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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JANUARY 17, 2000
Date of Report (Date of earliest event reported)
HA-LO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
ILLINOIS 001-13525 36-3573412
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5980 WEST TOUHY AVENUE, NILES, ILLINOIS 60714
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 647-2300
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 17, 2000, HA-LO Industries, Inc., an Illinois corporation
(the "Company"), entered into an Agreement and Plan of Merger and Plan of
Reorganization, with HA-LO Industries, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company ("Sub"), and Starbelly.com, Inc.
("Starbelly"), which provides for the merger of Sub and Starbelly. In the
merger, stockholders of Starbelly (including holders of options under
Starbelly's stock option plan) will receive an aggregate of $19 million in
cash, $51 million in the Company's preferred stock and the remainder in the
Company's common stock. All outstanding options to purchase Starbelly's
common stock will be assumed by the Company and converted into options to
purchase Company common stock and preferred stock. It is intended that the
transaction qualify as a tax-free reorganization for federal income tax
purposes.
The merger is subject to various conditions including the receipt of
regulatory approvals and the approval of the transaction by the shareholders
of the Company.
Following the merger, John Kelley, Jr. will remain the Chief
Executive Officer of the Company. Bradley Keywell, Chief Executive Officer of
Starbelly, will become President and a director of the Company. Eric
Lefkofsky, President of Starbelly, will become Chief Integration Officer and
a director of the Company.
In connection with the execution of the merger agreement,
stockholders who in the aggregate own approximately 94% of the voting power
of Starbelly's outstanding capital stock have voted in favor of the merger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
99.1 Press Release dated January 18, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HA-LO INDUSTRIES, INC.
January 21, 2000 By: /s/ Gregory J. Kilrea
---------------------------------
Gregory J. Kilrea,
Chief Financial Officer
3
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Exhibit Index.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
99.1 Press Release dated January 18, 2000
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EXHIBIT 99.1
HA-LO Industries Agrees to Acquire Starbelly.com Creates Dominant Internet
Promotional Products Powerhouse
CHICAGO, Jan. 18 /PRNewswire/ -- HA-LO Industries, Inc. (NYSE: HMK - news), a
brand marketing and promotional products industry leader, today announced it
has signed a definitive agreement to acquire Starbelly.com, Inc., the premier
internet business solution for custom-decorated merchandise. The transaction
brings together the industry's strongest players from the off-line and
on-line worlds, combining HA-LO's market leadership and blue-chip customer
relationships with Starbelly.com's sophisticated Internet business model.
This marriage of off-line and on-line leadership positions HA-LO to redefine
and dominate the global $75 billion branded and custom-decorated merchandise
industry.
The value of the transaction is $240 million. Under the terms of the
agreement, Starbelly.com shareholders will receive $19 million in cash, with
the balance in newly-issued shares of HA-LO common and preferred stock.
Closing of the transaction, subject to shareholder approval, is expected in
March 2000.
"Our acquisition of Starbelly.com is a cornerstone of HA-LO's
e-transformation strategy and commitment to the future, igniting HA-LO for
aggressive long-term growth and value creation through a combination of new
market opportunities, operating efficiencies and infusion of innovative
internet talent," said John Kelley, HA-LO president and chief executive
officer.
In December 1999, Kelley announced HA-LO's e-transformation strategy to
evolve the company into an internet business-to-business brand marketing
leader that leverages its significant off-line relationships. The initial
step in that strategy was the formation of UPSHOT Direct, which builds upon
its Hewlett-Packard alliance to provide a comprehensive suite of Internet-
based direct marketing services. Today's acquisition of Starbelly.com extends
HA-LO's e-transformation strategy to its promotional products business, which
comprises 75 percent of HA-LO's revenues.
Kelley said, "Starbelly.com's revolutionary internet business model will
expand HA-LO's penetration of the $15 billion promotional products market
through unprecedented client service, while also unleashing access to the
broader $75 billion branded and custom-decorated merchandise market. While
our focus will be rapid top-line growth, we will enjoy margin improvements
through technology-enabled operating efficiencies at every level of the
supply chain. In addition, the incredible talent and passion of our combined
management teams is an asset that will enable us to move at Internet speed."
Starbelly.com, which began operations in March 1999 and has since grown to
over 100 virtual company stores, was founded by Brad Keywell and Eric
Lefkofsky. Ownership includes its management team, as well as leading
Internet venture capital firms Chase Capital Partners and Flatiron Partners.
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"HA-LO's critical mass of customer and supplier relationships gives us an
unmatched advantage in this lucrative B2B internet market, which we know is
virtually untapped," said Brad Keywell, chief executive officer of
Starbelly.com. "The formula for Internet success requires a superior business
model and the speed to implement that model to change an industry. This
transaction gives us the opportunity to leverage HA-LO's global relationships
through an internet solution that compresses every level of the supply chain.
Our technology has the capacity to meet exponential volume, and the fantastic
talent on our team was assembled with the singular purpose of revolutionizing
this industry."
Keywell added, "Whether they be corporations, associations, or sports teams,
our make-on-demand model sets a new standard in the custom-decorated
merchandise industry, giving customers control over the entire process from
ordering to unlimited customization to proofing and pre-press approval. Our
direct model will elevate the customer experience and bring the supply chain
closer to the customer, at the same time expanding the market due to our
ability to communicate with anyone, anywhere through the Internet."
HA-LO's Promotional Products Group and Starbelly.com will be merged into one
division named Starbelly.com. John Kelley will remain chief executive officer
of HA-LO, and Brad Keywell will assume the role of president. Eric Lefkofsky
will become HA-LO Chief Integration Officer, focused on the e-transformation
of the promotional products group, as well as the marketing services
divisions. Mike Linderman, current president of HA-LO Promotional Products
Group, will become president of Starbelly.com. In addition, Keywell and
Lefkofsky will become members of HA-LO's Board of Directors.
HA-LO Industries, a brand marketing organization, is the nation's leading
distributor of promotional products and a premier provider of brand marketing
services through UPSHOT, a number one-ranked brand marketing agency, UPSHOT
Direct, an Internet-based direct marketing solutions provider, and LAGA,
experts in brand strategy and identity. HA-LO's extensive client roster
includes such global leaders as Abbott Labs, Anheuser-Busch, The Coca-Cola
Company, Discover Financial Services, Ford, General Electric, Glaxo Wellcome,
Mirage Resorts, Procter & Gamble, J.E. Seagram & Son and SBC Communications.
The company operates in 11 countries.
Starbelly.com is a leading Internet marketplace for the custom-decorated
merchandise industry. Its sophisticated mass customization technology and
revolutionary business model incorporates alliances with leading partners
such as Oracle, Ariba, PurchasePro, Intelisys, Yahoo! and Excite. Founded in
March, 1999, it has rapidly gained a reputable customer base including
Newell/Rubbermaid, Quaker Oats, Trimark Pictures, NBC, Nestle, and AOL.
Certain statements in this press release regarding HA-LO's long-term growth,
value creation, and dominance of the relevant marketplace are forward-looking
statements that invoke substantial
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risks and uncertainties. Actual results may differ materially from those
implied by such forward-looking statements as a result of various factors.
Readers are encouraged to review HA-LO's Annual Report on Form 10-K and
quarterly report on Form 10-Q for the third quarter of 1999 for other
important factors that may cause actual results to differ materially from
those implied in these forward-looking statements.
CONTACT: Sharon Erikson of Fleishman-Hillard, 312-751-8878, for HA-LO
Industries, Inc. SOURCE: HA-LO Industries, Inc.
