Oaktree Capital Looks to Acquire Jakks Pacific
Oaktree Capital Management announced on September 13 that it has made a proposal to acquire all outstanding shares of Jakks Pacific, Inc., common stock for $20 per share in cash, representing a total equity value of approximately $670 million on a fully diluted basis, according to Oaktree. The offer represents a 25 percent premium over the company’s closing stock price as of September 13, the 30-day average closing price of the company’s stock leading up to September 13, and the average closing price of the company’s stock over the preceding 24 months.
Oaktree says it is making the proposal public after Jakks’ Board’s continued refusal to engage in meaningful discussions about the options available for maximizing shareholder value at Jakks, including an acquisition by the Oaktree Funds, according to the statement put out by the company. The Oaktree Funds are among Jakks’ largest shareholders, with a current collective stake of approximately 4.9 percent of Jakks common shares.
Oaktree went public with its letter to Stephen Berman, president and CEO of Jakks, and Jakks’ board. Part of the letter is excerpted below:
“We are disappointed that you have repeatedly declined to pursue meaningful discussions with us about the options available for maximizing shareholder value at Jakks Pacific, Inc., including a potential going-private transaction. Collectively, Oaktree-managed funds are among the company’s largest shareholders, with a stake of approximately 4.9 percent of outstanding common shares, and we are strong believers in the potential for long-term value creation at Jakks. As such, it has been our preference to discuss with you available options to enhance shareholder value, including a potential negotiated going-private transaction. We have attempted to engage with you on that basis since March of this year, but you have repeatedly rebuffed our efforts. Given the significant ownership interest that the Oaktree Funds have in Jakks, we are left with no acceptable alternative but to make it known publicly that we are prepared to acquire, through the Oaktree Funds, all of the company’s outstanding common shares for $20 per share in cash.”
The letter concludes: “This transaction is of the highest priority for us and has the full attention of our investment team and legal advisors at Kirkland & Ellis LLP. We are ready to proceed immediately and, with the company’s full cooperation, we believe we can complete our due diligence, have firm committed financing, and execute definitive documentation within 60 days.”
Jakks Pacific issued a statement on its website yesterday, which is posted below, addressing Oaktree Capital Management’s interest in the company.
Addressing Matthew Wilson and B. James Ford of Oaktree the letter from Stephen Berman, Jakks’ president and CEO, reads:
“I am writing to acknowledge receipt last evening of your letter expressing your interest in acquiring Jakks Pacific, Inc., which I have shared with our board of directors.
We note that your letter remains a conditional non-binding indication of interest, subject to the completion of both financial and legal due diligence and your receipt of the financing necessary to complete the transaction. The board of directors is acutely aware of its fiduciary duties, and will carefully consider your indication of interest with the advice of the company’s independent financial and legal advisors, Rothschild Inc. and Skadden, Arps, Slate, Meagher & Flom LLP, and will continue to act in the best interests of the Company and its shareholders.
I will advise you after the board has had an opportunity to review and consider your expression of interest.”
Oaktree Capital Management’s U.S.-based private investment fund is Acorn Management Group (AMG). Jay Foreman (formerly of Play Along Toys, which was sold to Jakks) is the president and CEO of AMG. It was established to invest in and/or acquire assets and interests in kid-focused consumer products companies and product lines. Foreman is also president and CEO of The Bridge Direct, a global sourcing and supply chain management company, based in Florida.
The Bridge Direct had no comment.