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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
HIBBETT, INC.
(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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2700 Milan Court
Birmingham, Alabama, 35211
June 13, 2024
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of Hibbett, Inc. (“Hibbett” or the “Company”) to be held on July 19, 2024, at 9:00 a.m., Central Time (such meeting, including any adjournment or postponement thereof, the “Special Meeting”). The Special Meeting will be held in virtual format and conducted via a live webcast at www.virtualshareholdermeeting.com/HIBB2024.
At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of April 23, 2024 (the “Merger Agreement”), by and among Hibbett, Genesis Holdings, Inc. (“Parent”), Steps Merger Sub, Inc., a direct, wholly owned subsidiary of Parent (“Merger Sub”) and, solely for purposes of certain provisions specified therein, JD Sports Fashion plc, the ultimate parent company of Parent and Merger Sub (“JD Sports”). Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into Hibbett (the “Merger”) effective as of the effective time of the Merger (the “Effective Time”). As a result of the Merger, Merger Sub will cease to exist, and Hibbett will survive the Merger as a wholly owned subsidiary of Parent. You will also be asked to consider and vote on a non-binding, advisory proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger and a proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
If the Merger contemplated by the Merger Agreement is completed, you will be entitled to receive $87.50 in cash, without interest, for each share of Hibbett’s common stock, par value $0.01 per share (“Hibbett Common Stock”), that you own, unless you have properly exercised your appraisal rights with respect to such shares.
On April 22, 2024, Hibbett’s board of directors, after considering various factors, including those described in the accompanying Proxy Statement (the “Proxy Statement”), and after consultation with Hibbett’s independent legal and financial advisors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Hibbett and its stockholders, (ii) determined that it is in the best interest of Hibbett and its stockholders to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Hibbett of the Merger Agreement, the performance by Hibbett of its covenants and agreements contained in the Merger Agreement and the consummation of Merger and the other the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (iv) directed that the approval of the adoption of the Merger Agreement be submitted to the holders of Hibbett Common Stock, and (v) subject to the terms of the Merger Agreement, resolved to recommend that the stockholders of Hibbett (“Hibbett stockholders”) approve the adoption of the Merger Agreement at the Special Meeting.
Hibbett’s board of directors unanimously recommends that you vote (i) “FOR” the proposal to adopt the Merger Agreement, thereby approving the Merger, the Merger Agreement and the transactions contemplated thereby, (ii) “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may be payable by Hibbett to its named executive officers in connection with the Merger and contemplated by the Merger Agreement, and (iii) “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
The enclosed Proxy Statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the Proxy Statement. The Proxy Statement also describes the actions and determinations of Hibbett’s board of directors in

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connection with its evaluation of the Merger Agreement and the Merger. You are encouraged to read the Proxy Statement and its annexes, including the Merger Agreement, carefully and in their entirety. You may also obtain more information about Hibbett from documents we file with the U.S. Securities and Exchange Commission (the “SEC”) from time to time.
We appreciate you taking the time to vote promptly, and encourage you to do so electronically. After reading the Proxy Statement, please vote at your earliest convenience by voting over the Internet using the Internet address on the proxy card or by voting by telephone using the toll-free number on the proxy card. If you do not have access to a touch-tone phone or the Internet, you may alternatively vote by signing, dating and returning the enclosed proxy card in the enclosed postage-paid envelope. Only your last-dated proxy will be counted, and any proxy may be revoked at any time prior to its exercise at the Special Meeting. If your shares are held in street name through a broker, bank or other nominee, you are considered the beneficial owner of those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares. Without your voting instructions, because of the non-routine nature of the proposals, your broker, bank or other nominee may not vote your shares with respect to any of the proposals. We encourage you to instruct your broker, bank or other nominee to vote your shares “FOR” all of the proposals set forth in the Proxy Statement by following the directions on the enclosed voting instruction form to provide your instructions over the Internet, by telephone or by signing, dating and returning the voting instruction form in the postage-paid envelope provided. Again, we encourage you to vote electronically.
Your vote is very important, regardless of the number of shares that you own. We cannot consummate the Merger unless the proposal to adopt the Merger Agreement is approved by the affirmative vote of a majority of the outstanding shares of Hibbett Common Stock entitled to vote thereon. In addition, the Merger Agreement makes the approval by Hibbett stockholders of the proposal to adopt the Merger Agreement a condition to the parties’ obligations to consummate the Merger. The failure of any stockholder to grant a proxy electronically over the Internet or by telephone, to submit a signed proxy card, or to vote at the Special Meeting will have the same effect as a vote against the proposal to adopt the Merger Agreement, and will not have any effect on the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger or the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Further, such stockholder’s shares will not be counted for purposes of determining whether a quorum is present for the transaction of business at the Special Meeting. Because the proposals presented to stockholders will be considered non-discretionary, there will not be any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.
If you have any questions about the Proxy Statement, the Special Meeting, the Merger Agreement or the Merger or need assistance with voting procedures, please contact MacKenzie Partners, Inc., our proxy solicitor, by calling +1 (800) 322-2885 (toll-free).
On behalf of Hibbett’s board of directors, I thank you for your support and appreciate your consideration of this matter.
Sincerely,
 
 
 
/s/ Anthony F. Crudele
 
Anthony F. Crudele
 
Chairman
 
Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.
The Proxy Statement is dated June 13, 2024 and, together with the enclosed form of proxy card, is first being mailed to Hibbett stockholders on or about June 14, 2024.

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2700 Milan Court
Birmingham, Alabama, 35211
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
YOUR VOTE IS VERY IMPORTANT.
PLEASE VOTE YOUR SHARES PROMPTLY.
A special meeting of stockholders of Hibbett, Inc., a Delaware corporation (“Hibbett” or the “Company’), will be held on July 19, 2024, at 9:00 a.m., Central Time (such meeting, including any adjournment or postponement thereof, the “Special Meeting”). The Special Meeting will be held in virtual format and conducted via a live webcast at www.virtualshareholdermeeting.com/HIBB2024.
