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8-K - REEDS, INC. - REED'S, INC. | reeds_8k-030910.htm |
EXHIBIT 99.1
Reed’s
Inc. and Jones Soda Co. Enter Into Letter of Intent Regarding Potential Merger;
Jones CEO to Depart
LOS
ANGELES, CA and SEATTLE, WA -- (Marketwire – March 9) - Reed's, Inc.
(NASDAQ:REED),
maker of top-selling sodas in natural food stores nationwide, and Jones Soda,
Inc. (NASDAQ: JSDA), a leader in
the premium soda category and known for its unique branding and innovative
marketing, announced today that the two companies have entered into a Letter of
Intent (LOI) regarding a merger, with Reed’s as the surviving
company. The combination would unite a number of leading premium soda
brands, such as Reed’s Ginger Brew, Virgil’s, and Jones Soda. The
proposed merger would also provide the two companies with the opportunity to
realize the potential benefits of increased size and scale, as well as cost
efficiencies in several aspects of the combined business, including
administration, operations, and customer interface. The strength of
the Reed’s portfolio in the direct selling channel combined with Jones Soda's
strong national distributor structure allows for future growth opportunities for
each company's brands across these channels.
The
non-binding provisions of the LOI contemplate a merger transaction in which
Reed's would acquire Jones Soda for a combination of cash and Reed's common
stock. The shareholders of Jones Soda would receive an aggregate of
4.5 million shares of Reed’s common stock (or approximately 0.17 of a share of
Reed's common stock per share of Jones Soda common stock based on current Jones
Soda shares outstanding) and cash of $0.10 per share of Jones Soda common stock
(or an aggregate of approximately $2.56 million based on current shares
outstanding). There is no financing contingency as Reed's would use
its best efforts to secure the cash portion of the consideration, and if it is
unable to secure all or part of this cash, any deficit would instead be paid in
additional shares of Reed's common stock, with the aggregate number of shares
equal to the amount of the cash deficit divided by $1.70.
Mr. Chris
Reed, Founder, Chairman and CEO of Reed’s stated, “We have watched Jones for
years and have been impressed with its innovative marketing programs, strong
brand recognition, and loyal customer following. I am confident that
our portfolio of brands will benefit from Jones Soda’s marketing savvy as well
as its organization’s deep mainstream distribution relationships. At
the same time, we believe our strong infrastructure and operational capabilities
will help drive important efficiencies through Jones Soda’s supply
chain. With minimal customer and demographic overlap between our
combined brands, we believe this transaction also provides us with compelling
merchandising and growth opportunities in the years ahead.”
Jones
Soda retained North Point Advisors in February 2009 to assist in evaluating the
company's strategic alternatives. Since that time, Jones has reviewed
a broad range of strategic alternatives to enhance shareholder
value.
Rick
Eiswirth, Chairman of the Board of Jones Soda Co., stated, “Over the past year
we have taken numerous steps to reduce our expenses and reinvigorate our top
line in order to return to profitability. Unfortunately, the challenging
economic environment combined with our current capitalization has made it
extremely difficult to operate on a standalone basis. After
evaluating a range of strategies aimed at improving our outlook, our Board of
Directors determined that the proposed merger with Reed’s offers our
shareholders the most compelling long-term benefits of the available
alternatives. We believe the combination of Jones and Reed’s will
create a substantially larger beverage business with a more powerful operating
platform and a brighter future. We are especially pleased that the
Jones shareholders will be able to participate in the potential upside of the
combined business, as a meaningful portion of the consideration is in the form
of Reed’s stock.”
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Jones
Soda also announced that Joth Ricci will be stepping down as Chief Executive
Officer effective April 2, 2010 in order to pursue other business
opportunities. Joth Ricci commented, “I have truly enjoyed my time at
Jones Soda and I’m pleased with the work our team has done to improve many
aspects of our business. Unfortunately, due to the current market
conditions, it has taken longer than anticipated to produce the necessary top
line results to effectively return to profitability and stem our cash
burn. However, I remain confident in the strength of the Jones Soda
brand and believe the proposed merger with Reed’s provides Jones Soda an
improved platform from which to capitalize on its future prospects and is in the
best interests of its shareholders.”
