Saucony Agrees to Be Acquired by Stride Rite for $23 in Cash for Each Class A and Class B Common Share
02 June 2005 - 9:06PM
Business Wire
Saucony, Inc. (NASDAQ:SCNYA and SCNYB) announced today that it has
entered into a definitive agreement with The Stride Rite
Corporation (NYSE:SRR) under which Stride Rite has agreed to
acquire Saucony. Stride Rite will pay $23 in cash for each share of
Class A and Class B common stock of Saucony, representing a 19%
premium to $19.32, the average of the Class A and Class B common
stock closing prices on June 1, 2005, and a 17% premium to $19.60
which is the average of the last four weeks' closing prices of
Saucony's Class A and Class B common shares. All outstanding
options for Saucony common stock, whether or not vested, will be
cashed out in the merger based on the $23 per share purchase price.
Based on the number of shares of Saucony common stock outstanding
and the net option value as of May 31, 2005, the transaction value
is approximately $170 million. The transaction is expected to close
in the summer of 2005 and is subject to regulatory approval,
approval by the holders of at least two-thirds of Saucony's Class A
shares and the holders of at least two-thirds of Saucony's Class A
and Class B shares voting together as a single class, and other
customary closing conditions. Saucony President and Chief Executive
Officer John Fisher said, "This morning's announcement of the
merger agreement between Saucony and Stride Rite is the culmination
of our strategic alternative review process announced last August.
We believe that this transaction maximizes value for Saucony
shareholders. In addition, we are convinced that Saucony has found
the correct acquirer to expand our market presence and accelerate
the growth of our businesses. We believe that Stride Rite's and
Saucony's complementary strengths will provide a stronger platform
for growth and profitability. We thank our shareholders for their
patience during our review process and look forward with enthusiasm
to becoming part of the Stride Rite family." Mr. Fisher and Charles
Gottesman, Executive Vice President, Business Development, of
Saucony, as well as members of their respective families and trusts
and other entities through which Messrs. Fisher and Gottesman
beneficially own or have sole or shared voting power with respect
to shares of Saucony common stock, have agreed, pursuant to a
voting agreement with Stride Rite, that they will vote all of their
shares in favor of the transaction at the meeting of Saucony
shareholders. The individuals, trusts and other entities signing
the voting agreement own approximately 49% of the outstanding
shares of Saucony Class A common stock and approximately 25% of the
outstanding shares of Saucony Class A common stock and Class B
common stock, taken together as a single class. If the merger
agreement is terminated, the voting agreement also terminates.
Chestnut Securities, Inc. acted as financial advisor to Saucony in
connection with the transaction and delivered a fairness opinion to
the Saucony board of directors. Wilmer Cutler Pickering Hale and
Dorr LLP served as legal advisor to Saucony. Conference Call
Saucony will be holding a conference call to discuss the merger
today, Thursday, June 2, 2005, at 8:45 a.m. The conference call
dial-in number is 913-981-4913. About Saucony Saucony designs,
develops and markets performance-oriented athletic footwear,
athletic apparel and casual leather footwear. Its principal
products are: -- technical running, walking, cross-training and
outdoor trail shoes and athletic apparel, which the company sells
under the Saucony brand name; -- technical running shoe models from
the early 1980s, which the company reintroduced in 1998 as Saucony
"Originals", its classic footwear line; -- athletic apparel, which
the company sells under the Hind brand name; and -- shoes for
coaches and officials, cleated football and multi-purpose footwear
and casual leather walking and workplace footwear, which the
company sells under the Spot-bilt brand name. Saucony's products
are sold in the United States at more than 5,500 retail locations
and at its 21 factory outlet stores. Outside the United States the
company's products are sold in 53 countries through 24 independent
distributors located throughout the world and through the company's
subsidiaries located in Canada, The Netherlands and the United
Kingdom and at the company's two factory outlet stores in Canada.