The Special Meeting will be held for the following purposes:
1.
to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of April 23, 2024, by and among Hibbett, Genesis Holdings, Inc. (“Parent”), Steps Merger Sub, Inc., a direct, wholly owned subsidiary of Parent (“Merger Sub”) and, solely for purposes of certain provisions specified therein, JD Sports Fashion plc, the ultimate parent company of Parent and Merger Sub (“JD Sports”) (as it may be amended from time to time, the “Merger Agreement”), a copy of which is attached as Annex A to the proxy statement (the “Proxy Statement”) accompanying this notice;
2.
to consider and vote on a non-binding, advisory proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger; and
3.
to consider and vote on a proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
The affirmative vote of a majority of the outstanding shares of Hibbett’s common stock, par value $0.01 per share (“Hibbett Common Stock”), entitled to vote thereon is required to adopt the Merger Agreement. The affirmative vote of the holders of a majority in voting power of the Hibbett Common Stock entitled to vote thereon, which are present or represented by proxy at the Special Meeting, provided a quorum is present, is required to approve (i) by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (ii) the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. The failure of any stockholder of record to grant a proxy electronically over the Internet or by telephone, submit a signed proxy card, or to vote by virtual ballot at the Special Meeting will have the same effect as a vote against the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger or the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Abstentions will be counted as votes against the proposal to adopt the Merger Agreement, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger and the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Because the proposals presented to stockholders will be considered non-discretionary, there will not be any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.
Only Hibbett stockholders of record as of the close of business on June 3, 2024 are entitled to notice of the Special Meeting and to vote at the Special Meeting. A list of stockholders entitled to vote at the Special Meeting will be available at Hibbett’s principal executive offices located at 2700 Milan Court, Birmingham, Alabama 35211, during regular business hours for a period of no less than ten days before the Special Meeting.

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Hibbett stockholders who do not vote in favor of the proposal to adopt the Merger Agreement will have the right to seek appraisal of the fair value of their shares of Hibbett Common Stock if they deliver a demand for appraisal before the vote is taken on the Merger Agreement and comply with all the requirements of Delaware law, which are summarized in the Proxy Statement accompanying this notice and reproduced in their entirety in Annex C to the accompanying Proxy Statement.
Hibbett’s board of directors (the “Board”) unanimously recommends that you vote (i) “FOR” the adoption of the Merger Agreement, (ii) “FOR” the non-binding, advisory proposal regarding compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (iii) “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained. In considering the recommendation of the Board, Hibbett stockholders should be aware that Hibbett’s executive officers and members of the Board may have agreements and arrangements in place that provide them with interests in the Merger that may be different from, or in addition to, those of Hibbett. See the section entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on page 70 of this Proxy Statement.
Our Notice of Special Meeting and Proxy Statement are available at www.proxyvote.com.
By order of the Board of Directors,

/s/ Elaine V. Rodgers
Elaine V. Rodgers
Corporate Secretary
June 13, 2024

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IMPORTANT
Your vote is extremely important. Whether or not you plan to attend the Special Meeting and regardless of the number of shares you own, we urge you to vote promptly “FOR” each of the proposals.
If you have any questions about submitting your proxy card or otherwise require assistance, please contact:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
+1 (800) 322-2885 (TOLL-FREE)
Email: proxy@mackenziepartners.com

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SUMMARY
This summary highlights selected information from this proxy statement (this “Proxy Statement”) related to the merger (the “Merger”) of Steps Merger Sub, Inc., (“Merger Sub”) with and into Hibbett, Inc. (“Hibbett” or the “Company”) and may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should read carefully this entire Proxy Statement, the annexes to this Proxy Statement and the documents we refer to in this Proxy Statement. You may obtain the information incorporated by reference in this Proxy Statement without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 117 of this Proxy Statement. The Merger Agreement (as defined below) is attached as Annex A to this Proxy Statement. You are encouraged to read the Merger Agreement, which is the legal document that governs the Merger.
Except as otherwise specifically noted in this Proxy Statement, “Hibbett,” the “Company,” “we,” “our,” “us” and similar words in this Proxy Statement refer to Hibbett, Inc., including, in certain cases, our subsidiaries. Throughout this Proxy Statement we refer to Genesis Holdings, Inc., as “Parent,” Steps Merger Sub, Inc., as “Merger Sub” and JD Sports Fashion plc, the ultimate parent company of Parent and Merger Sub, as “JD Sports” or “Ultimate Parent.” In addition, throughout this Proxy Statement we refer to the Agreement and Plan of Merger, dated as of April 23, 2024, as it may be amended from time to time, by and among Hibbett, Parent, Merger Sub and, solely for purposes of certain provisions specified therein, JD Sports as the “Merger Agreement.”
The Special Meeting
Date, Time and Place
The special meeting of Hibbett stockholders (the “Special Meeting”) will be held on July 19, 2024 at 9:00 a.m., Central Time, unless the meeting is adjourned or postponed. The Special Meeting will be held in virtual format and conducted via a live webcast at www.virtualshareholdermeeting.com/HIBB2024.
Record Date; Shares Entitled to Vote
You are entitled to vote at the Special Meeting if you owned shares of common stock, par value $0.01 per share, of the Company (“Hibbett Common Stock”), at the close of business on June 3, 2024, the record date for the Special Meeting (the “Record Date”). You will have one vote at the Special Meeting for each share of Hibbett Common Stock you owned at the close of business on the Record Date.
Purpose
At the Special Meeting, we will ask Hibbett stockholders of record as of the Record Date to vote on proposals (i) to adopt the Merger Agreement, (ii) to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (iii) to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained (collectively, the “Special Meeting Proposals”).
Quorum
The holders of a majority of voting power of all issued and outstanding Hibbett Common Stock entitled to vote at the Special Meeting, present or represented by proxy, constitutes a quorum for the transaction of business at the Special Meeting. As of the close of business on the Record Date, there were 11,948,003 shares of Hibbett Common Stock issued and outstanding and entitled to vote. 5,974,002 shares must be present or represented by proxy at the Special Meeting to have a quorum.
Required Vote
The affirmative vote of a majority of outstanding shares of Hibbett Common Stock entitled to vote thereon is required to adopt the Merger Agreement. The affirmative vote of the holders of a majority in voting power of the Hibbett Common Stock entitled to vote thereon, which are present or represented by proxy, at the Special Meeting, provided a quorum is present, is required to approve (i) by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in
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connection with the Merger and (ii) the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained. This means that the proposal to adopt the Merger Agreement will be approved if the number of shares voted “FOR” such proposal is greater than 50% of the total number of shares of Hibbett Common Stock entitled to vote at the Special Meeting. Abstentions will have the same effect as votes against the proposal to adopt the Merger Agreement, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and the proposal to approve the adjournment from time to time of the Special Meeting, if necessary or appropriate. Because all three proposals presented to stockholders will be considered non-discretionary, there will not be any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.
Share Ownership of Hibbett’s Directors and Executive Officers
As of June 3, 2024, the Record Date, Hibbett’s directors and executive officers beneficially owned and were entitled to vote, in the aggregate, 384,985 shares of Hibbett Common Stock, representing approximately 3.2% of the outstanding shares of Hibbett Common Stock. Hibbett’s directors and executive officers have informed Hibbett that they currently intend to vote all of their shares of Hibbett Common Stock “FOR” the adoption of the Merger Agreement, “FOR” the non-binding, advisory proposal regarding compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and “FOR” the proposal to approve the adjournment from time to time of the Special Meeting, if necessary or appropriate.
