By Sarah Falson
Lake Forest, ILLINOIS: US-based Salton Inc announced that it has entered into an exclusivity agreement with Harbinger Capital Partners Master Fund I, Ltd (Harbinger), and is discussing a possible combination of Salton and Black & Decker distributor, Applica.
The exclusivity agreement means Salton promises not to negotiate or acquire a proposal from anyone other than Harbinger, at least until 15 December, while Applica is party to a definitive agreement to be acquired by certain affiliates of Harbinger.
The announcement of the possible merger comes off the back of a trend of US small appliance brands merging.
“Harbinger has agreed to use its commercially reasonable efforts to complete its due diligence and negotiate customary commitment letters in respect of financing for the combined companies,” said a release on the Salton website.
Salton, the company behind the highly-successful George Foreman grill range, initially announced last week that it was exploring the possibility of a sale or merger due to the consolidation within the small appliance industry.
The NYSE-listed company said it had appointed a special committee to investigate what is described as “strategic alternatives”.
“The board of directors and management of the company believe that, in light of the consolidation in the small household appliance market and recent expressions of interest by third parties in possible transactions with the company, it is now appropriate to initiate an external process to explore strategic alternatives to enhance stockholder value,” the statement said.
“As a result, the board of directors has formed a special committee comprised of three independent board members and has engaged Houlihan Lokey Howard & Zukin Capital Inc. as its financial advisor to assist the board and the special committee in this process, which could include a sale or merger.”
In the latest statement, Salton emphasises that there can be no assurance that a transaction will actually occur or, if one is undertaken, of its potential terms or timing.
“Salton may not update its progress or disclose developments with respect to potential strategic initiatives unless the Board of Directors has approved a definitive course of action or transaction,” the company said.