Fusion Corporate Partners

The Fusion Team have completed over 70 digital and media transactions for its private, corporate and private equity clients. For more information contact pkelly@fusioncorp.co.uk or visit our website
 
 
ACQUISITION
FDN Database Reference:  F231109-357
It has been news for some time now that JDS Capital’s private equity arm Dimensional Associates, has been negotiating to buy the part of online music distributor The Orchard it didn’t already own. Well they have finally done the deal, valuing the company at $12.77 million.

Links:

• SEC FORM 8-K
• Press Release

 NEW YORK–(BUSINESS WIRE)–The Orchard (NASDAQ: ORCD), a global leader in music and video distribution and comprehensive digital strategy, announced today that it has entered into a definitive merger agreement with Dimensional Associates, LLC, a private equity affiliate of JDS Capital, L.P. Dimensional currently owns approximately 42% of the Company’s outstanding common stock and 99% of the Company’s outstanding Series A Preferred Stock, representing an aggregate of approximately 53% of the Company’s voting securities.

“Dimensional Associates has always been a strong supporter of The Orchard and our management team in delivering services and content to our clients and retail partners”. Following the unanimous recommendation and approval of a Special Committee of independent and disinterested directors, the Board of Directors of The Orchard (other than Daniel C. Stein, who abstained from voting on the matter due to his position as an executive of Dimensional Associates) has approved the merger agreement and is recommending to The Orchard’s stockholders that they adopt and approve the merger agreement. Under the terms of the merger agreement, Dimensional Associates will acquire all of the common stock of The Orchard not currently owned by it or its affiliates for $2.05 per share and stockholders will also receive a contingent right to receive additional consideration, under certain circumstances post-closing if Dimensional Associates or any of its affiliates enters into a commitment to sell at least 80% of The Orchard’s voting securities or assets within six months of the consummation of the merger. The $2.05 per share consideration represents a 52% premium to the closing price of The Orchard’s common stock on October 14, 2010, the day before Dimensional Associates first presented its acquisition proposal to The Orchard’s Board of Directors and a 21% premium to the closing price of The Orchard’s common stock on March 15, 2010, the last trading day prior to the announcement of the execution of a definitive merger agreement.

The proposed transaction is expected to close in the third quarter of this calendar year, subject to customary closing conditions, including the absence of any material adverse change affecting The Orchard’s business prior to closing. In addition, the transaction is subject to the approval of the merger agreement by holders of a majority of the outstanding shares of The Orchard’s common stock not owned by Dimensional Associates or it’s affiliates, at a meeting of stockholders which will be held on a date to be announced. If The Orchard’s stockholders approve the merger, following the closing under the merger agreement, The Orchard will be owned by Dimensional Associates and will return to private company status.

Under the terms of the merger agreement, The Orchard’s Special Committee will oversee a 30 day go-shop period ending April 14, 2010 to determine if there are any other interested buyers for The Orchard. The Special Committee has retained Craig-Hallum Capital Group LLC to coordinate its solicitation activities during the go-shop period.

“The Special Committee of the Board has an obligation to our shareholders to review and evaluate The Orchard’s options for creating shareholder value,” said Michael Donahue, Chairman of the Board and the Special Committee for The Orchard. “We have undertaken an intensive review of The Orchard and its value, both independently and with the assistance of a financial advisor. We have negotiated a fair price, while also demanding the right to solicit additional potential buyers. In order to ensure that our shareholders concur with our conclusion, we have conditioned the consummation of the merger on its approval by a majority of the minority shareholders.”

“Dimensional Associates has always been a strong supporter of The Orchard and our management team in delivering services and content to our clients and retail partners,” said Brad Navin, CEO of The Orchard.

Dimensional Associates was the primary owner of The Orchard from 2003 until the reverse merger with DMGI in November 2007 and has continued to be the majority owner. Daniel C. Stein, an executive of Dimensional Associates, has been a member of The Orchard’s Board of Directors since 2007.

About The Orchard

Headquartered in New York and London with operations in 25 markets around the world, The Orchard (NASDAQ: ORCD) is an independent music and video distributor specializing in comprehensive digital strategies for content owners. Through innovative global marketing and promotions, The Orchard drives sales across more than 660 digital and mobile storefronts in 75 countries, as well as physical retailers across North America and Europe. The company was founded in 1997 as a business partner that fosters creativity and independence within its global clients. For further information visit www.theorchard.com.