How You Can Vote
You may cast your shares in any of four ways: (i) by voting over the Internet using the website indicated on the enclosed proxy card; (ii) by telephone using the toll-free number on the enclosed proxy card; (iii) by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided; and (iv) by attending the Special Meeting in a virtual format and voting by virtual ballot.
If your shares of Hibbett Common Stock are held in a street name and you do not instruct your broker, bank or other nominee how to vote your shares, then, because the Special Meeting Proposals are “non-routine matters,” your broker, bank or other nominee would not have discretionary authority to vote your shares on the Special Meeting Proposals. If your shares of Hibbett Common Stock are held in street name, your broker, bank or other nominee has enclosed a voting instruction form with this Proxy Statement. We encourage you to authorize your broker, bank or other nominee to vote your shares “FOR” each of the Special Meeting Proposals by following the instructions provided on the voting instruction form.
YOUR VOTE IS VERY IMPORTANT. We encourage all stockholders to vote electronically. Please submit your proxy via the Internet or by telephone by following the instructions on the enclosed proxy card. If you do not have access to a touch-tone phone or the Internet, you may alternatively vote by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided—even if you plan to attend the Special Meeting. If you properly and timely submit your proxy, the individuals named as your proxy holders will vote your shares as you have directed.
All shares entitled to vote and represented by properly submitted proxies (including those submitted via the Internet, by telephone and by mail) received before the polls are closed at the Special Meeting, and not revoked or superseded, will be voted at the Special Meeting in accordance with the instructions indicated on those proxies. If no direction is indicated on a proxy card, such shares will be voted by the proxy holders named on the enclosed proxy card according to the recommendation of Hibbett’s board of directors (the “Board”) “FOR” each of the Special Meeting Proposals.
Parties Involved in the Merger
Hibbett, Inc.
Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with 1,169 Hibbett, City Gear and Sports Additions specialty stores located in 36 states nationwide as of May 4, 2024. Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan, New Balance and Adidas.
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Hibbett Common Stock is currently listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “HIBB.”
Genesis Holdings, Inc.
Parent is an Indiana corporation and a subsidiary of JD Sports. Parent serves as a holding company through which JD Sports owns certain of its businesses that conduct operations in the United States, including Finish Line, Shoe Palace and DTLR.
Steps Merger Sub, Inc.
Merger Sub is a Delaware corporation and a wholly owned subsidiary of Parent, formed on April 15, 2024 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement, including the Merger. Merger Sub has not conducted any business operations except in furtherance of this purpose and activities incident to its formation. Upon the consummation of the Merger, Merger Sub will cease to exist.
JD Sports Fashion plc
JD Sports is a company incorporated in England and Wales. It is a leading global omni-channel retailer of sports fashion brands. JD Sports provides customers with the latest exclusive products from its strategic partnerships with the most-loved premium brands–including Nike, Adidas and The North Face. The vision of JD Sports is to inspire the emerging generation of consumers through a connection to the universal culture of sport, music and fashion. JD Sports focuses on four strategic pillars: global expansion focused on the JD Sports brand first; leveraging complementary concepts; moving beyond physical retail by creating a lifestyle ecosystem of relevant products and services; and doing the best for its people, partners and communities.
JD Sports is a constituent of the FTSE 100 index and had 3,313 stores worldwide as of March 2, 2024.
JD Sports has entered into the Merger Agreement solely for purposes of certain provisions specified therein.
Effects of the Merger
The Merger Agreement provides that, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), at the time at which the Merger will become effective (the “Effective Time,” and the date on which the Effective Time actually occurs, the “Effective Date” or the “Closing Date”), Merger Sub will be merged with and into Hibbett, whereupon the separate existence of Merger Sub will cease, and Hibbett will continue as the surviving corporation (the “Surviving Corporation”) and will continue to be governed by the laws of Delaware. As a result of the Merger, the Surviving Corporation will become a direct, wholly owned subsidiary of Parent and Hibbett Common Stock will no longer be publicly traded. In addition, Hibbett Common Stock will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in each case, in accordance with applicable laws, rules and regulations, and Hibbett will no longer file periodic reports with the U.S. Securities and Exchange Commission (the “SEC”) on account of Hibbett Common Stock. If the Merger is consummated, you will not own any shares of capital stock of the Surviving Corporation.
The Effective Time will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware, or on such later date and time as Hibbett and Parent may agree and specify in the certificate of merger.
Effect on Hibbett if the Merger Is Not Consummated
If the Merger Agreement is not adopted by Hibbett stockholders or if the Merger is not consummated for any other reason, Hibbett stockholders will not receive any payment for their shares of Hibbett Common Stock. Instead, Hibbett will remain an independent public company, Hibbett Common Stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC on account of Hibbett Common Stock. Under certain specified circumstances, Hibbett may be required to pay Parent a termination fee of $35,200,000 (the “Company Termination Fee”), or, under certain other specified circumstances, Hibbett may be entitled to receive a reverse termination fee of $53,500,000 from Parent (the “Parent Termination Fee”), in each case upon the termination of the Merger Agreement, as described in the section entitled “Terms of the Merger Agreement—Termination Fees” beginning on page 103 of this Proxy Statement.
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Transaction Consideration
Upon consummation of the Merger, at the Effective Time, each share of Hibbett Common Stock issued and outstanding immediately prior to the Effective Time (other than any (i) shares of Hibbett Common Stock (A) held in the treasury of Hibbett or (B) owned by any direct or indirect wholly owned subsidiary of Hibbett, JD Sports or any direct or indirect wholly owned subsidiary of JD Sports (including Parent and Merger Sub) (such shares described in the foregoing clauses (A) and (B), the “Cancelled Shares”) and (ii) held by a stockholder who has not voted in favor of the adoption of the Merger Agreement and who has complied with all of the provisions of the DGCL concerning the right of holders of shares of Hibbett Common Stock to demand appraisal of their shares (such shares, the “Dissenting Shares”)) will be automatically converted into the right to receive $87.50 in cash, without interest (the “Transaction Consideration”).
Recommendation of the Board and Reasons for the Merger
On April 22, 2024 the Board, after considering various factors, including those described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Recommendation of the Board and Reasons for the Merger” beginning on page 55 of this Proxy Statement, and after consultation with Hibbett’s independent legal and financial advisors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Hibbett and its stockholders, (ii) determined that it is in the best interests of Hibbett and its stockholders to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Hibbett of the Merger Agreement, the performance by Hibbett of its covenants and agreements contained in the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (iv) directed that the approval of the adoption of the Merger Agreement be submitted to the holders of Hibbett Common Stock, and (v) subject to the terms of the Merger Agreement, resolved to recommend that the Hibbett stockholders approve the adoption of the Merger Agreement at the Special Meeting.
