Everlast Worldwide Inc. has entered into a settlement agreement with Hidary Group Acquisitions, LLC and Hidary Group Acquisitions, Inc. providing for the dismissal, with prejudice, of Hidarys lawsuit against Everlast, which sought to block Everlasts pending merger agreement to be acquired by Brands Holdings Limited. Pursuant to the terms of the settlement, among other things, Everlast has agreed to limit the discovery it may take from Hidary in connection with certain stockholder litigation, and Everlast agreed to publicly reaffirm its boards commitment to comply with its fiduciary responsibilities.
Pursuant to the terms of the merger agreement, the Board of Directors of Everlast remains free to consider unsolicited acquisition proposals. Additionally, as Everlast has previously disclosed, there is no agreement between Everlast and Hidary that would prohibit Hidary from commencing a non-coercive tender offer for Everlasts shares. The Everlast Board has been and remains committed to obtaining the best transaction reasonably available to its stockholders, as it is required to under Delaware law. In the event that any entity (including Hidary) makes an unsolicited acquisition proposal or commences a non-coercive tender offer for Everlasts shares, the Everlast Board will, as it has done in the past, comply with its fiduciary duties under Delaware law in evaluating and responding to any such proposal or tender offer.
Hidarys proposal to acquire Everlast has received increasing support from key shareholders. The Everlast board of directors received separate letters from Aquamarine Capital Management, LLC, on July 13, 2007, and Burlingame Asset Management, LLC, the companys largest independent shareholder, on July 25, 2007, in favor of Hidarys most recent proposal with its valuable tax-free roll-over feature. In addition, several shareholder lawsuits have been commenced against the company regarding its recent actions. Given these developments, Hidary announced that it does not require the intervention of the Delaware courts at this time to ensure that the Everlast Board will fulfill its fiduciary responsibility to its shareholders. Hidary has thus voluntarily dismissed its Delaware Chancery Court litigation against Everlast.
Jack D. Hidary, Managing Partner of The Hidary Group stated: “We appreciate the increasing shareholder support for our most recent proposal, and we are pleased that we can now focus our efforts exclusively on delivering superior value to each and every Everlast shareholder.”
Hidary's last offer to Everlast shareholders, which was publicly disclosed on June 29, 2007, was to purchase their shares for $31.25 per share in cash in an all cash transaction. In addition, the offer gave all Everlast shareholders the option, as well as the flexibility, to invest up to 50% of their shares into the transaction to become investors in the new entity.
Burlingame noted in a letter to Everlast's Board dated July 25, 2007: “the roll over option gives stockholders the ability to participate in the future successes of Everlast, while also deferring taxes on up to half of their gains. The tax deferral alone probably makes the Hidary proposal superior to stockholders; let alone what value they could ultimately receive by rolling over up to half their interests into the surviving private company.”
Everlast began to remove impediments to Hidary's ability to compete on an economic basis for the acquisition of Everlast by sending Hidary a letter dated July 26, 2007. The letter stated that in the event that Hidary proposed either a new acquisition proposal or commenced a non-coercive tender offer for Everlast's shares, Everlast would not enforce the standstill provisions of the Confidentiality and Standstill Agreement, dated as of May 9, 2007, between M. Hidary & Company, Inc. and Everlast. Everlast's public reaffirmation of its commitment to discharge its fiduciary duties under Delaware law with respect to any Hidary acquisition proposal also makes clear that Hidary is now free to compete economically without artificial impediments or obstacles.
