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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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FUNCO, INC.
(Name of Subject Company)
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FUNCO, INC.
(Name of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
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360762108
(CUSIP Number of Class of Securities)
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DAVID R. POMIJE
10120 WEST 76TH STREET
EDEN PRAIRIE, MINNESOTA 55344
(952) 946-8883
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications on Behalf of the Person Filing Statement)
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COPIES TO:
PHILIP S. GARON, ESQ.
FAEGRE & BENSON LLP
2200 NORWEST CENTER
90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
(612) 336-3000
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[X] CHECK THE BOX IF THE FILING RELATES TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT DATE OF A TENDER OFFER.
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[Funco, Inc. Letterhead]
FOR IMMEDIATE RELEASE
CONTACT:
Stanley A. Bodine
President
Funco, Inc.
612-946-8883
FUNCO ANNOUNCES RECEIPT OF LETTER AGREEMENT
FROM BARNES & NOBLE
MINNEAPOLIS, MN, April 13, 2000 - Funco, Inc. (Nasdaq: FNCO) today announced
that it received from Barnes & Noble, Inc. a letter agreement dated April 12,
2000. The letter agreement contains an unconditional commitment by Barnes &
Noble to enter into a merger agreement with Funco (the "B&N Merger
Agreement") under which Funco shareholders would receive $21.00 per share in
cash or approximately $135 million in the aggregate. Barnes & Noble has
agreed to keep its commitment open until April 21, 2000 so that Funco could
give Electronics Boutique Holdings Corp. the five business days notice
required by Funco's existing merger agreement with Electronics Boutique (the
"EB Merger Agreement"). On April 12, 2000, Funco gave written notice to
Electronics Boutique of its present intent to enter into the B&N Merger
Agreement at the expiration of such five business day period. During the five
business day period Electronics Boutique has the right under the EB Merger
Agreement to propose adjustments to the terms of the EB Merger Agreement.
The form of the B&N Merger Agreement committed to by Barnes & Noble
is substantially identical to the EB Merger Agreement except for the purchase
price. Funco is not legally obligated to execute the B&N Merger Agreement. If
Funco does execute the B&N Merger Agreement and terminate the EB Merger
Agreement, Barnes & Noble has also agreed to pay Funco the termination fee
required to be paid by Funco to Electronics Boutique under the EB Merger
Agreement.
Funco also announced that on April 11, 2000, Dr. David Eckert, a
shareholder of Funco, commenced a purported shareholder class action lawsuit
against Funco and the members of the Board of Directors of Funco, alleging
that the defendants have breached their fiduciary duties in causing Funco to
enter into the EB Merger Agreement by taking actions that allegedly inhibit
the maximization of shareholder value and that the defendants have taken
actions designed to halt any other offers and deter higher offers from other
potential acquirers. The plaintiff seeks, among other things, injunctive
relief to enjoin the merger with Electronics Boutique, an order directing the
individual defendants to exercise their fiduciary duties to negotiate in good
faith with Babbage's, a subsidiary of Barnes & Noble, and costs and
attorneys' fees incurred in the action. Funco and its Board of Directors deny
the plaintiff's allegations and intend to defend the action vigorously.
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Funco currently owns and operates 400 retail stores, that are
predominately located in strip malls throughout the United States, and also
operates an e-commerce division, located at http://www.funcoland.com.
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
FUNCO, INC. WILL FILE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION A
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO THE OFFER. THE OFFEROR
WILL FILE A TENDER OFFER STATEMENT WITH THE COMMISSION. 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 COMMISSION) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE AVAILABLE FOR FREE AT THE
COMMISSION'S WEBSITE AT WWW.SEC.GOV.