The Board unanimously recommends that you vote (i) “FOR” the proposal to approve the adoption of the Merger Agreement, and the transactions contemplated by the Merger Agreement, including the Merger; (ii) “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (iii) “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Opinion of Hibbett’s Financial Advisor
In connection with the Merger, the Board received a written opinion, dated April 22, 2024, from Hibbett’s independent financial advisor, Solomon Partners Securities, LLC (“Solomon Partners”), as to the fairness, from a financial point of view and as of the date of such opinion and based upon and subject to the assumptions, qualifications, limitations and other matters set forth therein, of Transaction Consideration to be paid to the holders (other than the holders of Cancelled Shares and Dissenting Shares, together with affiliates of Parent and affiliates of JD Sports (collectively, the “Excluded Holders”)) of shares of Hibbett Common Stock, pursuant to the Merger Agreement. The full text of Solomon Partners’ written opinion, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached to this Proxy Statement as Annex B, and see the section entitled “Proposal 1: Adoption of the Merger AgreementOpinion of Hibbett’s Financial Advisor” beginning on page 61 of this Proxy Statement. Solomon Partners provided its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The opinion does not constitute a recommendation to any holder of shares of Hibbett Common Stock as to how any such holder should vote with respect to the Merger or act on any matter relating to the Merger or any other matter.
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Interests of the Directors and Executive Officers of Hibbett in the Merger
When considering the recommendation of the Board that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that Hibbett’s directors and executive officers may have interests in the Merger that are different from, or in addition to, your interests as a stockholder. The Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating and negotiating the Merger Agreement, in approving the Merger Agreement and the Merger and in recommending that the Merger Agreement be adopted by Hibbett stockholders. These interests include the following:
the accelerated vesting of (i) all unvested Company Options (as defined in the section entitled “Summary—Treatment of Hibbett Equity Awards beginning on page 5 of this Proxy Statement”), (ii) certain Company PSU Awards (as defined in the section entitled “Summary—Treatment of Hibbett Equity Awards” beginning on page 5 of this Proxy Statement), (iii) certain Company RSU Awards (as defined in the section entitled “Summary—Treatment of Hibbett Equity Awards” beginning on page 5 of this Proxy Statement) and (iv) all Company DSU Awards (as defined in the section entitled “Summary—Treatment of Hibbett Equity Awards” beginning on page 5 of this Proxy Statement), into the right to receive Transaction Consideration;
the eligibility of each of Hibbett’s executive officers to receive enhanced severance payments and benefits under their Change in Control Agreements (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on page 70 of this Proxy Statement) and under the Longo Employment Agreement (as defined in the section entitled “Agreements with Hibbett Executive Officers” beginning on page 73 of this Proxy Statement) with respect to Mr. Longo, if such officer’s employment is terminated by Hibbett without cause or if such officer resigns his or her employment for good reason, in each case, during the period beginning six months prior to the consummation of the Merger and ending on the second anniversary of the consummation of the Merger;
two of Hibbett’s executive officers have entered into compensatory arrangements with Parent simultaneously with the signing of the Merger Agreement and the possibility that additional Hibbett executive officers will enter into compensatory arrangements with Parent or its affiliates prior to or following the closing of the Merger; and
continued indemnification and directors’ and officers’ liability insurance to be provided by the Surviving Corporation.
See the section entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on page 70 of this Proxy Statement for a more detailed description of these interests. If the proposal to adopt the Merger Agreement is approved by Hibbett stockholders, the shares of Hibbett Common Stock held by Hibbett’s directors and executive officers will be treated in the same manner as outstanding shares of Hibbett Common Stock held by all other Hibbett stockholders entitled to receive the Transaction Consideration.
Treatment of Hibbett Equity Awards
The Merger Agreement provides that Hibbett’s equity awards that are outstanding immediately prior to the Effective Time will be subject to the following treatment (unless otherwise mutually agreed by Parent and the applicable holder thereof) as of the Effective Time:
Company Options
If the Merger is completed, each option to purchase shares of Hibbett Common Stock (any such option, a “Company Option”) that is outstanding as of immediately prior to the Effective Time, whether vested or unvested, will be cancelled by virtue of the Merger without any action on the part of the holder thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock subject to such Company Option as of immediately prior to the Effective Time and (2) the excess, if any, of the Transaction Consideration over the exercise price per share of Hibbett Common Stock subject to such Company Option as of immediately prior to
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the Effective Time. Any Company Option with an exercise price per share of Hibbett Common Stock equal to or in excess of the Transaction Consideration will be cancelled and have no further force or effect by virtue of the Merger without any action on the part of the holder thereof and without any payment to the holder thereof.
Company PSU Awards
If the Merger is completed, each performance stock unit award (any such unit, a “Company PSU Award”), that was granted on or after January 1, 2023 to an employee of the Company or its subsidiaries who is not a party to a Change in Control Agreement (any such Company PSU Award, a “Specified Company PSU Award”), that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Specified Company PSU Award, assuming that any performance based vesting conditions applicable to such Specified Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company PSU Award with Parent and its affiliates (including the Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company PSU Award (as provided for in the Hibbett, Inc. Amended and Restated 2015 Equity Incentive Plan (the “2015 Equity Incentive Plan”) and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing of the Merger with respect to such Specified Company PSU Award), except for any performance-vesting conditions and as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s).
If the Merger is completed, each Company PSU Award that is not a Specified Company PSU Award (any such Company PSU Award, a “Cashed-Out Company PSU Award”) that is outstanding as of immediately prior to the Effective Time, will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Cashed-Out Company PSU Award, assuming that any performance based vesting conditions applicable to such Cashed-Out Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration.
Company RSU Awards
If the Merger is completed, each restricted stock unit award (any such unit, a “Company RSU Award”), that was granted on or after January 1, 2023 to an employee of the Company or its subsidiaries who is not a party to a Change in Control Agreement (any such Company RSU Award, a “Specified Company RSU Award”) that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Specified Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company RSU Award with Parent and its affiliates (including the Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company RSU Award (as provided for in the 2015 Equity Incentive Plan and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing of the Merger with respect to such Specified Company RSU Award), except as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s).
If the Merger is completed, each Company RSU Award that is not a Specified Company RSU Award (any such Company RSU Award, a “Cashed-Out Company RSU Award”) that is outstanding as of immediately prior to the
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Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Cashed-Out Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration.
Company DSU Awards
If the Merger is completed, each share of Hibbett Common Stock credited to any Deferred Stock Account (as defined in the Hibbett, Inc. 2015 Director Deferred Compensation Plan) (each such credited share, a “Company DSU Award”) that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Company DSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration.
