Trans World acquires etailz
Trans World Entertainment Corporation announced the acquisition of etailz in a cash and stock transaction of approximately $75M, which was unanimously approved by the boards of directors of each company. The acquisition combines the entertainment specialty retailer with a leading digital marketplace retailer. Together, both companies expect to benefit by sharing certain infrastructure, development resources, scale and best operational and digital practices in order to deliver innovation and value to Trans World Entertainment customers, shareholders, business partners and the combined Trans World Entertainment team. Trans World paid $36.2M in cash and issued 5.7M shares of TWMC stock at closing to the shareholders of etailz for their shares. Based on the closing stock price on Friday, October 14, the shares had a value of $19.6M. An earn-out of up to a maximum of $14.6M will be payable in 2018 and 2019 subject to the achievement by etailz of $6M in operating income in 2017 and $7.5M in fiscal 2018. In connection with the acquisition, Trans World assumed the liability for etailz $4.2M employee retention bonus plan, of which $1.9M was paid at closing. Shares issued to Josh Neblett, etailz's CEO, will vest over a two year period. The acquisition and related costs were funded primarily from Trans World's cash on hand and with short term borrowings under its revolving credit facility. The acquisition is expected to be accretive in the first full fiscal year, 2017.