UNITED STATES
SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549
__________________
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
__________________
FUNCO, INC.
(Name of Subject Company)
B&N ACQUISITION CORPORATION
BARNES & NOBLE, INC.
(Names of Filing Persons)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
360762-10-8
_____________________________
(CUSIP Number of Class of Securities)
Maureen O'Connell, Chief Financial Officer
Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011
(212) 633-3300
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on behalf of filing persons)
COPY TO:
Stuart A. Gordon, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
(212) 541-2000
May 5, 2000
CALCULATION OF FILING FEE
TRANSACTION VALUATION AMOUNT OF FILING FEE
$ N/A $ N/A
[ ] 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: [ ]
<PAGE>
FOR IMMEDIATE RELEASE
CONTACTS:
Mary Ellen Keating
Senior Vice
President, Maureen O'Connell Maria Florez
Corporate Chief Financial Director, Investor
Communications Officer Relations Stanley A. Bodine
Barnes & Noble, Barnes & Noble, Barnes & Noble, President
Inc. Inc. Inc. Funco, Inc.
(212) 633-3323 (212) 633-3338 (212) 633-4009 (612) 946-8883
BARNES & NOBLE AND FUNCO JOINTLY ANNOUNCE THAT
BARNES & NOBLE HAS AGREED TO ACQUIRE FUNCO
FOR $161.5 MILLION, BECOMING THE WORLD'S LARGEST
SPECIALTY RETAILER OF ELECTRONIC GAMES
Babbage's Etc. and Funco Combined Have Approximately
1,000 U. S. Stores and Two Web Sites
NEW YORK, NY -- May 4, 2000 -- Barnes & Noble, Inc. (NYSE: BKS) and Funco,
Inc. (NASDAQ: FNCO) today jointly announced a merger agreement under which
Barnes & Noble will acquire Funco, a Minneapolis-based electronic games
retailer, for approximately $161.5 million. Through its more than 400
FuncoLand stores, primarily in strip malls, and Web site,
http://www.funcoland-com, Funco markets interactive home entertainment,
primarily through the sale of new and previously played video games, related
hardware and accessories. Combined with the complementary business of
Babbage's Etc., acquired last year, Barnes & Noble, Inc. becomes the world's
largest video game and PC entertainment specialty retailer.
Barnes & Noble will offer to purchase for $24.75 per share in cash all
outstanding Funco shares, or approximately $161.5 million, pursuant to a
tender offer expected to commence within two weeks. The acquisition is
expected to be completed in June and to be accretive to Barnes & Noble's
earnings per share in the current fiscal year. Funco has terminated its
merger agreement with Electronics Boutique Holdings Corp. in accordance with
the terms of that merger agreement.
The electronic games industry is one of the fastest-growing retail segments
with revenues that are expected to soon surpass total U.S. movie sales with
video-game and related revenue forecast to approach $10 billion next year.
"With this acquisition, we bring together the most knowledgeable specialists
in this industry and dramatically accelerate our multi-channel capability,"
said Leonard Riggio, chairman and chief executive officer of Barnes & Noble,
Inc. "As the leader in providing video-game entertainment in retail outlets
and on the Internet, we are in a strong position to serve the rapidly growing
and diversifying video-game market, wherever and however video games are
sold."
- more -
"We are obviously pleased for our shareholders," said David R. Pomije,
Funco's chairman and chief executive officer." We believe that this
transaction will provide opportunities for our employees, allow our business
to benefit from the synergies with Babbage's Etc. and offer the additional
economic and other advantages of being associated with a major retailer like
Barnes & Noble."
Funco reported sales of $206.7 million for fiscal 1999 (ended March 28,
1999), which included approximately $1.6 million in net sales from its Web
site. 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 Web site sales.
Babbage's Etc.'s chief executive officer, Dick Fontaine, and Dan DeMatteo,
chief operating officer, will lead the combined companies. Babbage's Etc. is
one of the nation's largest operators of video game and entertainment
software stores, with 540 stores, primarily in malls, under the Babbage's(R),
Software Etc.(TM), and GameStop(R) names, and a Web site,
http://www.gamestop.com.
"Babbage's and Funco each serve different market segments, but have in common
outstanding and experienced personnel who are passionately committed to the
video-game business," said Mr. Fontaine. "Over the next 18 months, the
business is poised to achieve record sales with the introduction of Sony's
Playstation II in the fall, followed next year by Nintendo's Color Game Boy
Advanced and set-top Dolphin next-generation machines. In addition,
Microsoft has announced its entry into the business with the fall 2001 launch
of the X-Box. This acquisition positions us to take maximum advantage of
these enormous sales opportunities."
Barnes & Noble'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 Barnes & Noble
and its subsidiaries, represents 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 Improvements Act of 1976, as amended.
About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE: BKS) operates 542 Barnes & Noble and 400 B.
Dalton bookstores, and Babbage's Etc., one of the nation's largest operators
of video game and entertainment software stores. Barnes & Noble stores stock
an authoritative selection of book titles and provide access to more than one
million titles. They offer books from more than 50,000 publisher imprints
with an emphasis on small, independent publishers and university presses.
- more -
Barnes & Noble is one of the world's largest booksellers on the World Wide
Web (http://www.bn.com), and the exclusive bookseller on America Online
(Keyword: bn). Barnes & Noble.com has the largest standing inventory of any
online bookseller. Barnes & Noble also publishes books under its own imprint
for exclusive sale through its retail stores, mail-order catalogs, and Web
site.
General financial information on Barnes & Noble, Inc. can be obtained via the
Internet by visiting the company's investor relations Web site:
http://www.shareholder.com/bks/.
About Funco, Inc.
Funco, Inc., headquartered in Minneapolis, Minnesota, currently owns and
operates 404 FuncoLand video game retail stores that are predominantly
located in strip malls throughout the United States, and also operates an e-
commerce division, located at http://www.funcoland.com.
Safe Harbor
This press release contains "forward-looking statements." Barnes & Noble,
Inc. (NYSE: BKS) 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,
the 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; the 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; the successful integration of
acquired businesses; the dependence on suppliers for products; 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,
BARNES & NOBLE, INC. AND A 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.
- more -
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 FUNCO, INC. AT NO EXPENSE TO THEM. THE
TENDER OFFER STATEMENT (INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER
OF TRANSMITTAL AND ALL OTHER OFFER DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO
BE AVAILABLE FOR FREE AT THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT
WWW.SEC.GOV.
# # #