Employee Stock Purchase Plan
Prior to the Effective Time, (i) participation in the Hibbett, Inc. 2015 Employee Stock Purchase Plan (the “ESPP”) will be limited to those employees of Hibbett and its subsidiaries who were participating in the ESPP as of April 23, 2024, (ii) the offering under the ESPP in effect as of April 23, 2024 will be the final offering under the ESPP and no offering will commence on or after April 23, 2024, (iii) all further payroll deductions under the ESPP will cease effective as of the conclusion of the final offering; (iv) each purchase right under the ESPP outstanding as of April 23, 2024 will automatically be exercised no later than the earlier to occur of (A) the Offering Termination Date (as defined in the ESPP) and (B) the second business day prior to the Closing Date (such earlier date, the “Final Exercise Date”), (v) each ESPP participant’s accumulated contributions under the ESPP will be used to purchase whole shares of Hibbett Common Stock in accordance with the terms of the ESPP as of the Final Exercise Date, which shares of Hibbett Common Stock will at the Effective Time be automatically converted into the right to receive the Transaction Consideration, and (vi) the ESPP will terminate effective as of immediately prior to (and subject to the occurrence of) the Effective Time, but subsequent to the exercise of purchase rights on the Final Exercise Date (in accordance with the terms of the ESPP). At the Effective Time, any funds credited as of such date under the ESPP that are not used to purchase shares of Hibbett Common Stock on the Final Exercise Date within the associated accumulated payroll withholding account for each participant under the ESPP will be refunded to the applicable participant in accordance with the terms of the ESPP.
Financing of the Merger
The Merger is not conditioned on any financing arrangements or contingencies. Parent and Merger Sub have represented in the Merger Agreement that Parent and Merger Sub will have sufficient cash at the Effective Time to pay the aggregate Transaction Consideration. Parent and Merger Sub intend to finance the Merger through a combination of existing cash resources and the proceeds from an extension to existing bank facilities of JD Sports. If such financing has not been obtained, Parent and Merger Sub will each continue to be obligated to consummate the Merger, subject to satisfaction or waiver of the closing conditions set forth in the Merger Agreement.
U.S. Federal Income Tax Consequences of the Merger
For U.S. federal income tax purposes, the receipt of cash by a U.S. Holder (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement) in exchange for such U.S. Holder’s shares of Hibbett Common Stock pursuant to the Merger will be a taxable transaction and generally will result in the recognition of gain or loss by such U.S. Holder in an amount equal to the difference, if any, between the amount of cash such U.S. Holder receives with respect to such shares in the Merger and such U.S. Holder’s adjusted U.S. federal income tax basis in such shares.
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For a Non-U.S. Holder (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement), the Merger generally will not result in U.S. federal income tax consequences unless such Non-U.S. Holder has certain connections with the United States, but such Non-U.S. Holder may be subject to U.S. backup withholding unless such Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from U.S. backup withholding.
For a more detailed description of the U.S. federal income tax consequences of the Merger, see the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement.
Holders of Hibbett Common Stock should consult their own tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of their particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
Regulatory Approvals Required for the Merger
Under the Merger Agreement, the Merger cannot be consummated until the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), has expired or been terminated. Hibbett and the Pentland Group, the majority shareholder of JD Sports, made the filings required by the HSR Act on May 8, 2024. The applicable waiting period under the HSR Act expired at 11:59 p.m. Eastern Time on June 7, 2024.
Legal Proceedings Regarding the Merger
As of the date of this Proxy Statement, there are no pending lawsuits challenging the Merger. However, potential plaintiffs may file lawsuits challenging the Merger. The outcome of any future litigation is uncertain. Such litigation, if not resolved, could prevent or delay consummation of the Merger and result in substantial costs to Hibbett, including any costs associated with the indemnification of directors and officers. One of the conditions to the consummation of the Merger is that no order, judgment, or injunction, whether temporary, preliminary or permanent, by any court or other tribunal of competent jurisdiction will have been entered and will continue to be in effect that restrains, enjoins, prevents, prohibits or makes illegal the consummation of the Merger. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the Merger on the agreed-upon terms, then such injunction may prevent the Merger from being consummated, or from being consummated within the expected time frame.
Restrictions on Solicitations of Other Offers
For purposes of this Proxy Statement, each of “Company Takeover Proposal” and “Company Superior Proposal” is defined in the section entitled “Terms of the Merger Agreement—Restrictions on Solicitations of Other Offers” beginning on page 90 of this Proxy Statement.
In the Merger Agreement, Hibbett agreed that, subject to certain exceptions, Hibbett will not, and will cause its subsidiaries and its and their respective directors and officers not to, and will instruct and use its reasonable best efforts to cause its subsidiaries and other representatives not to, directly or indirectly (including through intermediaries): (i) solicit, initiate or propose the making, submission or announcement of, or knowingly encourage or knowingly facilitate the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal; (ii) conduct, engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any information in connection with, or for the purpose of knowingly encouraging or knowingly facilitating, a Company Takeover Proposal; (iii) approve, adopt, endorse, declare advisable or recommend a proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal; (iv) execute or enter into any letter of intent, agreement in principle, acquisition agreement, merger agreement, joint venture agreement or similar contract (whether written, oral, binding or non-binding) with respect to a Company Takeover Proposal; or (v) grant any waiver, amendment or release of any third party under any standstill or confidentiality agreement. However, Hibbett may grant a waiver of any standstill or similar obligation of any third party with respect to Hibbett or any of its subsidiaries to allow such third party to make a Company Takeover Proposal.
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Alternative Acquisition Agreements
Except as described in the following paragraph, under the terms of the Merger Agreement, none of Hibbett, its subsidiaries or any of their respective directors and officers may execute or enter into any letter of intent, agreement in principle, acquisition agreement, merger agreement, joint venture agreement or similar contract (whether written, oral, binding or non-binding) with respect to a Company Takeover Proposal (other than a confidentiality agreement).
