UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 13, 2008
ASHWORTH, INC.
(Exact Name of Registrant as Specified in Its Charter)
| |
|
|
|
|
Delaware
(State or Other Jurisdiction of
Incorporation)
|
|
001-14547
(Commission
File Number)
|
|
84-1052000
(IRS Employer
Identification No.) |
| |
|
|
2765 Loker Avenue West
Carlsbad, California
(Address of Principal Executive Offices)
|
|
92008
(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (760) 438-6610
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
On October 13, 2008, Taylor Made Golf Company, a Delaware corporation (“TaylorMade”), PHX
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of TaylorMade (“Merger Sub”),
and Ashworth, Inc., a Delaware corporation (“Ashworth”), entered into an Agreement and Plan of
Merger (the “Merger Agreement”).
The Merger Agreement provides that, on and subject to the terms thereof, Merger Sub will
commence a tender offer (the “Offer”) by October 20, 2008 to purchase all of the outstanding shares
of Ashworth common stock, $0.001 par value (the “Shares”), for $1.90 in cash per Share, subject to
adjustment as described below (the “Offer Price”).
Following a successful consummation of the Offer, Ashworth will take all needed steps to cause
Merger Sub to merge with and into Ashworth, with Ashworth surviving as a wholly owned subsidiary of
TaylorMade (the “Merger”). In the Merger, each outstanding Share that is not tendered and accepted
pursuant to the Offer (other than Shares held in treasury by Ashworth or owned by TaylorMade,
Merger Sub or any subsidiary of TaylorMade or Ashworth, and other than the Shares as to which
appraisal rights have been perfected in accordance with applicable law) will be cancelled and
converted into the right to receive the Offer Price, on the terms and conditions set forth in the
Merger Agreement.
At the effective time of the Merger, (i) each outstanding option under Ashworth’s equity
plans, whether vested or unvested, will be cancelled, and in exchange Ashworth will pay each former
holder thereof an amount in cash equal to the excess (if any) of the Offer Price over the exercise
price per Share, multiplied by the number of Shares subject to the option, and (ii) all unvested
restricted stock grants or portions thereof will vest.
Consummation of the Offer is subject to customary conditions, including, but not limited to,
(i) at least a majority of outstanding Shares on a fully diluted basis being tendered into the
Offer, (ii) the expiration or termination of any waiting periods under applicable antitrust laws
and (iii) the absence of any Material Adverse Effect (as defined in the Merger Agreement). The
Offer is not subject to a financing condition.
The Offer will expire at midnight, New York City time, on the 20th business day after the
commencement thereof, unless extended in accordance with the terms of the Offer and the Merger
Agreement and the applicable rules and regulations of the Securities and Exchange Commission (the
“SEC”). Subject to conditions in the Merger Agreement, the Offer is required to be extended for up
to 120 days after commencement of the Offer to seek a majority of the Shares.
Consummation of the Merger is also subject to customary conditions, including, if required
under Delaware law, approval of the Merger Agreement by Ashworth’s stockholders. The parties have
agreed that, if after the purchase of Shares pursuant to the Offer and any subsequent offering
period, and after giving effect to any Shares purchased pursuant to the Top-Up Option described in
the next paragraph, Merger Sub owns at least 90% of the outstanding Shares, then once the other
conditions of the Merger are satisfied or waived, Merger Sub will merge into Ashworth in a
“short-form” merger pursuant to the applicable provisions of Delaware law, which will not require a
vote of Ashworth’s stockholders.
In the Merger Agreement, Ashworth has granted to Merger Sub an option (the “Top-Up Option”) to
purchase, at a price per share equal to the Offer Price, a number of newly issued Shares equal to
the lowest number of Shares that, when added to the number of Shares owned by TaylorMade or Merger
Sub at the time of exercise of the Top-Up Option, constitutes one Share more than 90% of the fully
diluted Shares (after giving effect to the issuance of all Shares subject to the Top-Up Option).
Merger Sub may exercise the Top-Up Option during the 20 business day period following the
consummation of the Offer.
2
In addition, pursuant to the terms of the Merger Agreement, effective upon the purchase of
Shares pursuant to the Offer, TaylorMade will be entitled to designate a number of directors,
rounded up to the next whole number, on Ashworth’s Board of Directors and committees thereof equal
to the product of
(i) the total number of directors on Ashworth’s Board of Directors or a committee thereof, as
applicable, and (ii) the percentage that the number of Shares beneficially owned by TaylorMade
and/or Merger Sub bears to the number of Shares then outstanding.
The Merger Agreement contains customary representations and warranties by TaylorMade, Merger
Sub and Ashworth. The Merger Agreement also contains customary covenants and agreements, including
with respect to the operation of the business of Ashworth and its subsidiaries between signing and
closing, solicitation of alternative acquisition proposals by Ashworth, governmental filings and
approvals, and other matters.
The Merger Agreement and the Offer may be terminated in certain customary circumstances by
TaylorMade and/or Ashworth, including if the Offer is not consummated on or before the date that is
120 days after the commencement thereof (the “Outside Date”), and further provides for a
termination fee of $2 million, payable by Ashworth to TaylorMade, if the Merger Agreement is
terminated under certain circumstances. The Board of Directors of each of TaylorMade, Merger Sub
and Ashworth has approved the Merger Agreement and the transactions contemplated thereby.
