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SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549
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SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FUNCO, INC.
(Name of Subject Company)
EB ACQUISITION CORPORATION
a wholly-owned subsidiary of
ELECTRONICS BOUTIQUE HOLDINGS CORP.
(Names of Filing Persons)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
360762-10-8
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(CUSIP Number of Class of Securities)
Joseph J. Firestone, President and Chief Executive Officer
Electronics Boutique Holdings Corp.
931 South Matlack Street
West Chester, PA 19382
(610) 430-8100
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on behalf of filing persons)
COPY TO:
Stephen T. Burdumy, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
(215) 569-4646
April 3, 2000
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION AMOUNT OF FILING FEE
$ N/A $ N/A
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|_| Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount previously paid: N/A Form or Registration No.: N/A
Filing party: N/A Date Filed: N/A
/X/ Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: /_/
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SCHEDULE TO
This Tender Offer Statement on Schedule TO relates to an offer by EB Acquisition
Corporation, a Minnesota corporation and a direct, wholly-owned subsidiary of
Electronics Boutique Holdings Corp., a Delaware corporation, to purchase all of
the outstanding shares of common stock, par value $0.01 per share, of Funco,
Inc., a Minnesota corporation, at a purchase price of $17.50 per share, or an
aggregate purchase price of approximately $110 million.
ITEM 12. EXHIBITS.
EX-99.1 Press Release dated April 3, 2000
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
ELECTRONICS BOUTIQUE HOLDINGS CORP.
By: N/A
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Name:
Title:
Dated:
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EX-99.1 Press Release dated April 3, 2000
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FOR IMMEDIATE RELEASE
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CONTACTS:
Joseph Firestone David Pomije Alan Lewis/Greg Euston
Electronics Boutique Funco, Inc. MS&L
610-430-8100 612-946-8883 212-213-7424/212-213-7060
[email protected]
[email protected]
ELECTRONICS BOUTIQUE AND FUNCO JOINTLY ANNOUNCE THAT
ELECTRONICS BOUTIQUE HAS AGREED TO ACQUIRE FUNCO,
BECOMING THE LARGEST SPECIALTY RETAILER
OF ELECTRONIC GAMES IN THE WORLD
$110 MILLION CASH ACQUISITION WILL SOLIDIFY COMPANY'S SPECIALTY RETAIL
LEADERSHIP POSITION; MORE THAN 1,000 COMBINED STORES AND NEARLY $1 BILLION
IN ANNUAL REVENUE
WEST CHESTER, PA, APRIL 3, 2000 - Electronics Boutique Holdings Corp. (NASDAQ:
ELBO) and Funco, Inc. (NASDAQ: FNCO) today jointly announced a definitive merger
agreement under which Electronics Boutique will acquire Funco. Electronics
Boutique HTTP://WWW.EBWORLD.COM is among the world's largest specialty retailers
of electronic games. Funco, a Minneapolis-based electronic games retailer,
through its stores and web site, HTTP://WWW.FUNCOLAND.COM, markets interactive
home entertainment, primarily through the purchase and resale of new and
previously played video games, related hardware and accessories. The combined
company will become the largest specialty retailer of electronic games in the
world.
A wholly owned subsidiary of Electronics Boutique will offer to purchase for
$17.50 per share in cash all outstanding Funco shares, or approximately $110
million, pursuant to a tender offer expected to commence in the second week in
April. The acquisition is expected to be completed by late spring and is
expected to be accretive to earnings per share in the current fiscal year.
Industry analysts estimate the rapidly growing electronic games industry
generates approximately $6.9 billion in U.S. retail sales annually. It is
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widely expected that the industry will soon surpass the size of the entire movie
industry which currently generates about $7.1 billion in U.S. retail sales.
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ELECTRONICS BOUTIQUE/FUNCO
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"With this acquisition, Electronics Boutique will be able to carry out the most
wide-reaching 'clicks and mortar' strategy in the electronic games industry,"
said Joseph Firestone, President and Chief Executive, Electronics Boutique. "We
will market products to customers wherever it is convenient for them: in
shopping malls, neighborhood stores and on the web."
"This is an excellent transaction for Funco's shareholders and an excellent
opportunity for its employees," said David Pomije, Funco's Chairman and Chief
Executive Officer. "The video game industry continues to present exciting
opportunities, and the synergies between Funco and Electronics Boutique will
greatly expand our companies' abilities to capitalize on those opportunities."
"Interactive entertainment continues to become the most popular form of
entertainment among mass-market consumers. The significant market share gains
resulting from this merger will enable Electronics Boutique to be well
positioned to respond to their growing excitement about the launch of new gaming
platforms, including Sony's PlayStation 2, Nintendo's 'Dolphin' and Microsoft's
X-Box system," Mr. Firestone added.
Mr. Firestone of Electronics Boutique added that the transaction combines the
strengths of two successful electronic games retailers who have traditionally
targeted two different segments of the market. "These segments represent
customers with different demographics and purchasing patterns, so the combined
company will efficiently serve a larger market base without overlap or
competitive cannibalization of either company's sales," said Firestone.
Electronics Boutique stores are primarily located in high traffic areas in
regional shopping malls. Electronics Boutique's core customer is a game
enthusiast who demands immediate access to new title releases, and generally
purchases three times as many games (35 per year) as the average game consumer.
Funco's stores are generally located in high traffic "strip centers" near major
regional malls, or in high density neighborhood shopping areas. Funco's typical
customer wants a broad selection of new and previously played electronic games,
with previously played games being Funco's specialty niche.