Under the Merger Agreement, prior to, but not after, obtaining the affirmative vote of a majority of the outstanding shares of Hibbett Common Stock entitled to vote thereon (the “Hibbett Stockholder Approval”), under certain circumstances and subject to certain requirements described in the section entitled “Terms of the Merger Agreement—Alternative Acquisition Agreements” beginning on page 93 of this Proxy Statement, the Board is entitled to, with respect to a Company Superior Proposal, either or both: (1) make a Company Adverse Recommendation Change (as defined in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement) or (2) terminate the Merger Agreement (subject to the payment by Hibbett of the Company Termination Fee) in order to enter into a definitive agreement for such Company Superior Proposal (in each case, if and only if, prior to taking such action, the Board has determined in good faith, after consultation with its financial advisor and outside legal counsel, that such Company Takeover Proposal constitutes a Company Superior Proposal and that failure to take such action is reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law). However, prior to taking either such action, (i) Hibbett must have given Parent at least four (4) business days’ prior written notice of its intention to take such action, including the terms and conditions of, the identity of the person making any such Company Superior Proposal, and an unredacted copy of the Company Superior Proposal or any proposed acquisition agreements, including any related schedules, appendices, exhibits and amendments and financing commitments relating thereto; (ii) if requested in writing by Parent, Hibbett must have negotiated in good faith with Parent during such four (4) business day period concerning any revisions to the terms of the Merger Agreement proposed by Parent; and (iii) following the end of such notice period, the Board must have determined, after consultation with its financial advisor and outside legal counsel, and giving due consideration in good faith to the revisions to the terms of the Merger Agreement to which Parent has committed in writing, that the relevant Company Takeover Proposal would nevertheless continue to constitute a Company Superior Proposal (assuming the revisions committed to by Parent in writing were to be given effect) and that the failure to take such action is reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law.
Adverse Recommendation Changes
Except as described in the preceding section and the following paragraph, under the terms of the Merger Agreement, neither the Board nor any committee thereof may make a “Company Adverse Recommendation Change” (as defined in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement).
Under the Merger Agreement, prior to, but not after, obtaining the Hibbett Stockholder Approval, under certain circumstances and subject to certain requirements described in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement, other than in connection with a Company Takeover Proposal, the Board is entitled to make a Company Adverse Recommendation Change in response to an “Intervening Event” (as defined in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement), if prior to taking such action, the Board has determined in good faith, after consultation with its financial advisor and outside legal counsel, that the failure to take such action is reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law. However, before taking such action: (i) Hibbett must have given Parent at least four (4) business days’ prior written notice of its intention to take such action, specifying in reasonable detail the underlying facts giving rise to the Intervening Event and the reasons for which the Board is proposing to effect a Company Adverse Recommendation Change; (ii) if requested in writing by Parent, Hibbett must have negotiated in good faith with Parent during such four (4) business day period concerning any revisions to the terms of the Merger Agreement proposed by Parent; and (iii) following the end of such four (4) business days period, the Board must have considered in good faith any revisions to the terms of the Merger Agreement to which Parent has committed in writing, and must have determined, after consultation with its financial advisor
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and outside legal counsel, assuming the revisions committed to by Parent in writing were to be given effect, that the failure to make a Company Adverse Recommendation Change is reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law, subject to certain requirements described in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement.
Employee Benefits
Until the first anniversary of the Effective Time (the “Benefits Continuation Period”), the Surviving Corporation will provide, or cause to be provided, to each “Continuing Employee” (as defined in the section entitled “Terms of the Merger Agreement—Employee Benefits” beginning on page 94 of this Proxy Statement) (i) target compensation levels (consisting of base salary and target bonus and other incentive (including equity-based) compensation opportunities) that will not be materially less favorable in the aggregate than the compensation (consisting of base salary and target bonus and other incentive (including equity-based) compensation opportunities) provided by Hibbett or the applicable subsidiary to such Continuing Employee immediately prior to the Effective Time (provided that the forms of any such compensation (cash or equity) may differ from the forms provided prior to the Effective Time) and (ii) employee benefits with respect to each Continuing Employee that are substantially comparable in the aggregate to either, at Parent’s election, (A) the employee benefits provided by Parent and its subsidiaries (other than the Surviving Corporation) to similarly situated employees of U.S.-based subsidiaries of Parent and its subsidiaries or (B) the employee benefits provided by Hibbett or the applicable subsidiary to such Continuing Employee immediately prior to the Effective Time; provided, however, that no severance, defined benefit pension, non-qualified deferred compensation, post-retirement medical or welfare, retention, change in control or other special or non-recurring compensation or benefits provided prior to the Closing Date will be taken into account for purposes of clause (i) or (ii) above. In addition, Parent will or will cause the Surviving Corporation to provide Continuing Employees whose employment terminates during the Benefits Continuation Period with severance benefits no less favorable than the severance benefits that would have been provided in accordance with Hibbett’s past practices or the severance plans, policies or commitments applicable to such Continuing Employee immediately prior to the Effective Time, if any.
Efforts to Close the Merger
Hibbett, Parent and Merger Sub have agreed to use, and to cause their respective subsidiaries to use, their respective reasonable best efforts to take, or cause to be taken, as promptly as practicable, all actions necessary, proper or advisable to consummate the Merger as promptly as practicable and in any event by no later than January 23, 2025 (the “End Date”). Hibbett, Parent and Merger Sub have agreed not to voluntarily extend any waiting period under the HSR Act or associated with any consent of any governmental entity or enter into any agreement with any governmental entity not to consummate the Merger and the other transactions, except with the prior written consent of Hibbett, Parent or Merger Sub, as applicable. In accordance with the terms and subject to the conditions of the Merger Agreement, Parent has agreed to use, and to cause its affiliates to use, their respective reasonable best efforts (i) to contest or resist, including through pursuing litigation on the merits, any proceeding asserted or threatened by any governmental entity or any other person under antitrust laws (including pursuing all available avenues of administrative or judicial appeal) that seeks to prevent, restrain, impede, delay, enjoin, or otherwise prohibit the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement, including the Merger, and (ii) to avoid entry of, or to have vacated or terminated, any order (whether temporary, preliminary or permanent) entered, issued or threatened that would prevent, restrain, impede, delay, enjoin or otherwise prohibit the consummation of the Merger or any of the other transactions prior to the End Date, or otherwise materially delaying the closing of the Merger or delaying the Effective Time beyond the End Date.
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Conditions to the Closing of the Merger
The respective obligations of each party to effect the Merger will be subject to the fulfillment (or waiver by Hibbett and Parent, to the extent permissible under applicable law) at or prior to the closing of the following conditions:
Hibbett will have obtained the Hibbett Stockholder Approval;
No order, judgment, or injunction, whether temporary, preliminary or permanent, by any court or other tribunal of competent jurisdiction will have been entered and will continue to be in effect, and no law will have been adopted or be effective, in each case, that restrains, enjoins, prevents, prohibits or makes illegal the consummation of the Merger; and
Any waiting period (and any extensions thereof) applicable to the Merger under the HSR Act will have expired or been terminated.
