A few days after receiving a due diligence request from hedge fund Harbinger Capital Partners, small appliance maker Salton Inc. said Monday that it has formed a special committee of its board of directors and retained Houlihan Lokey Howard & Zukin Capital Inc. to advise it on “strategic alternatives to enhance shareholder value,” citing “the consolidation in the small household appliance market and recent expressions of interest by third parties.” For those who can't read between the lines, the maker of the George Foreman grill is clearly taking Harbinger's unsolicited interest seriously.
The announcement came three days after Harbinger, which holds convertible stock entitling it to 15% of Salton’s common stock, disclosed that it had approached Salton about acquiring it and merging it with Applica Inc., which Harbinger agreed to acquire Oct. 19. Harbinger said it would merge the companies if it succeeds in buying them both. The combined company would have sales of roughly $1.2 billion.
Salton has become a prime takeover candidate as it has reported loses over the last three years. Increasing the odds a bidder might swoop in for the kill, long-time executives have recently left the company. Salton announced the retirement Aug. 25 of long-time chairman David C. Sabin, and on Oct. 18 it said president and chief operating officer William B. Rue would step down. Rue was a co-founder of the company in 1988, and both men had served it since then. Co-founder Leonhard Dreimann remains CEO.
Salton also announced Monday that Jason Mudrick, a portfolio manager at Contrarian Capital Management, L.L.C., which holds 18% of Salton’s stock, has joined Salton’s board. — John E. Morris and Matthew Wurtzel
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See Applica story from The Deal
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