Tweeter Home Entertainment Group Inc announced Monday that it agreed to buy Sound Advice, a 33 store specialty consumer electronics retailer based in Florida. The companies expect to complete the transaction on or around September 1, 2001. The deal has been approved by the Boards of Directors of Both Companies, however it is subject to the approval of both Tweeter and Sound Advice stock holders, as well to other conditions including regulatory approval. The deal will increase Tweeter’s store count and position it as the number 1 US specialty electronics retailer. The deal is currently valued at about $114 million, based on Tweeter’s closing stock price of $28.75 per share and Sound Advice’s shares outstanding as reported by S&P MarketScope.
The deal is structured as a tax-free exchange of stock and will be accounted for by Tweeter as a purchase. As part of the transaction, Tweeter is entitled to a $4million breakup fee if the agreement is terminated.
Under the terms of the deal, each share of Sound Advice common stock will be converted into Tweeter Common stock at an exchange rate of one-for-one while the five day market price for Tweeter is between $21 and $31 per share.
If the five day average price for Tweeter common stock is above $30 per share, the exchange ratio will decrease to maintain $30 per share; if the five day average price is below $21 per share the exchange ratio will increase to maintain $21 per share. Both companies have the right to terminate the deal if the five day average closing price of the Tweeter stock is bellow $18 at the time of closing.
After the deal closes, Sound Advice will be a wholly owned subsidiary of Tweeter Home entertainment group.
Link for more info: www.twtr.com