For more information, visit www.saucony.com. About Stride Rite
Headquartered in Lexington, Massachusetts, The Stride Rite
Corporation is an NYSE company with approximately $558 million in
2004 sales that markets the leading brand of high-quality,
non-athletic children's shoes in the U.S. Other footwear products
for children and adults are marketed by the company under
well-known brand names, including Stride Rite, Keds, PRO-Keds,
Sperry Top-Sider, Tommy Hilfiger and Grasshoppers. Information
about the company is available on its website -
www.strideritecorp.com. Information about the company's brands and
product lines is available at www.striderite.com, www.keds.com, and
www.sperrytopsider.com. Saucony(R), GRID(R), Hind(R), Spot-bilt(R),
and Hyde(R) are registered trademarks of Saucony, Inc. All other
product names, service marks, and trademarks mentioned herein are
trademarks of their respective owners. Important Additional
Information Will Be Filed with the SEC Saucony plans to file with
the Securities and Exchange Commission and mail to its shareholders
a Proxy Statement in connection with the transaction. The Proxy
Statement will contain important information about Saucony, Stride
Rite, the transaction and related matters. Investors and security
holders are urged to read the Proxy Statement carefully when it is
available. Investors and security holders will be able to obtain
free copies of the Proxy Statement and other documents filed with
the SEC by Saucony and Stride Rite through the web site maintained
by the SEC at www.sec.gov. In addition, investors and security
holders will be able to obtain free copies of the Proxy Statement
from Saucony by contacting Saucony Investor Relations, Saucony
Inc., 13 Centennial Drive, Peabody, Massachusetts 01960,
1-800-625-8080. Stride Rite and Saucony, and their respective
directors and executive officers, may be deemed to be participants
in the solicitation of proxies in respect of the transactions
contemplated by the merger agreement. Information regarding Stride
Rite's directors and executive officers is contained in Stride
Rite's Annual Report on Form 10-K for the year ended December 3,
2004 and its proxy statement dated February 25, 2005, which are
filed with the SEC. Information regarding Saucony's directors and
executive officers is contained in Saucony's Annual Report on Form
10-K for the year ended December 31, 2004 and its proxy statement
dated April 27, 2005, which are filed with the SEC. As of January
31, 2005, Saucony's directors and executive officers and their
affiliates beneficially owned (as calculated in accordance with SEC
Rule 13d-3) approximately 1,232,790 shares, or 48.9%, of Saucony's
Class A common stock and approximately 1,106,082 shares, or 24.1%,
of Saucony's Class B common stock. All outstanding options for
Saucony common stock, whether or not vested, including those held
by current directors and executive officers, will be cashed out in
the merger based on the $23 per share purchase price. In addition,
in connection with the execution of the merger agreement, Messrs.
Fisher and Gottesman have entered into executive benefits
agreements with Saucony pursuant to which (1) the parties have
agreed that effective immediately after the closing of the merger,
the employment of each of Messrs. Fisher and Gottesman will be
deemed to have terminated "for good reason" and (2) Messrs. Fisher
and Gottesman have agreed to reduce the amounts payable to them as
a result of this transaction under their executive retention
agreements entered into with the company in 2000. Stride Rite has
also requested that Mr. Fisher enter into a one-year consulting
agreement with Stride Rite effective upon the closing of the
merger. Mr. Fisher has agreed to negotiate such an agreement with
Stride Rite. A more complete description of these arrangements will
be available in the Proxy Statement when it is filed with the SEC.
Safe Harbor for Forward-Looking Statements This press release
contains forward-looking statements regarding the proposed
transaction between Stride Rite and Saucony, the expected timetable
for completing the transaction, future financial and operating
results, benefits and synergies of the transaction, future
opportunities for the combined company and any other statements
about Stride Rite or Saucony managements' future expectations,
beliefs, goals, plans or prospects. Any statements that are not
statements of historical fact (including statements containing the
words "believes," "plans," "anticipates," "expects," "estimates"
and similar expressions) should also be considered to be
forward-looking statements. There are a number of important factors
that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including: the
ability to obtain the approval of Saucony's shareholders; the
ability to consummate the transaction; the ability of Stride Rite
to successfully integrate Saucony's operations and employees;
intense competition among designers, marketers, distributors and
sellers of footwear; changes in consumer fashion trends that may
shift to footwear styling not currently included in Saucony's
product lines; the loss of significant suppliers or customers, such
as department stores and specialty retailers; the consolidation or
restructuring of such customers, including large chain and
department stores, which may result in unexpected store closings;
difficulties in implementing, operating and maintaining complex
information systems and controls, including, without limitation,
the systems related to retail stores, systems related to demand and
supply planning and inventory control; and the other factors
described in Saucony's Annual Report on Form 10-K for the year
ended December 31, 2004 and its most recent quarterly report filed
with the SEC. Saucony disclaims any intention or obligation to
update any forward-looking statements as a result of developments
occurring after the date of this press release.
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