Business

Acquisition of R.I.-based Summer Infant set to be completed


KIDS2 INC., a Georgia manufacturer that owns the well-known Baby Einstein brand, is closing its acquisition of Summer Infant Inc. headquartered in Woonsocket.

WOONSOCKET – Kids2 Inc., a Georgia manufacturer that owns the well-known Baby Einstein brand, is set to close on its acquisition of Rhode Island-based Summer Infant Inc. on Wednesday.

Shareholders of Summer Infant, a maker of infant and juvenile products, which does business as SUMR Brands, voted on June 16 to approve the sale, despite an effort by some shareowners to stop the company from being sold to Kds2 Inc. through a lawsuit.

“We want to thank our stockholders for their support of our transaction with Kids2,” said Stuart Noyes, Summer Infant CEO, said after the vote. “Their vote of confidence was pivotal to closing this transaction, which will benefit our channel customers and, ultimately, the end consumers they serve.”

The deal is scheduled to be finalized Wednesday.

Under the terms of the agreement, the Summer Infant’s stockholders will receive $12 in cash for each share of company common stock that they own, implying a 41.2% premium to the closing price of the company’s common stock on March 15.

“This acquisition is a critical move in our long-term vision and growth strategy – and we are excited about the many synergies between Kids2 and Summer Infant,” Ryan Gunnigle, CEO of Kids2, said after Summer Infant shareholders approved the sale. “With this acquisition, Kids2 will leverage its already existing brand platform strength and add new adjacent categories from Summer Infant’s portfolio to further scale globally.”

In a filing with the Securities and Exchange Commission on May 6, Summer Infant, which is headquartered in Woonsocket, disclosed that federal lawsuits had been filed separately in New York and Pennsylvania by three shareholders, alleging that Summer Infant executives omitted information when notifying all company shareholders of the tentative agreement to sell the company to Kids2.

In March, Summer Infant and Kids2 announced that the companies had reached an agreement that would have Kids2 pay $12 per share for the Summer Infant – at the time about 40% more than what it was trading for on the Nasdaq Stock Market. At that price, the deal is valued at about $25.9 million.

Summer Infant continues to feel the effects of the COVID-19 pandemic and supply chain problems the crisis has caused.

The company, which opened in 1985, reported a net loss of $4.8 million, or $2.20 per share, for the fourth quarter of 2021.

“The fourth quarter of 2021 continued to be challenging across a number of fronts, with supply chain constraints and higher material costs negatively impacting our ability to meet demand and maintain margins,” Summer Infant CEO Stuart Noyes said in a statement in March. “In general, things did not improve as we had hoped, and such conditions have remained as we begin fiscal 2022. Elevated container rates, demurrage, and related logistics expense, along with air freight – to better serve customers – have been constant headwinds against our efforts to efficiently manage supply. Working capital has also been under pressure due to the need for increased inventory and elongated transit times.”

That earnings report was accompanied by the announcement of the tentative acquisition by Kids2, which owns the well-known Ingenuity and Bright Starts brands, in addition to Baby Einstein.

“We are pleased with the value creation this transaction brings to SUMR’s shareholders and believe it is beneficial to all stakeholders, as it ensures our leading brands are available and supported by a larger, broad-based global organization,” Noyes said when the terms of the sale were announced. “We look forward to continuing to serve our customers through exceptional products and industry-leading innovation.”

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