Costa Inc. to be Acquired by Essilor International

Costa Inc., previously known as A.T. Cross, announced an agreement whereby Essilor International will acquire all outstanding shares of the company for $21.50 per share. This corresponds to an enterprise value of approximately $270 million. The all-cash offer represents a 19 percent premium on the volume weighted average share price over the past six months and approximately 2.8x the last twelve month’s revenue from continuing operations.

The merger agreement provides that Costa Inc. may consider superior proposals from other interested parties. Costa Inc. designs, assembles and markets sunglasses under the Costa and Native eyewear brands.

Introduced in 1983, when a few fishermen decided the world needed better sunglasses, Costa has become a leader in the performance sunglass market. As a premiere manufacturer of superior polarized performance sunglasses, Costa is best known for its patented 580 lens technology, which offers color enhancement and increased visual acuity. Still handcrafted today in Florida, Costa’s unparalleled fit and durability, backed by a lifetime warranty, have made them a leading choice of serious water sports enthusiasts.

Costa is also known for its commitment to protecting the world’s waters and works with conservation partners around the world to help increase awareness and influence policy so that both the fish and fishermen of tomorrow will have healthy waters to enjoy.

Commenting on the agreement, David G. Whalen, Chief Executive Officer of Costa Inc. said, “When viewed in comparison with comparable transactions we believe that this transaction represents significant value to our shareholders.” Mr. Whalen continued, “We are delighted to be joining forces with the world leader in optics. Over the past decade, as the terrific Costa management team has worked to make customers and consumers more aware of the features and benefits offered by the Costa brand, our business has grown rapidly. As a member of the Essilor family, we will have access to a deep pool of world class resources including technology and distribution that will drive our continued growth both in the United States and the global marketplace.”

Under the terms of the merger agreement, certain Costa shareholders owning in the aggregate approximately 34% of the outstanding common shares of Costa have agreed to vote in favor of the transaction at a forthcoming special meeting to be called to approve it, subject to certain conditions. Additionally, a termination fee of approximately $8.9 million is payable, under certain circumstances, by Costa Inc. to Essilor in the event a superior, unsolicited offer is accepted by Costa Inc.

The transaction is expected to close in early 2014, subject to necessary regulatory approvals and clearances, approval by the Costa shareholders, and certain other conditions. The transaction is not subject to any financing contingency and it will be financed out of Essilor’s cash reserves.

D.A. Davidson & Co. is serving as Costa Inc.’s financial advisor and Weil, Gotshal & Manges LLP is acting as Costa Inc.’s legal counsel.