Skullcandy filed a form 13D today with the Securities and Exchange Commission announcing that founder Rick Alden was going to explore a transaction to take the company private. To be clear, that doesn’t mean it will go private. Here’s the relevant section of the 13D.
“On June 6, 2016, representatives of an investment entity controlled by Mr. Alden informed Ptarmagin that Mr. Alden has determined to explore potential transactions in which he may cause one of his affiliates to make an offer to purchase some or all of the shares of the Issuer’s Common Stock or otherwise pursue a “going private” transaction involving the Issuer (a “Potential Transaction”). Such representatives informed Ptarmagin that Mr. Alden intended to cause the investment entity, or an affiliate, directly or indirectly, to make a proposal to the Issuer for a Potential Transaction. Such representatives proposed to Ptarmagin that it participate with Mr. Alden and/or his affiliates in a Potential Transaction.”
Ptarmagin is a holder of some Skullcandy stock. Rick Alden is on the Skullcandy Board of Directors. I won’t be surprised if he resigns from the board if he actively pursues a transaction.
Skull’s stock closed today (June 7) at $3.93.
Regular readers know I’ve endorsed CEO Hoby Darling’s strategy since he came to the company. But I’ve also wondered if Skull could compete in the broader market with the much bigger and better resourced competitors it faces. I’ve suggested it could be successful as a niche player but perhaps, like other public companies in our space, would have trouble getting the growth Wall Street wants to see while also maintaining its brand positioning.
I had no inkling this was going to happen, but I thought it a possibility. I think Skull would be better of as a private company. I thought the same about Quiksilver (which is now private) and I’m wondering if the same might not also be true of GoPro.
Anyway, I want to emphasize that this filing doesn’t mean any transaction will happen, but you don’t file a 13D just because you had a random thought over a beer.