If, at a scheduled expiration date of the Offer, the Outstanding Liabilities (as defined in
the Merger Agreement) of Ashworth (on a consolidated basis) exceeds a threshold, which shall
initially be $85 million, then Merger Sub may elect to adjust the Offer Price downward and extend
the Offer for an additional period of 10 business days (provided that the end of such 10 business
day period is before the Outside Date). If Merger Sub so elects, the Offer Price will be reduced
from $1.90 per share, on a pro rata basis, by the amount by which the Outstanding Liabilities
exceed $85 million. After any such adjustment, the new threshold for purposes of triggering a
future adjustment right will be equal to the Outstanding Liabilities at the time of such
adjustment, plus an additional $5 million.
Ashworth was advised that members of the Knightspoint Partners stockholder group who
collectively own over 16% of Ashworth’s outstanding Shares have entered into an agreement and proxy
with TaylorMade (the “Tender Agreement”) whereby such stockholders have agreed to tender their
Shares, subject to certain terms and conditions.
The foregoing description of the Merger Agreement and Tender Agreement are qualified in their
entirety by reference to the full texts thereof, which are attached hereto as Exhibit 2.1 and
Exhibit 99.2, respectively, and incorporated herein by reference. The Merger Agreement and Tender
Agreement have been included to provide stockholders with information regarding their terms. They
are not intended to provide any other factual information about TaylorMade, Merger Sub, Ashworth or
any stockholders of Ashworth. The press release announcing the transaction is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
Additional Information
In connection with the Offer, TaylorMade intends to file a Schedule TO with the SEC and
Ashworth intends to file a Solicitation/Recommendation Statement on Schedule 14D-9. Such documents
are not currently available. When these documents become available, they will contain important
information about the transaction and should be read carefully before any decision is made with
respect to the Offer. Investors will be able to obtain free copies of the Schedule TO and Schedule
14D-9, as well as other filings containing information about TaylorMade and Ashworth, without
charge, at the SEC’s website (http://www.sec.gov) once such documents are filed with the SEC. A
free copy of the Offer materials, when they become available, may also be obtained from TaylorMade
or Ashworth.
3
Safe Harbor for Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements related to Ashworth’s
market position, finances, operating results, marketing and business plans and strategies within
the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements may contain the words
“believes,” “anticipates,” “expects,” “predicts,” “estimates,” “projects,” “will be,” “will
continue,” “will likely result,” or other similar words and phrases. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Ashworth undertakes no obligation to update any forward-looking statements, whether as a result of
new information, changed circumstances or unanticipated events unless required by law. These
statements involve risks and uncertainties that could cause actual results to differ materially
from those projected. These risks include the consummation of the recently announced proposed
acquisition of Ashworth by Taylor Made Golf Company, the uncertainties associated with a potential
liquidity shortfall in the first half of fiscal 2009, implementing a successful transition in
executive leadership, successful resolution of the current dispute with Callaway Golf Company, the
evaluation of strategic alternatives that may be presented, timely development and acceptance of
new products, as well as strategic alliances, the impact of competitive products and pricing, the
success of the Sun Ice® and Callaway Golf apparel product lines, the preliminary nature of bookings
information, the ongoing risk of excess or obsolete inventory, the potential inadequacy of booked
reserves, the successful operation of the distribution facility in Oceanside, CA, the successful
implementation of Ashworth’s ERP system, and other risks described in Ashworth’s SEC reports,
including the Annual Report on Form 10-K for the year ended October 31, 2007, quarterly reports on
Form 10-Q filed thereafter and amendments to any of the foregoing reports, including the Form
10-K/A for the year ended October 31, 2007.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| |
|
|
| Exhibit No. |
|
Description of Exhibit |
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of October 13, 2008, by and
among Taylor Made Golf Company, Inc., PHX Acquisition Corp. and Ashworth, Inc. |
|
|
|
99.1
|
|
Press Release, dated as of October 13, 2008. |
|
|
|
99.2
|
|
Stockholder Tender Agreement and Irrevocable Proxy, dated as of October
13, 2008, by and between Taylor Made Golf Company, Inc., on the one hand, and
David M. Meyer, Michael S. Koeneke, Knightspoint Partners II, L.P.,
Knightspoint Capital Management II LLC, Knightspoint Partners, LLC, Ramius
Value and Opportunity Master Fund Ltd (f/k/a Starboard Value & Opportunity
Master Fund, Ltd) and Parche, LLC, on the other hand. |
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
|
|
|
|
| |
ASHWORTH, INC.
|
|
| Date: October 14, 2008 |
By: |
/s/ Greg W. Slack
|
|
| |
|
Greg W. Slack |
|
| |
|
Chief Financial Officer |
|
5
EXHIBIT INDEX
| |
|
|
| Exhibit No. |
|
Description of Exhibit |
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of October 13, 2008, by and
among Taylor Made Golf Company, Inc., PHX Acquisition Corp. and Ashworth, Inc. |
|
|
|
99.1
|
|
Press Release, dated as of October 13, 2008. |
|
|
|
99.2
|
|
Stockholder Tender Agreement and Irrevocable Proxy, dated as of October
13, 2008, by and between Taylor Made Golf Company, Inc., on the one hand, and
David M. Meyer, Michael S. Koeneke, Knightspoint Partners II, L.P.,
Knightspoint Capital Management II LLC, Knightspoint Partners, LLC, Ramius
Value and Opportunity Master Fund Ltd (f/k/a Starboard Value & Opportunity
Master Fund, Ltd) and Parche, LLC, on the other hand. |
6