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Boston College Law School

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Wednesday, November 21, 2007

Thanksgiving Tidbits

I'll be on hiatus for the rest of the week, returning on Monday.  In the interim, here are some tidbits to keep your M&A mind working over the Thanksgiving holiday:

  1. CKX, Inc. yesterday filed a Form 8-K finally detailing the financing commitment letters for its pending acquisition by Robert F.X. Sillerman and Simon R. Fuller.  Kudos to CKX for making the filing only two days before Thanksgiving instead of later today.  I'll have more on this Monday when people are back -- but in the interim feel free to figure out on your own the amount of financing now being provided by Sillerman and whether these "commitment letters" are really as firm as they should be.  Moreover, in addition to possibly shaky financing, five months in the parties have yet to file a preliminary proxy statement with the SEC, and CKX cannot terminate the deal for failure of Sillerman's financing until June 1, 2008 at the earliest -- in a going private deal the type of long-term optionality being provided here to Sillerman, et al. really is remarkable.  For more on this see my prior post:  CKX:  The Fine Art of Cramped Disclosure
  2. Buttressing Genesco's case, Footlocker announced poor third quarter results yesterday.  This should help Genesco argue that the MAC carve-out for industry-wide down-turns in its agreement with Finish Line applies.  For more on this argument, see my prior post:  Hell is Other People:  Genesco/Finish Line/UBS.
  3. Sears Holding Corporation filed a Schedule 13D announcing it had acquired 13.67% of Restoration Hardware.  The purchase took place in two transactions on November 8 and November 12, respectively.  Restoration Hardware is clearly in Revlon mode right now and its Board is thus required to accept the highest price reasonably available.  Sears' foray has come during Restoration's go-shop period so a break-fee on the deal is the lower $6,675,000 instead of $10,680,000.  For more on Restoration's pending deal with Catterton Partners and its transaction defenses, see my post:  Restoration Hardware Sold!
  4. Remember the SPAC Endeavor Acquisition Corp.'s agreement to acquire American Apparel?  It has been so long few do; the transaction was announced on December 18, 2006.  But a year later Endeavor has yet to clear its merger proxy with the SEC.  The latest proxy filing contemplates a December 12 meeting to approve the transaction, but has yet to be mailed. They are certainly cutting it close:  if they do not complete the acquisition by December 15, 2007, Endeavor will be required under its organizational documents to be dissolved.  Note that on November 7, 2007, the acquisition agreement was amended to, among other things:
    1. increase the number of shares of Endeavor being issued to Dov Charney [CEO and majority owner of American Apparel] at the closing of the acquisition from 32,258,065 to 37,258,065;
    2. increase the level of American Apparel’s net debt above which there would be an adjustment in the number of shares issued to Mr. Charney at closing of the acquisition from $110 million to $150 million;
    3. increase the size of the 2007 performance equity plan from 2,710,000 shares to 7,710,000 shares and to provide that stock awards from an aggregate of 2,710,000 shares would be allocated and issued thereunder . . . .;
    4. eliminate as a closing condition American Apparel’s hiring of a chief financial officer, chief operating officer and chief information officer; and
    5. Revise Dov Charney's compensation under his employment agreement (wonder which way it went?).   

In my next life, I want to be acquired by a SPAC. 

http://lawprofessors.typepad.com/mergers/2007/11/thanksgiving-ti.html

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