Skullcandy to Be Bought by Mill Road as Incipio Walks Away

Skullcandy to Be Bought by Mill Road as Incipio Walks Away
By Austen Hufford. Source: WSJ.

Headphones maker Skullcandy Inc. said it would be acquired by private-equity firm Mill Road Capital Management, likely ending a monthslong takeover battle as rival bidder Incipio LLC walks away from its pursuit.

The deal values Skullcandy at about $196.6 million, or $6.35 a share, a 62% premium over the company’s stock price of $3.93 on June 7, before talks of a takeover were reported.

Thursday’s agreement comes after a two-month public takeover battle between Mill Road and Incipio, a maker of consumer-technology products. Incipio initially signed an agreement to buy Skullcandy for $5.75 on June 24. Days later, Mill Road said it had acquired a 9.8% stake in Skullcandy and offered $6.05 a share for the remainder.

After additional bids and counterbids, Skullcandy entered into the deal with Mill Road when Incipio told Skullcandy this week that it didn’t intend to submit a counterproposal.

Skullcandy said it will pay a termination fee to Incipio. The companies had said the termination fee was $6.6 million in a prior merger agreement earlier this month.

“Returning to private ownership under Mill Road provides us with the flexibility and resources to continue to expand our uniquely positioned business,” Skullcandy Chief Executive Hoby Darling said.

Skullcandy makes headphones and videogame accessories aimed at the intersection of music, sports and technology.

Since pricing its initial public offering at $20 in 2011, Skullcandy’s shares have fallen as revenue growth has slowed in recent years. The stronger dollar, among other factors, has weighed on the company as a large chunk of its sales come from outside the U.S.

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