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Skullcandy In Midst Of Bidding War Between Incipio And Mill Road Capital Management

Skullcandy has put the brakes on its acquisition by Incipio.

The headphones maker received an unsolicited bid from private investment firm Mill Road Capital Management three days after its announcement that Incipio would acquire Skullcandy for $5.75 per share in cash, or $177 million. Mill Road offered $6.05 per share.

Incipio and Skullcandy amended its original merger agreement to increase the offer price to $6.10 per share.

Although Mill Road then upped its proposal to $6.25 per share in cash on Aug. 14 (after offering, and then rescinding, $6.50 per share), the Skullcandy board of directors continued to recommend the Incipio deal based “upon evaluation of, among other things, the additional potential risks involved with closing the potential transaction contemplated by the August 14 Mill Road Proposal, including Skullcandy’s obligation to pay the termination fee to Incipio, Mill Road’s history of negotiations with Skullcandy, and the timing of such a transaction relative to the current transaction with Incipio.”

Mill Road then again upped its proposal to $6.35 per share in cash yesterday, Aug. 17, and the Skullcandy board determined that it again constitutes a “superior proposal” and has recommended this new deal proposal to the Skullcandy stockholders.

Skullcandy said it has notified Incipio that it intends to terminate its agreement with the company on Aug. 23, noting that Incipio still has the right to negotiate and revise its proposal.