Sport Supply Group, Inc. has entered into a definitive merger agreement to be acquired by an affiliate of ONCAP Management Partners, L.P., the mid-market private equity business of Onex Corporation. Under the terms of the merger agreement, all of the outstanding shares of Sport Supply, other than those held by certain participating stockholders, will be acquired for $13.55 per share in cash.
CBT Holdings, LLC, an affiliate of Andell Holdings, which beneficially owns approximately 16% of Sport Supply Group’s outstanding common stock, and certain members of Sport Supply Group’s management team, have entered into agreements with ONCAP to exchange their Sport Supply Group common stock and options, as applicable, for equity of the purchaser entity. Carlson Capital, L.P., which beneficially owns approximately 22% of Sport Supply Group’s outstanding common stock, and CBT, have each entered into a voting agreement with ONCAP, and have each agreed to vote their shares in favor of the adoption of the merger agreement.
The merger agreement was negotiated on behalf of Sport Supply Group by a special committee of Sport Supply Group’s board of directors composed entirely of independent directors, with the assistance of outside financial and legal advisors.
The board of directors of Sport Supply Group, on the unanimous recommendation of the independent special committee, approved the merger agreement and recommends that Sport Supply Group’s stockholders adopt the merger agreement.
In accordance with the merger agreement, the special committee of independent directors is entitled to solicit superior proposals from third parties for a period of 30 days after today (which period can be extended for an additional 15 days for parties meeting certain additional requirements). However, there is no assurance that the solicitation of superior proposals will result in any proposal or an alternative transaction. Furthermore, if Sport Supply Group’s board or its special committee, as applicable, terminates the merger agreement as a result of accepting a superior proposal, which will also terminate the voting agreement, then Sport Supply Group is obligated to pay ONCAP a termination fee of either $3,000,000 or $6,000,000, depending primarily on whether the proposal was received during the “go-shop” period.
The transaction is subject to the approval of the holders of a majority of the outstanding shares of common stock of Sport Supply Group. The transaction is not subject to any financing condition; however, ONCAP has the unilateral option to terminate the merger agreement by paying to Sport Supply Group a termination fee of either $6,000,000 or $10,000,000, depending on whether financing is available to ONCAP. The transaction is expected to close in the second or third quarter of this year.
Houlihan Lokey Howard & Zukin Capital, Inc. is acting as financial advisor to the special committee in connection with the proposed merger.
OMelveny & Myers LLP is acting as legal counsel to ONCAP.
Vinson & Elkins L.L.P. is acting as legal counsel to Sport Supply Group.
