Follett Corporation will acquire VSTY:
Varsity Group Inc. to Be Acquired by Follett Corporation in an All-Cash Transaction for $0.20 per Share
Monday February 25, 9:00 am ET
FAIRFAX, VA and RIVER GROVE, IL--(MARKET WIRE)--Feb 25, 2008 -- Varsity Group Inc. (NasdaqCM:VSTY - News), a provider of online textbook sales and services to educational institutions nationwide, today announced that it has entered into a definitive merger agreement with a subsidiary of Follett Corporation, the nation's largest provider of library materials and library technology to K-12 schools, the leading operator of college bookstores and a major distributor of textbooks to institutions at all levels of education. Pursuant to the merger agreement, Follett will acquire all outstanding shares of Varsity Group for $0.20 per share in cash.
A tender offer to acquire all issued and outstanding shares of Varsity Group at a price of $0.20 in cash is expected to commence in the next two weeks. The tender offer is subject to a number of closing conditions and is presently expected to close in the second quarter of 2008. The Board of Directors of Varsity Group has unanimously approved the transaction and has recommended that Varsity Group stockholders accept the offer and tender their shares of Varsity Group pursuant to the offer.
"Completing this transaction will significantly enhance Varsity Group's ability to support our school customers and grow the business," said Eric J. Kuhn, chairman and co-founder of Varsity Group. "By combining Varsity Group's virtual bookstore expertise with Follett's distribution capabilities and understanding of the K-12 marketplace, our customers will receive superior customer service and fulfillment."
"As a pioneer in the online sales of textbooks, Varsity Group has established a solid virtual bookstore presence that will help us accelerate Follett's growth in this market," said Christopher D. Traut, president and chief executive officer of Follett Corporation. "In addition to our extensive involvement in serving K-12 schools and school districts, Follett manages the ecommerce needs for more than 900 colleges and universities across the country. We intend to leverage all of this expertise to enhance Varsity Group's level of value and service to customers."
Varsity Group also announced that an affiliate of Follett purchased Bank of America's interest in Varsity Group's line of credit. There are currently approximately $1.8 million of advances outstanding under the line of credit. In connection with this funding arrangement, Varsity Group has granted a warrant to an affiliate of Follett to acquire shares of Varsity Group common stock equal to the total advances made under the line of credit divided by the exercise price of $0.20 per share, subject to adjustment.
As of the date of the agreement, all the directors of Varsity Group and certain other stockholders, who in the aggregate hold approximately 20 percent of the outstanding shares, have agreed to support the merger and tender their shares in the tender offer. If the merger agreement is terminated under certain circumstances, Varsity Group will be obligated to pay a termination fee and expenses to the Follett subsidiary.
McDermott Will & Emery LLP served as legal advisor to Follett, and Latham & Watkins LLP represented Varsity Group.
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