LIVINGSTON, N.J. -- June 15, 2005 -- Mega Bloks Inc. announced today that it has entered into a definitive agreement to acquire the Rose Art Industries group for $350 million (U.S.). The transaction combines leading companies focused on construction toys, arts and crafts, and other creative-activity products.
"This acquisition reflects the company's commitment to expanding our market opportunity and growing our consumer base," said Marc Bertrand, Mega Bloks president and CEO. "With this transaction, the company solidifies its position as one of the largest players in the U.S. arts and crafts market. The combination of Mega Bloks and Rose Art is an excellent strategic and operational fit."
The new Mega Bloks will have greater resources to grow in the North American market, both organically and through acquisitions.
"Mega Bloks gives our product lines immediate and significant access to world markets through their existing sales and distribution network," explained Lawrence Rosen, Rose Art president and CEO. "This is the best way to support our continuing rapid growth."
Under the terms of the transaction, Mega Bloks will acquire all of the issued and outstanding shares of Rose Art Industries, Inc., Warren Industries, Inc., and their respective subsidiaries (collectively "Rose Art") for $350 million, including approximately $35 million of assumed debt. The purchase agreement calls for a contingent payment of up to $50 million and additional earn-out payments in 2005, 2006, and 2007--all based on financial performance. The purchase price is payable in cash and $20 million of Mega Bloks common shares at CA$19.00 per share.
In addition to becoming major shareholders, Lawrence Rosen, Rose Art's president and CEO, and Jeffrey Rosen, executive vice president, will assume senior management positions in Mega Bloks - with Lawrence as senior vice president and chief marketing officer and Jeffrey as executive vice president. In addition, Lawrence Rosen will be nominated to Mega Bloks' board of directors.
The transaction is fully financed and is expected to be completed in the third quarter of 2005. Closing is subject to regulatory approval and customary closing conditions.
About Mega Bloks
Mega Bloks, based in Montreal www.megabloks.com is the number-two company in the construction toy category worldwide. The company has more than 1,000 employees and sells in more than 100 countries through a well-established global sales and distribution network. Its umbrella brand is MEGA BLOKS and its brand family includes Block Buddies, Tiny 'n Tuff, Dragons, Pyrates, and ProBuilder. Mega Bloks has licensing agreements with Disney, Marvel, and NASCAR.
Mega Bloks has a strong family heritage with brothers Marc and Vic Bertrand in the leadership roles, with their father Victor J. Bertrand, who founded the company in 1967, as Chairman of the Board.
About Rose Art
Privately held Rose Art www.roseart.com is owned by brothers Lawrence and Jeffrey Rosen and their father Sydney.
Rose Art is headquartered in Livingston, N.J. and has more than 1,000 employees. Its major brands include Rose Arts Arts & Crafts, Magnetix, Fun Dough, USA Gold and Fuzzy. Rose Art also markets products under licensed brands such as Kodak, Thomas Kinkade, Strawberry Shortcake, Bratz and Warner Brothers.
Rose Art has a manufacturing facility in Wood-Ridge, New Jersey, and the group of companies includes: Western Graphics Corp. in Eugene, Oregon; Rose Moon Industries LLC in Lewisburg, Tennessee; Warren Industries, Inc. in Lafayette, Indiana; and a facility in China.