The obligations of Parent and Merger Sub to effect the Merger are further subject to the satisfaction or, to the extent permitted by applicable law, waiver by Parent at or prior to the closing of the following conditions:
Each of the representations and warranties of Hibbett contained in the Merger Agreement must be true and correct in all respects, without regard to any materiality or Company Material Adverse Effect (as defined in the section entitled “Terms of the Merger Agreement—Representations and Warranties” beginning on page 84 of this Proxy Statement) qualification contained therein, as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period), except for such failures to be so true and correct has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; provided, however, that the representations and warranties of Hibbett:
regarding the absence of certain changes or events must be true and correct in all respects as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period);
regarding its capital structure must be true and correct in all respects as of April 23, 2024 and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period), except for any de minimis inaccuracies; and
regarding (i) its and its subsidiaries’ existence, good standing and power and authority, (ii) its capital structure (to the extent not already addressed above), (iii) its power and authority to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement, (iv) the absence of certain conflicts or consents, (v) anti-takeover matters, (vi) brokers’ and finders’ fees, and (vii) the opinion of Hibbett’s financial advisor, in each case, that (A) are qualified by materiality or Company Material Adverse Effect qualifications must be true and correct in all respects (without disregarding such Company Material Adverse Effect or other materiality qualifications) as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period) and (B) are not qualified by any materiality or Company Material Adverse Effect qualifications, must be true and correct in all material respects as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period);
Hibbett must have performed and complied in all material respects with all covenants and agreements required by the Merger Agreement to be performed or complied with by Hibbett prior to the Effective Time;
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Since April 23, 2024, there must not have occurred any Company Material Adverse Effect; and
Hibbett must have delivered to Parent a certificate, dated the Effective Time, certifying to the effect that the foregoing conditions have been satisfied.
The obligations of Hibbett to effect the Merger are further subject to the satisfaction or, to the extent permitted by applicable law, waiver by Hibbett at or prior to the closing of the following conditions:
Each of the representations and warranties of Parent and Merger Sub contained in the Merger Agreement must be true and correct in all respects, without regard to any materiality or Parent Material Adverse Effect (as defined in the section entitled “Terms of the Merger Agreement—Representations and Warranties” beginning on page 84 of this Proxy Statement) qualification contained therein, as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period), except for such failures to be so true and correct has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; provided, however, that the representations and warranties of Parent and Merger Sub regarding (i) its respective due organization, existence, good standing and power and authority, (ii) its respective power and authority to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement, (iii) the absence of certain conflicts or consents and (iv) brokers’ and finders’ fees, in each case that (A) are qualified by materiality or Parent Material Adverse Effect qualifications must be true and correct in all respects as of April 23, 2024, and as of the Closing Date, as though made as of the Closing Date (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period) and (B) are not qualified by any materiality or Parent Material Adverse Effect qualifications must be true and correct in all material respects (without disregarding such Parent Material Adverse Effect or other materiality qualifications) as of April 23, 2024 and as of the Closing Date, as though made as of the Closing Date without disregarding such Parent Material Adverse Effect or other materiality qualifications (except to the extent such representations and warranties are expressly made as of a particular date or period, in which case such representations and warranties must be so true and correct as of such date or period);
Each of Parent and Merger Sub must have performed or complied in all material respects with all agreements and covenants required to be performed by Parent or Merger Sub, as applicable, under the Merger Agreement at or prior to the closing; and
Hibbett must have received a certificate from an executive officer of Parent confirming the satisfaction of the foregoing conditions.
Termination of the Merger Agreement
The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (except as otherwise expressly noted), only as follows, and subject to any required authorizations of the Board or the board of directors of Merger Sub to the extent required by the DGCL, as applicable:
by mutual written consent of Hibbett and Parent;
by either Hibbett or Parent, if:
the Hibbett Stockholder Approval is not obtained upon a vote taken thereon at the Stockholder Meeting (as defined in the section entitled “Terms of the Merger Agreement—Other Covenants—Stockholder Meeting” beginning on page 98 of this Proxy Statement) or at any adjournment or postponement thereof;
the closing of the Merger has not occurred by 11:59 p.m., New York City time, on the End Date; provided, however, that if as of 11:59 p.m. New York City time on January 23, 2025, any of the conditions concerning the absence of legal prohibitions (if any such order, judgment or injunction arises under or as a result of an antitrust law) or expiration of the waiting period under the HSR Act have not been satisfied, then either Hibbett or Parent may, in its respective sole discretion, elect to extend the End Date to 11:59 p.m. New York City time on April 23, 2025, in which case,
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such date will become the End Date for all purposes of the Merger Agreement; provided, however, that if as of 11:59 p.m. New York City time on April 23, 2025, any of the conditions concerning the absence of legal prohibitions (if any such order, judgment or injunction arises under or as a result of an antitrust law) or expiration of the waiting period under the HSR Act have not been satisfied, then either Hibbett or Parent may, in its respective sole discretion, elect to extend the End Date to 11:59 p.m. New York City time on July 23, 2025, in which case, such date will become the End Date for all purposes of the Merger Agreement, by delivering written notice to the other party no later than the then-scheduled End Date, regardless of whether such End Date (whether or not extended) is before or after the date of the receipt of the Hibbett Stockholder Approval; provided, further, that the right to terminate the Merger Agreement or extend the End Date may not be exercised by any party whose material failure to perform any covenant or obligation under the Merger Agreement has been the principal cause of, or resulted in, the failure of the closing to have occurred on or before the then-current End Date; or
an order by a governmental entity of competent jurisdiction has been issued permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such order has become final and nonappealable; provided, however, that this right to terminate the Merger Agreement will not be available to a party if such order (or such order becoming final and nonappealable) was due to the material breach of such party of any representation, warranty, covenant or agreement of such party set forth in the Merger Agreement.
by Hibbett, if:
Parent or Merger Sub has breached or failed to perform any of their representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform would result in a failure of a condition to the obligations of Hibbett to effect the Merger (other than the requirement of an officer’s certificate) to be satisfied, and such breach or failure to perform is either not curable or is not cured by the earlier of (x) the End Date and (y) the date that is 30 days following written notice from Hibbett to Parent describing such breach or failure in reasonable detail (provided that Hibbett is not then in breach of or has failed to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement such that any condition to the obligations of Parent or Merger Sub to effect the Merger (other than the requirement of an officer’s certificate or the non-occurrence of a Company Material Adverse Effect) would not be satisfied); or
prior to obtaining the Hibbett Stockholder Approval, in order to concurrently enter into a definitive agreement providing for a Company Superior Proposal (after compliance in all material respects with the applicable terms of the Merger Agreement); provided, that immediately prior to or concurrently with (and as a condition to) the termination of the Merger Agreement, Hibbett pays to Parent the Company Termination Fee in the manner provided in the relevant provisions of the Merger Agreement.
by Parent, if:
Hibbett has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform would result in a failure of a condition to the obligations of Parent or Merger Sub to effect the Merger (other than the requirement of an officer’s certificate or the non-occurrence of a Company Material Adverse Effect) to be satisfied, and such breach or failure to perform is either not curable or is not cured by the earlier of (x) the End Date and (y) the date that is 30 days following written notice from Parent to Hibbett describing such breach or failure in reasonable detail (provided that Parent is not then in breach of or has failed to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement such that any condition to the obligations of Parent or Merger Sub to effect the Merger (other than the requirement of an officer’s certificate) would not be satisfied); and
a Company Adverse Recommendation Change has occurred prior to obtaining the Hibbett Stockholder Approval or Hibbett has committed a willful and material breach of the covenant prohibiting solicitation of Company Takeover Proposals.
