) solicit, initiate, or knowingly facilitate or encourage any alternative proposal to acquire Heelys, or (B)
subject to certain exceptions, provide any information in connection with any such proposal, or engage in any discussions or negotiations
regarding or any such proposal. Sequential has agreed to contribute cash to Merger Sub in an amount which, together with the cash
held by Heelys at the time of the closing of the Merger, will be sufficient to pay, among other things, the aggregate Per Share
Merger Consideration to the Stockholders in accordance with the Merger Agreement upon closing of the Merger. Sequential estimates
that it will contribute approximately $8,100,000 in cash to the Merger Sub in order to close the Merger.
The Merger Agreement has been approved
by the Board of Directors of each of Sequential and Heelys. Consummation of the Merger is subject to certain customary conditions,
including, among others, approval of the stockholders of Heelys, accuracy of the representations and warranties of the other party
(generally subject to a material adverse effect standard), and material compliance by the other party with its obligations under
the Merger Agreement.
Subject to the satisfaction of the closing
conditions, the parties anticipate completing the transaction promptly following approval of the Merger by Heelys’ Stockholders.
The Merger Agreement also contains certain
termination provisions for Sequential and Heelys and provides that, in connection with the termination of the Merger Agreement
under specified circumstances, Heelys will be required to pay Sequential a termination fee of $900,000.
Concurrently with the execution of the
Merger Agreement, certain of Heelys’ stockholders (the “
Covered Stockholders
”) entered into voting agreements
with Sequential and Merger Sub (the “
Voting Agreements
”). Pursuant to the Voting Agreements, the Covered Stockholders,
who collectively have the power to vote approximately 35.1% of Heelys’ common stock as of December 7, 2012, agreed to vote
all shares beneficially owned by them in favor of adoption of the Merger Agreement and the transactions contemplated thereby and
against any alternative proposal or any other action that is reasonably likely to adversely effect or interfere with the consummation
of the transactions contemplated by the Merger Agreement. Each Voting Agreement terminates upon the earlier of (i) the effective
time of the Merger and (ii) the termination of the Merger Agreement in accordance with its terms.
In connection with the Merger, Sequential
has entered into an equity commitment letter with Tengram Capital Partners Gen2 Fund, L.P., pursuant to which such entity has
agreed to provide up to $8,100,000 of equity financing to Sequential, subject to the terms and conditions set forth therein, if
needed, for Sequential to satisfy its obligation to provide cash to Merger Sub as described above. The commitment letter will
automatically terminate upon the consummation of the transactions contemplated by the Merger Agreement or ninety (90) days after
the termination of the Merger Agreement for any reason. In addition, the commitment of Tengram Capital Partners Gen2 Fund, L.P.
under the commitment letter is subject to certain conditions, including that all conditions to the obligations of Sequential and
Merger Sub under the Merger Agreement shall have been satisfied or waived in accordance with the Merger Agreement and there shall
have been no termination of the Merger Agreement pursuant to the terms thereof.
The foregoing description of the Merger
Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached hereto
as Exhibit 2.1 (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K of Heelys, dated December 10, 2012), and
is incorporated by reference herein. The Merger Agreement has been attached as an exhibit to provide investors and security holders
with information regarding its terms. It is not intended to provide any other financial information about Sequential or its subsidiaries
or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of
that agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to
limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject
to standards of materiality applicable to the parties that differ from those applicable to investors. Investors should not rely
on the representations, warranties, or covenants or any description thereof as characterizations of the actual state of facts
or condition of Sequential or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the
representations, warranties, and covenants may change after the date of the Merger Agreement, which subsequent information may
or may not be fully reflected in public disclosures by Sequential.
Forward-Looking Statements
Except for historical information contained
herein, the statements in this Current Report on Form 8-K are forward-looking and made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently unreliable and actual results
may differ materially. Factors which could cause actual results to differ materially from these forward-looking statements include
Sequential's ability to identify and acquire brands, the Sequential’s ability to license new and existing brands to third
party retailers, distributors, and manufacturers on terms acceptable to the Sequential, Sequential’s ability to develop
and maintain strategic business relationships for its brands, the impact of competitive products and pricing, growth in targeted
markets, the adequacy of Sequential’s liquidity and financial strength to support its growth, and other information that
may be detailed from time to time in Sequential’s filings with the United States Securities and Exchange Commission. Sequential
undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
On December 10, 2012, Sequential and Heelys
issued a joint press release announcing the execution of the Merger Agreement, as described above. A copy of the joint press release
is attached hereto as Exhibit 99.1.
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Item 9.01
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Financial Statements and Exhibits.
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The following exhibits are filed with this report:
Exhibit No.
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Description
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2.1
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Agreement and Plan of Merger, dated December 7, 2012, by and among Sequential Brands Group, Inc., Wheels Merger Sub Inc.
and Heelys, Inc. (incorporated herein by reference to Exhibit 2.1 to Current Report on Form 8-K of Heelys dated December 10,
2012)
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99.1
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Joint Press Release, dated December 10, 2012
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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.
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SEQUENTIAL BRANDS GROUP, INC.
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By:
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/s/ Yehuda Shmidman
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Yehuda Shmidman
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Chief Executive Officer
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Dated: December 10, 2012
[Signature Page to Merger Agreement
Signing Form 8-K]
EXHIBIT INDEX
Exhibit No.
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Description
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2.1
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Agreement and Plan of Merger, dated December 7, 2012, by and among Sequential Brands Group, Inc., Wheels Merger Sub Inc.
and Heelys, Inc. (incorporated herein by reference to Exhibit 2.1 to Current Report on Form 8-K of Heelys dated December 10,
2012)
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99.1
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Joint Press Release, dated December 10, 2012
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