By Angela McDaniels
Seattle, Oct. 2 - Salton, Inc. announced an agreement with APN Holding Co., Inc. on Tuesday, under which APN subsidiary Applica Inc. will become a wholly owned subsidiary of Salton.
APN is owned by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, LP.
The companies intend to complete the merger within three to four months, subject to shareholder approval.
Under the merger agreement, all outstanding shares of Salton's series A voting convertible preferred stock and series C non-voting preferred stock will be converted into shares of Salton's common stock, and Harbinger Capital will exchange $90 million of Salton's second-lien notes and $15 million of Salton's 2008 senior subordinated notes for shares of a new series of 16% non-voting preferred stock of Salton.
Following the merger, Harbinger Capital will own 92% of the outstanding common stock of Salton, and existing holders of Salton's common stock, series A convertible preferreds and series C preferreds would own 2%, 3% and 3%, respectively.
Further details of the merger were not disclosed.
"We believe that this transaction is the best strategic alternative available to enhance stockholder value," Salton chief executive officer William Lutz said in a company news release. The combination will result in "expanded brand portfolios, strengthened international presence and improved capital structure" and the combined company will "operate more efficiently than either Applica or Salton on a stand alone basis, and will benefit significantly from cost and revenue synergies," he added.
"In addition, we believe the combined company will be a compelling platform for future expansion in our industry," Applica chief operating officer and chief financial officer Terry Polistina added in the release.
The new company will be led by members of Salton's and Applica's existing management teams as well as new management personnel.
Salton and APN entered into an agreement on Feb. 7, 2007, under which a Salton subsidiary was to merge with and into APN, but APN terminated the agreement after the companies failed to close the deal by the July 31 deadline.
Lake Forest, Ill.-based Salton markets and distributes branded small appliances, home decor and personal care products.
Applica, located in Miramar, Fla., along with its subsidiaries, markets branded and private-label small household appliances.
| Acquirer: | Salton, Inc.
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| Target: | Applica Inc.
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| Announcement date: | Oct. 2
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| Expected closing: | Within three to four months
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