Harbinger Acquires Applica, NACCO Terminates Offer
Jan 24, 2007
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The bidding finally came to an end and it was Harbinger Capital Partners that got its hands on Applica Incorporated (Miramar, Florida, U.S.), snatching the prize away from NACCO Industries, Inc. (Cleveland, Ohio, U.S.).
After months of offers and counter-offers, Applica's shareholders agreed to sell all outstanding shares to affiliates of Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P., for $8.25 per share in cash. The vote came at a special meeting of shareholders held yesterday and the merger transaction occurred immediately thereafter. Applica shares ceased trading on the New York Stock Exchange.
Applica had originally come to an agreement with NACCO, in July 2006, to merge with NACCO's electric housewares business, Hamilton Beach/Proctor-Silex. The agreement called for NACCO to spin off the housewares unit, which would merge with Applica and operate under the name Hamilton Beach, Inc. Applica backed out of the deal in favor of an offer from Harbinger Capital Partners, which was already a major Applica shareholder. NACCO responded with lawsuits, claiming the original agreement had been breached, and with increasingly higher offers for the outstanding Applica shares. NACCO's highest bid reached $8.05 per share on Jan. 16, 2007. Harbinger matched NACCO bids along the way. The per-share price eventually rose from the original Harbinger offer of $6.00 per share to its final price of $8.25 per share when the transaction closed yesterday.
Also yesterday, NACCO terminated its tender offer for the common stock of Applica.
"We pursued the Applica transaction because we believed that there was a good brand fit and high synergy value with our Hamilton Beach/Proctor-Silex business," said NACCO Chairman, President and CEO Alfred M. Rankin, Jr. "We felt then and continue to believe that this was a strategically and financially compelling transaction that carried opportunity for significant value enhancement for shareholders of both Applica and NACCO."
"…our original merger agreement was breached by Applica."
When Applica turned away from NACCO to accept the Harbinger offer, Rankin said, "We followed a disciplined and focused bidding process in order to acquire the business at the lowest possible reasonable price, despite the fact that, we believe, our original merger agreement was breached by Applica. However, the increase in the break-up fee payable to affiliates of Harbinger to which Applica agreed last week had a negative effect on the bidding process and we determined that further increases by us would not be in our shareholders' best interests."
NACCO said it will continue to develop Hamilton Beach/Procter-Silex, which Rankin called "A very strong company with leading market positions, excellent financial performance, experienced management, and good opportunities for continued growth."
NACCO will also continue to pursue claims against Applica and Harbinger in litigation it commenced in Delaware in November of 2006.
Read More About It
In July 2006, in the days after the initial announcement of the planned Hamilton Beach/Proctor-Silex merger with Applica, APPLIANCE magazine spoke exclusively with Michael Morecroft, president and CEO of Hamilton Beach/Proctor-Silex and the man slated to be president and CEO of the Hamilton Beach, Inc. Read our exclusive interview with Michael Morecroft from July 2006.
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