Horizon Kinetics LLC entered into an Agreement and Plan of Merger to acquire Scott's Liquid Gold-Inc. in a reverse merger transaction.
December 26, 2023
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Horizon Kinetics LLC entered into an Agreement and Plan of Merger to acquire Scott's Liquid Gold-Inc. (OTCPK:SLGD) in a reverse merger transaction on December 19, 2023. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, upon obtaining the requisite shareholder approval, (i) Scott's Liquid will convert from a Colorado to a Delaware corporation, increase its authorized shares of common stock and change its name and (ii) Merger Sub will be merged with and into Horizon Kinetics, with Horizon Kinetics being the surviving entity. Subject to the terms and conditions of the Merger Agreement, which has been unanimously approved by the Board of Directors (the ?Board?) of Scott's Liquid, if the Merger is completed, all of the ownership interests that Horizon Kinetics? members hold in Horizon Kinetics will be converted into an aggregate number of shares of the Company?s common stock (such number, the ?Merger Shares?) equal to (a) the sum of (i) Horizon Kinetics? net tangible assets plus (ii) the value of the Horizon Kinetics operating business, (b) divided by $1.25. Under the Merger Agreement, the value of the Horizon Kinetics operating business is (i) stipulated to be $200 million if and only if Horizon Kinetics? regulatory assets under management (?AUM?) are between $6 billion and $8 billion, and (ii) otherwise is calculated by multiplying AUM by a factor of 0.03. The Company currently expects its legacy shareholder ownership to be between 2% and 4% of the pro forma combined company. However, the exact percentage may be different and will reflect the number of Merger Shares calculated in accordance with the Merger Agreement based on Horizon Kinetics? financial position at closing. If the Merger is completed, the Company is obligated to expand its Board to seven members, with all but one of its existing directors resigning, and the remaining seats filled by candidates selected by Horizon Kinetics. Murray Stahl, Co-Founder and Chief Executive Officer of Horizon Kinetics, is expected to serve as Chief Executive Officer of the combined entity.
Completion of the Merger is subject to certain conditions, including, among others: (i) receipt of the Required Approvals by the Company?s shareholders, (ii) the absence of any court order, law, or rule prohibiting the completion of the Merger, (iii) the parties having agreed on the number of Merger Shares to be issued calculated in accordance with the Merger Agreement, (iv) Horizon Kinetics? security holders having entered into standard investor representation letters, (v) the Company?s delivery of certain directors? signed resignations to Horizon Kinetics. The transaction is expected to close in the second quarter of 2024, subject to standard closing conditions. The shareholders of Scott's Liquid Gold approved all the proposals presented during the special meeting held on June 20, 2024. Following the approvals received at the special meeting, Scott?s and Horizon Kinetics anticipate completing the merger on July 1, 2024. As of July 1, 2024, Scott's Liquid Gold and Horizon Kinetics have postponed the closing of the Transactions to ensure a smooth transition in trading of the Company?s stock, which, immediately after closing, is expected to trade on a post-reverse split basis under a new name and ticker symbol. Horizon Kinetics is seeking approval of the transaction from all of its members, and Scott?s will be seeking approval from its shareholders of 1) its conversion from a Colorado to a Delaware corporation, 2) an amendment to its charter to increase authorized shares of Company common stock, and 3) a change in the name of the Company. Roland S. Chase of Hill Ward Henderson acted as legal advisor for Scott's Liquid.
Scott's Liquid Gold-Inc. develops, markets, and sells household products. The Companyâs household products are Kids N Pets and Messy Pet. Kids N Pets brands are stain and odor removing products targeted toward households with children and pets. These products control odor and clean up kids and pet accidents, and food and drink stains while being products that parents can feel safe using around their children and pets. The primary sales channels for Kids N Pets and Messy Pet are through retail stores such as Walmart and Home Depot, and online through e-commerce retailers such as Amazon. Its products are sold nationally through its sales force to mass merchandisers, hardware stores, e-commerce retailers, and other retail outlets and to wholesale distributors. It primarily markets its products through trade promotions to support price features, displays, slotting fees and other merchandising of its products by its retail customers, consumer marketing in print, social and digital media.