Source Interlink Companies Announces Merger Agreement with Alliance Entertainment Corp.BONITA Bonita (Spanish and Portuguese for "beautiful") is the name of:
--Alliance's $1 Billion DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. and Music Distribution and Logistics Business to Expand Source Interlink's Product Offerings Sold at Retail Front-End Checkouts --Management to Host Conference Call on Friday, November 19, at 10:30 A.M. ET Source Interlink Companies, Inc. (Nasdaq: SORC), the largest direct-to-retail magazine distribution/fulfillment company in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and a leading provider of magazine information and front-end management services for retailers, today announced the execution of a definitive merger agreement with Alliance Entertainment Corp., a leading provider of logistical and distribution services to retailers of home entertainment content products including DVDs, CDs, video games See video game console. and related merchandise. In this merger-of-equals, the former equity holders of Alliance Entertainment and the equity holders of Source Interlink Companies will each hold 50% of the fully diluted capitalization of the combined company at the closing. Alliance Entertainment's customers include Barnes & Noble, barnesandnoble.com, ToysRUs, Sears, Kmart, Meijers, Musicland, Trans World Trans World is an economic simulation game for the Commodore 64 published by Starbyte Software in 1990. The player takes control of a new trucking company and competes against up to either three other human or computer players to make the most money. Music, Circuit City, Best Buy, AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. , BJ's Wholesale Club BJ's Wholesale Club, Inc. NYSE: BJ is a membership-only warehouse club chain operating in the East Coast of the United States, as well as in the state of Ohio. History , Blockbuster, Tower Records, Borders, and Hastings Entertainment. Alliance services a total of more than 30,000 stores and over two million individual consumers through its Consumer Direct Fulfillment business. Currently, Source Interlink's client base consists primarily of retail chains that collectively operate approximately 80,000 stores. Leslie Flegel, Chairman and Chief Executive Officer of Source Interlink, and other members of Source Interlink's executive management team will continue to lead the combined company. Alan Tuchman, Alliance Entertainment's President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , will join Source Interlink as Executive Vice President of Source Interlink responsible for Alliance operations. Source Interlink's Board of Directors is expected to increase to 11 members, 6 to be designated by Source Interlink and 5 by Alliance Entertainment. Commenting on the transaction, Leslie Flegel said, "Our merger with Alliance Entertainment will substantially expand our direct-to-retail distribution and fulfillment services beyond our existing magazine periodicals business. The company intends to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. Source Interlink's extensive market expertise at the front-end checkout and its strong relationships with supermarkets, drug stores, convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. , mass merchandisers, and other retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → , to strengthen Alliance Entertainment's leading position in distribution and logistics management Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet of home entertainment content products. We plan to utilize Alliance Entertainment's in-store merchandising capabilities to strengthen our role in the multi-billion dollar mainstream distribution market for magazines. Research has shown the DVD business will continue to have exceptional growth potential for the foreseeable future. We have developed a new marketing plan to expand DVD exposure to the mass market in response to strong consumer demand. "We expect to realize significant economies of scale through the consolidation of operations and the reduction of redundancies. While we will integrate corporate functions at closing in our world headquarters in Bonita Springs, we anticipate that operating headquarters for the Alliance Entertainment business will remain in Coral Springs Coral Springs, city (1990 pop. 79,443), Broward co., SE Fla.; inc. 1963. Largely residential, it is a city that has grown rapidly along with the southern Florida and Fort Lauderdale area. The population of Coral Springs nearly doubled between 1980 and 1990. for the foreseeable future," Flegel said. Alan Tuchman stated, "Alliance Entertainment is excited to merge with a company with the market breadth market breadth See breadth of market. of Source Interlink. Source Interlink's strong retailer relationships are expected to increase our market potential and provide an expanded base to grow our logistics and infrastructure services business for home entertainment content products. Our in-store merchandising capabilities combined with our comprehensive inventory and category management services should prove invaluable as the companies combine their diverse skill sets. We believe the cross-selling opportunities that exist between respective client rosters will enable shareholders of both companies to participate in a substantial growth opportunity." For the 12 months ended July 31, 2004, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, the combined company would have had revenue of approximately $1.3 billion and the transaction would have been accretive to Source Interlink's earnings. The merger is expected to close in Source Interlink's first quarter of fiscal year 2006 and is subject to shareholder and regulatory approvals, obtaining existing lender consent and other customary closing conditions. Jefferies & Company, Inc. has acted as financial advisor to Source Interlink and, at the request of the Source Interlink board of directors, has issued an opinion to the board that, based on and subject to certain assumptions set forth therein, as of the date hereof, the exchange ratio in the merger agreement is fair to Source Interlink from a financial point of view. Source Interlink has scheduled a conference call for 10:30 a.m. Eastern Time on November 19, 2004 to discuss the transaction in more detail. To access the call in a "listen only" mode via the Internet, go to www.fulldisclosure.com. Please allow extra time prior to the call to visit the site and download any necessary audio software. The online archive of the webcast will be available for 30 days following the call. Terms of the Agreement Under the terms of the agreement, Source Interlink will issue to Alliance Entertainment equity holders a number of shares of its common stock (including shares reserved for issuance pursuant to outstanding options, warrants and other rights assumed by Source Interlink) equal to Source Interlink's common stock outstanding prior to the closing of the merger (including those shares issuable for outstanding options, warrants and other rights). The former equity holders of Alliance Entertainment and the equity holders of Source Interlink will each hold 50% of the fully diluted capitalization of the combined company at the closing. Based on figures as of November 15, 2004, Source Interlink would issue approximately 27.2 million shares of Source Interlink common stock to Alliance Entertainment shareholders and assume the obligation to issue an additional 800,000 shares upon