At its annual meeting, West 49 Inc. said a takeover attempt by Adrenalina Inc. appears to be dead after the potential buyer stopped negotiations. Sam Baio, CEO of the Canadian action sports chain, said he hasn't heard from Adrenalina since the initial offer which was valued at Canadian $35 million (U.S. $29.7 mm), was rebuked in early May. “We actually never got a formal registered better offer,” Baio told shareholders at the Burlington Convention Centre, according to The Canadian Press.
On May 5, West 49 rejected the proposal while noting that Adrenalina was an unlisted U.S. public company and had experienced delays in filing its Form 10-K with the SEC. West 49 also said Adrenalina has an unproven business model, operates a very small number of highly expensive retail stores in the U.S. and recently made an unsuccessful unsolicited attempt to acquire Pacific Sunwear. Sports Executive Weekly has also learned that Adrenalina looked at the Active Board Shop deal, but never seriously entered the bidding process.
Adrenalina, best known for the Flowrider simulating wave machines featured in its stores, has locations in three Florida cities and one in Texas. As of May 2, West 49 operated 133 stores in nine Canadian provinces, under the banners West 49, Billabong, Off The Wall, Amnesia/Arsenic, D-Tox and Duke's Northshore.
In an SEC filing on April 28, Adrenalina said that due to ongoing evaluations of its assets, business and cash requirements, it was unable to file its Form 10-K. The filing indicated that, “The company is researching strategic alternatives to enhance operating performance and stockholder value, including restructuring its balance sheet, reducing costs and negotiating with its creditors to address the companys liquidity issues and implementing a revised strategic plan. There can be no assurance, however, that these initiatives will be successful.” Adrenalina reported just $2.4 million in revenues in fiscal 2007.
