LOS ANGELES–July 23, 1999–K2 Inc. (NYSE:KTO) Friday announced that it has signed a definitive agreement to acquire Ride Inc. (OTC BB:RIDE), a Preston, Wash.-based designer and manufacturer of snowboard equipment, apparel and accessories under the Ride, Liquid, 5150, Smiley and FullTilt brand names.
The all-stock transaction is expected to be accretive to K2 earnings during 2000, if integration can be accomplished as planned.
“This acquisition will enable us to create one of the strongest snowboard organizations in the world,” said Richard M. Rodstein, K2 president and chief executive officer. “This is an exciting acquisition of one of the early innovators in the snowboard business.
“Ride’s demonstrated ability to design innovative and high-quality snowboards, strap and step-in bindings and snowboard boots and apparel has resulted in upward momentum for its brands in the marketplace.
“While it is our intention to maintain the distinctiveness of the Ride brand, we see exciting opportunities to combine the talents of our companies that will enable us to deliver higher quality products, introduce new products, and raise service levels to our valued customer base. The acquisition creates an opportunity to benefit from a synergistic combination and to leverage each company’s strengths in different markets to grow our global presence,” Rodstein added.
“There are many compelling reasons for the company to join forces with K2,” added Robert Marcovitch, president and CEO of Ride Inc. “The strong market position of Ride and its family of brands combined with K2′s reputation for innovation and financial strength will help solidify the combined company’s position in the growing snowboard category.
“Furthermore, the synergies afforded by the combination will enhance Ride’s ability to continue to develop and manufacture the technically innovative, superior-quality products our customers around the world have come to expect.”
Under the terms of the agreement, K2 will acquire all outstanding shares of common stock of Ride Inc., in exchange for shares of K2 Inc. common stock. The shareholders of Ride Inc. will receive a fraction of a K2 share with an approximate value of $1.00 for each share of Ride stock owned.
The exact exchange ratio will be determined by dividing $1.00 by the market price of K2 stock during a five-day period prior to the merger, but not less than $10 nor more than $12. Based on the current number of Ride Inc. common shares outstanding, the value of the transaction is approximately $14.3 million.
In the aggregate, K2 will issue approximately 1.4 million shares at closing and will reserve approximately 324,000 additional shares for possible future issuance on exercise of options and warrants.
The merger transaction is expected to close within 100 days and will be accounted for as a purchase. The boards of directors of both companies have approved the agreement. The transaction is subject to the approval of Ride Inc. shareholders and satisfaction of regulatory requirements and other customary terms and conditions.
K2 Inc. is a leading designer, manufacturer and marketer of brand-name sporting goods, other recreational and industrial products. The company’s sporting goods products include well-known names suuch as K2 and Olin alpine skis; K2 snowboards, boots and bindings; K2 in-line skates; Stearns sports equipment; Shakespeare fishing tackle; K2 bikes; and Dana Design backpacks.
K2′s other recreational products include Planet Earth skate boards, Adio skateboard shoes and Hilton active apparel. K2′s industrial products include Shakespeare extruded monofilaments, marine antennas and fiberglass light poles.