exercise of currently outstanding Alliance Entertainment employee stock options and other rights. The proposed share-for-share transaction is intended to be tax free and will result in Alliance Entertainment merging into a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Source Interlink. Prior to the merger, Alliance Entertainment will spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. certain non-core assets related solely to its "All Media Guide" and "Digital On-Demand" businesses. About Source Interlink Source Interlink Companies is a leading provider of fulfillment and marketing services to retail companies who collectively operate approximately 80,000 stores, most major magazine publishers and consumer product manufacturers of confections and general merchandise. Its business consists of three interrelated in·ter·re·late tr. & intr.v. in·ter·re·lat·ed, in·ter·re·lat·ing, in·ter·re·lates To place in or come into mutual relationship. in operating groups: Magazine Fulfillment, In-Store Services and Wood Manufacturing. --Magazine Fulfillment manages the direct distribution of magazines to more than 7,000 retail outlets in the specialty retail market operated by 33 retail chains plus independent retailers. It assists these retailers with the selection, logistical procurement and fulfillment of approximately 4,000 monthly and 50 weekly magazine titles. The Fulfillment operating group is the largest U.S. importer of foreign magazine titles and a leading exporter of U.S. titles to the international market. --In-Store Services assists retailers in the mainstream retail market with the design, manufacture and implementation of their front-end merchandising programs. This group provides other value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. to retailers, publishers and other vendors, including assistance with publisher rebate and other fee collection as well as access to real-time sales and marketing information on more than 10,000 magazine titles, enabling customers to make more informed decisions regarding product placement and distribution. --Wood Manufacturing designs and manufactures wood displays and store fixtures for leading specialty retailers. For more information, please visit the company's website, http://www.sourceinterlink.com/. About Alliance Entertainment Corp. Alliance Entertainment Corp. (AEC AEC US Atomic Energy Commission Noun 1. AEC - a former executive agency (from 1946 to 1974) that was responsible for research into atomic energy and its peacetime uses in the United States Atomic Energy Commission ) is a leading total solutions provider of business-to-business infrastructure services that are integral to the home entertainment products marketplace. AEC offers an extensive product inventory (including DVDs, CDs, video games and related merchandise), e-commerce fulfillment capabilities and innovative technology and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services for today's marketplace, including third party logistics services. Alliance offers just-in-time product distribution and fulfillment services for DVDs, music and related home entertainment products to national music and video retailers, mass merchants, variety, e-commerce and independent retailers. Alliance Entertainment's business is composed of direct-to-retail store distribution, category management and Consumer Direct Fulfillment (CDF (1) (Central Distribution Frame) A connecting unit (typically a hub) that acts as a central distribution point to all the nodes in a zone or domain. See MDF. ). AEC customers include Barnes & Noble, barnesandnoble.com, ToysRUs, Sears, Kmart, Meijers, Musicland, Trans World Music, Circuit City, Best Buy, AOL, BJ's Wholesale Club, Blockbuster, Tower Records, Borders, Hastings Entertainment. In total, AEC services over 30,000 storefronts and over two million individual consumers through its Consumer Direct Fulfillment business. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains certain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, (i) timing of the merger, (ii) future business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , plans, strategies and financial results, (iii) the ability to leverage existing relationships, (iv) cross-selling opportunities, (v) product and service offerings and capabilities, (vi) market growth and opportunities, (vii) expected synergies, integration, elimination of redundancies and economies of scale and (viii) growth potential. These forward-looking statements reflect Source Interlink's and Alliance Entertainment's current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. Factors that could cause actual results to differ include: (i) the challenges and costs of closing, integration and restructuring and the ability to achieve anticipated synergies associated with the announced plans to merge Source Interlink and Alliance Entertainment; (ii) an evolving market; (iii) market uncertainty with respect to the proposed merger and acceptance of the combined company's product offerings by customers and partners; (iv) adverse changes in general economic or market conditions; (v) regulatory or other delays in completing the proposed merger in a timely manner or at all; (vi) the ability to attract and retain employees pending the consummation of the merger and thereafter; (vii) intense competition in the marketplace and (viii) other events and other important factors disclosed previously and from time to time in Source Interlink's filings with the Securities and Exchange Commission, including its 10-K filings. Source Interlink and Alliance Entertainment do not intend to and disclaim any duty or obligation to update or revise any forward-looking statements or industry information set forth in this press release to reflect new information, future events or otherwise. Additional Information and Where You Can Find It In connection with the proposed merger between Source Interlink and Alliance Entertainment Corp. described in this press release, Source Interlink intends to file a registration statement on Form S-4 including a proxy statement/prospectus and other materials with the Securities and Exchange Commission. Investors and security holders are urged to read these materials when they become available because they will contain important information about the merger. Investors and security holders may obtain a free copy of these materials when they become available, as well as other materials filed with the Securities and Exchange Commission concerning Source Interlink at the Securities and Exchange Commission's website, http://www.sec.gov. Source Interlink, Alliance Entertainment and its respective board members and executive officers and other members of management and employees, may be deemed to be participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies from the shareholders of Source Interlink and Alliance Entertainment in connection with the merger agreement. Information about the board members and executive officers of Source Interlink and their ownership of Source Interlink shares is set forth in the proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. for Source Interlink's 2004 Annual Meeting of Shareholders, which was filed with the Securities and Exchange Commission on May 28, 2004. Investors may obtain additional information regarding the interests of such participants by reading the proxy statement/prospectus when it becomes available. |
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