Under the
binding provisions of the LOI, Reed's and Jones Soda have until April 5, 2010 to
negotiate a definitive agreement on an exclusive basis. If Jones Soda
receives an unsolicited acquisition, financing or other strategic transaction
proposal that the Board of Directors of Jones Soda determines is superior to the
proposed merger transaction with Reed's, then Jones Soda may terminate the LOI
and reimburse Reed's for its third party out-of-pocket expenses (not to exceed
$75,000).
Since the
transaction terms of the LOI are non-binding, they are subject to the
negotiation, execution and delivery of a definitive agreement approved by the
respective Boards of Directors of each company. Accordingly, the
proposed terms of the transaction are subject to change, and there can be no
assurance that Reed's and Jones Soda will enter into a definitive agreement on
the terms outlined above, if at all, or that any transaction between the parties
will ultimately be consummated. The companies do not intend to
disclose developments with respect to negotiation of the definitive agreement
until their respective Boards of Directors deem it appropriate.
The
transaction would also be subject to approval of the shareholders of both Jones
Soda and Reed's.
About Reed's,
Inc.
Reed's,
Inc. makes top selling sodas in natural food markets nationwide and is currently
selling in 10,500 supermarkets in natural foods and mainstream. Its six
award-winning non-alcoholic Ginger Brews are unique in the beverage industry,
being brewed, not manufactured and using fresh ginger, spices and fruits in a
brewing process that predates commercial soft drinks.
In
addition, the Company owns a top selling root beer line in natural foods, the
Virgil's Root Beer product line, and a top selling cola line in natural foods,
the China Cola product line. Recently, Reed's added the Sonoma Sparkler brands
to its line, a celebration drink with an established customer base. Other
product lines include: Reed's Ginger Candies and Reed's Ginger Ice
Creams.
Reed's
products are sold through specialty gourmet and natural food stores, mainstream
supermarket chains, retail stores and restaurants nationwide, and in Canada. For
more information about Reed's, please visit the company's website at: http://www.reedsgingerbrew.com
or call 800-99-REEDS.
Follow
Reed's on Twitter at: http://www.twitter.com/reedsgingerbrew
Reed's
Facebook Fan Page at: http://www.facebook.com/pages/Reeds-Ginger-Brew-and-Virgils-Natural-Sodas/57143529039?ref=nf
Subscribe
to Reed's RSS feed at: http://www.irthcommunications.com/REED_rss.xml
More
information can be found at: http://www.irthcommunications.com/clients_REED.php
About
Jones Soda Co.
Headquartered
in Seattle, Washington, Jones Soda Co. ®
markets and distributes premium beverages under the Jones Soda, Jones Pure Cane
Soda™, Jones 24C™, Jones GABA®,
Jones Organics™, Jones Naturals® and
Whoopass Energy Drink®
brands and sells through its distribution network in markets primarily across
North America. A leader in the premium soda category, Jones is known
for its variety of flavors and innovative labeling technique that incorporates
always-changing photos sent in from its consumers. Jones Soda is sold
through traditional beverage retailers. For more information visit
www.jonessoda.com,
www.myjones.com, and
www.jonesGABA.com.
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Additional Information and
Where to Find It
If Reed's
and Jones enter into a definitive agreement relating to the proposed merger,
Reed's plans to file with the SEC a Registration Statement on Form S 4 in
connection with the transaction, and Jones Soda plans to file with the SEC and
mail to its shareholders a Proxy Statement/Prospectus in connection with the
transaction. The Registration Statement and the Proxy
Statement/Prospectus will contain important information about Reed's, Jones
Soda, the transaction and related matters. Investors and shareholders
are urged to read the Registration Statement and the Proxy Statement/Prospectus
carefully when they are available. Investors and shareholders will be
able to obtain free copies of the Registration Statement and the Proxy
Statement/Prospectus and other documents filed with the SEC by Reed's and Jones
Soda through the web site maintained by the SEC at www.sec.gov. In
addition, investors and shareholders will be able to obtain free copies of the
Registration Statement and the Proxy Statement/Prospectus from Reed's by
contacting Andrew W. Haag at IRTH Communications at (866) 976-4784, or from
Jones Soda by contacting Michael O’Brien at (206)-624-3357.