Both companies have growing Internet-based retail operations, and the
acquisition will allow for the creation of a significant online network
servicing game enthusiasts with both great content and vast purchasing
opportunities. Additionally, the content published in Funco's GAME INFORMER
magazine and companion web site, HTTP://WWW.GAMEINFORMER.COM, immediately
enhances Electronics Boutique's ability to inform its customers within the
EBWorld.com network.
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ELECTRONICS BOUTIQUE/FUNCO
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The addition of Funco locations will enable Electronics Boutique to provide its
online customers with face-to-face customer service in over 1,000 locations both
in shopping malls and local communities, offering an added level of convenience.
Funco will also benefit from the multimillion dollar state-of-the-art
fulfillment and customer service operation that Electronics Boutique has
implemented, which will now enable Electronics Boutique to serve the Funco
customer base with a product mix featuring a deep selection of popular new
release titles.
"The store associates in both companies are passionate and knowledgeable about
their products, which is why customers love to shop at Electronics Boutique and
FuncoLand stores," stated Mr. Firestone of Electronics Boutique. "We are
first-rate, focused retailers with good locations in high-traffic areas, and we
thoroughly understand what our customers want to buy and more importantly,
play."
Following the acquisition, Electronics Boutique's CEO will lead the combined
companies, which will have a total workforce of 7,000 employees. FuncoLand
stores will retain their name, as will the company's web sites. In addition,
current plans are to open approximately 125 Electronics Boutique and 60 Funco
retail stores throughout the world by the end of this year.
Electronics Boutique, based in West Chester, Pennsylvania, is among the world's
largest specialty retailers of video and computer games and also sells video
game hardware, PC productivity software and accessories, and interactive toys
and trading cards. The company currently operates 628 stores in 46 states,
Puerto Rico, Canada, Australia and South Korea, primarily under the names
Electronics Boutique, EBX, EB Kids, Stop 'N Save Software and BC Sports
Collectibles. The company has also established a separate e-commerce division,
EB World. The company's web site can be found at HTTP://WWW.EBWORLD.COM. The
company reported revenues of $728.7 million for fiscal 2000 (ended January 29,
2000), which included $14.1 million in net sales from its e-commerce division,
HTTP://WWW.EBWORLD.COM.
Funco currently owns and operates 400 retail stores, that are predominately
located in strip malls throughout the United States, and also operates a
separate e-commerce division, located at HTTP://WWW.FUNCOLAND.COM. Funco
reported sales of $206.7 million for fiscal 1999 (ended March 28, 1999), which
included approximately $1.6 million in net sales from HTTP://WWW.FUNCOLAND.COM.
For the nine-month period ended January 2, 2000, Funco reported a 31 percent
sales increase as it generated revenues of $197.9 million, which included
approximately $3.1 million in sales via its web site.
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ELECTRONICS BOUTIQUE/FUNCO
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Electronics Boutique's acquisition of Funco is subject to the satisfaction of
certain conditions which include, without limitation, the following: (i) Funco
shareholders shall have validly tendered and not withdrawn a number of Funco
shares which, together with all Funco shares owned by Electronics Boutique and
its subsidiaries represent at least 51% of the total voting power of Funco, and
(ii) the expiration or early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.
This press release contains "forward-looking statements." Electronics Boutique
Holdings Corp. (NASDAQ: ELBO) and Funco, Inc. (NASDAQ: FNCO) are including this
statement for the express purpose of availing themselves of the protections of
the safe harbor provided by the Private Securities Litigation Reform Act of 1995
with respect to all such forward-looking statements. These forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially. These risks include, but are not limited to, each
company's dependence on the continued introduction of new and enhanced video
games and PC hardware and software; the cyclical nature of the video game
market; the rapid technological changes which occur in the video game and PC
industry; each company's ability to open and operate new stores on a profitable
basis; the intensely competitive nature of the electronic game industry and its
rapid changes in consumer preferences and frequent new product introductions;
the seasonal nature of the retail industry; each company's dependence on its
suppliers for products; risks inherent to conducting international operations;
and consumer spending patterns and prevailing economic conditions. Please refer
to each company's Annual Report on Form 10-K on file with the SEC for a more
detailed discussion of these and other risks that could cause results to differ
materially.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES OF FUNCO, INC. AT THE TIME THE OFFER IS COMMENCED, ELECTRONICS
BOUTIQUE HOLDINGS CORP. AND A WHOLLY OWNED SUBSIDIARY OF SUCH COMPANY WILL FILE
A TENDER OFFER STATEMENT WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND
FUNCO, INC. WILL FILE A SOLICITATION /RECOMMENDATION STATEMENT WITH RESPECT TO
THE OFFER. THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED
LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION WHICH
SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER
DOCUMENTS, AS WELL AS THE SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE
AVAILABLE TO ALL SHAREHOLDERS OF
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ELECTRONICS BOUTIQUE/FUNCO
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FUNCO, INC. AT NO EXPENSE TO THEM FROM ELECTRONICS BOUTIQUE HOLDINGS CORP. AND
SUCH WHOLLY OWNED SUBSIDIARY. THE TENDER OFFER STATEMENT (INCLUDING THE OFFER TO
PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND ALL OTHER OFFER DOCUMENTS FILED
WITH THE COMMISSION) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE
AVAILABLE FOR FREE AT THE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
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