Reed's
and its directors and executive officers, and Jones Soda and its directors and
officers, may be deemed to be participants in the solicitation of proxies from
the shareholders of Jones Soda in connection with the transaction described
herein. Information regarding the special interests of these
directors and executive officers in the transaction described herein will be
included in the Proxy Statement/Prospectus described
above. Additional information regarding the directors and executive
officers of Jones Soda is also included in Jones Soda's annual report on Form
10-K filed with the SEC on March 16, 2009. Additional
information regarding the directors and executive officers of Reed's is also
included in Reed's annual report on Form 10-K filed with the SEC on March 27,
2009, as amended.
Forward-Looking Statements
Disclosure
Certain
statements in this press release are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements regarding the potential future benefits of the
proposed merger, including growth opportunities for each company's brands, the
combined company's ability to realize cost efficiencies, and the ability of
Reed's infrastructure and operational capabilities to drive efficiencies through
Jones Soda's supply chain. Forward-looking statements include all
passages containing words such as "aims," "anticipates," "becoming," "believes,"
"continue," "estimates," "expects," "future," "intends," "plans," "predicts,"
"projects," "targets," or "upcoming," variations of such words, and similar
expressions. Forward-looking statements also include any other
passages that are primarily relevant to expected future events or that can only
be evaluated by events that will occur in the future. Forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated in the
forward-looking statements. The risks and uncertainties that may
affect forward-looking statements include, among others, the inability of the
parties to reach a definitive agreement on the terms outlined in this press
release, if all, or to consummate the transaction for any reason, including as a
result of the failure to satisfy any condition to closing set forth in the
definitive agreement; the inability of the combined business to achieve levels
of revenue and cost reductions that are adequate to support its capital and
operating requirements, or to generate sufficient cash flow from operations, or
to obtain funds through additional financing, to support its business plan; the
impact of current and any future adverse economic conditions; the inability of
the combined business to establish distribution arrangements with distributors,
retailers or national retail accounts, or to maintain relationships with its
co-packers or third party brewers, or to maintain a consistent and
cost-effective supply of raw materials, or to maintain brand image and product
quality, or to protect its intellectual property; the impact of increasing costs
of fuel and freight; the impact of competition; and other factors detailed from
time to time in Jones Soda's and Reed's most recent annual reports on Form 10-K
and quarterly reports on Form 10-Q filed with the Securities and Exchange
Commission. You should not place undue reliance upon any such
forward-looking statements, which are based on management’s beliefs and opinions
at the time the statements are made, and neither Jones Soda nor Reed's
undertakes any obligations to update forward-looking statements should
circumstances or management’s beliefs or opinions change.
Source:
Reed’s, Inc. and Jones Soda Co.
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Contact
Reed's,
Inc. Investor Contact:
IRTH
Communications, LLC
Andrew W.
Haag
Managing
Partner
866-976-IRTH
(4784)
andrew@irthcommunications.com
http://www.irthcommunications.com
http://www.twitter.com/irthcomm
Jones
Soda Co. Investor Contact:
Jones
Soda Co.
Jonathan
J. Ricci, Chief Executive Officer
206-624-3357
jricci@jonessoda.com
Michael
R. O’Brien, Chief Financial Officer
206-624-3357
mobrien@jonessoda.com
or
ICR,
Inc.
Chad
Jacobs / Brendon Frey, 203-682-8200
Chad.jacobs@icrinc.com
/ Brendon.frey@icrinc.com
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