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Termination Fees
If the Merger Agreement is terminated in specified circumstances, either Hibbett or Parent may be required to pay a termination fee.
Parent would be entitled to receive the Company Termination Fee from Hibbett, if:
the Merger Agreement is validly terminated by Hibbett to enter into a definitive agreement with respect to a Company Superior Proposal;
the Merger Agreement is validly terminated by Parent because (A) a Company Adverse Recommendation Change has occurred prior to obtaining the Hibbett Stockholder Approval or (B) Hibbett has committed a willful and material breach of the covenant prohibiting solicitation of Company Takeover Proposals; or
(A) a Company Takeover Proposal has been publicly proposed or announced by any person after April 23, 2024 and not withdrawn prior to a termination of the Merger Agreement as contemplated by its terms (and, in the case of a termination if the Hibbett Stockholder Approval has not been obtained upon a vote taken thereon at the Stockholder Meeting or at any adjournment or postponement thereof, at least one business day before such vote is taken) and thereafter the Merger Agreement is validly terminated (1) by Parent or Hibbett because the closing of the Merger has not occurred on or prior to the End Date (and, in the case of such termination, the Parent Termination Fee is not payable), (2) by Parent because of the breach of or failure to perform any representation, warranty, covenant or other agreement under the Merger Agreement by Hibbett, which breach or failure to perform would result in a failure of a condition to the obligations of Parent to effect the Merger (other than the requirement of an officer’s certificate or the non-occurrence of a Company Material Adverse Effect) to be satisfied or (3) by Parent or Hibbett if the Hibbett Stockholder Approval has not been obtained upon a vote taken thereon at the Stockholder Meeting or any adjournment or postponement thereof, and (B) at any time on or prior to the twelve-month anniversary of such termination, Hibbett or any of its subsidiaries consummates any transaction included within the definition of Company Takeover Proposal or enters into a definitive agreement with respect to any such transaction that is (1) subsequently consummated or (2) subsequently terminated before consummation but a subsequent such transaction is entered into in connection with the termination of such first transaction and such subsequent transaction is subsequently consummated (in each case, whether within such twelve-month period or thereafter); provided, that for the purposes of this provision, all references in the definition of Company Takeover Proposal to fifteen percent (15%) will instead be references to fifty percent (50%).
Hibbett would be entitled to receive the Parent Termination Fee from Parent (and such Parent Termination Fee is guaranteed by JD Sports), if the Merger Agreement is validly terminated by Hibbett or Parent:
because the closing of the Merger has not occurred on or prior to the End Date and, as of the time of such termination, (A) at least one of the conditions to the parties’ obligations to effect the Merger relating to the absence of legal prohibitions (if such order, judgment or injunction arises under or as a result of an antitrust law) and the expiration of applicable waiting periods under the HSR Act has not been satisfied or waived, (B) a material breach by Hibbett of the Merger Agreement has not been the proximate cause of such failure to the parties’ obligations to effect the Merger relating to the absence of legal prohibitions (if such order, judgment or injunction arises under or as a result of an antitrust law) and the expiration of applicable waiting periods under the HSR Act to be satisfied and (C) all other conditions to the obligations of Parent and Merger Sub to effect the Merger have been satisfied or (to the extent permitted by applicable law) waived (or, in the case of those conditions that by their nature are to be satisfied at or immediately prior to the closing, such conditions are capable of being satisfied if the closing were to occur); or
because an order by a government entity of competent jurisdiction has been issued permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such order has become final and nonappealable, and as of the time of such termination, (A) a material breach by Hibbett of the Merger Agreement has not been the proximate cause of such order and (B) all conditions to the obligations of Parent and Merger Sub to consummate the Merger regarding obtainment of the Hibbett Stockholder Approval and the absence of legal prohibitions (other than those conditions related to an order by a government entity of competent jurisdiction has been issued permanently restraining,
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enjoining or otherwise prohibiting the consummation of the Merger (if such order, judgment or injunction arises under or as a result of an antitrust law) or the expiration of applicable waiting periods under the HSR Act have been satisfied or (to the extent permitted by applicable law) waived (or, in the case of those conditions that by their nature are to be satisfied at or immediately prior to the closing, such conditions are capable of being satisfied if the closing were to occur).
Enforcement Expenses
If either Hibbett or Parent fails to pay the Company Termination Fee or Parent Termination Fee, respectively, and in order to obtain such payment, Parent or Hibbett, as applicable, commences a suit that results in a judgment against the other party for the payment of such fee, such paying party must reimburse the non-paying party for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in connection with the collection under and enforcement under the applicable provisions of the Merger Agreement plus interest.
Specific Performance
Each of the parties to the Merger Agreement is entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement (including the obligation of the parties to consummate the transactions contemplated by the Merger Agreement and the obligation of Parent and Merger Sub to pay, and Hibbett’s stockholders’ right to receive, the aggregate consideration payable to them pursuant to the transactions contemplated by the Merger Agreement, in each case, in accordance with the terms and subject to the conditions of the Merger Agreement), without proof of actual damages (in addition to any other remedy to which any party is entitled at law or in equity). Notwithstanding anything to the contrary in the Merger Agreement, if any party brings a proceeding to enforce specifically the performance of the terms and provisions of the Merger Agreement (other than an action to specifically enforce any provision that expressly survives termination of the Merger Agreement), the End Date will automatically be extended to (i) the twentieth (20th) business day following the resolution of such proceeding or (ii) such other time period established by the court presiding over such proceeding.
Ultimate Parent Guarantee
Ultimate Parent has absolutely, unconditionally and irrevocably guaranteed to Hibbett the due and timely payment, performance and discharge of all obligations of Parent, Merger Sub and their respective successors and permitted assigns under the Merger Agreement, including any monetary damages (including the Parent Termination Fee) to the extent recoverable in the event of termination of the Merger Agreement under circumstances allowing claims for monetary damages, in all cases, subject to and in accordance with the relevant provisions of the Merger Agreement (such guarantee, the “Ultimate Parent Guarantee”). Should Parent, Merger Sub or any of their respective successors or permitted assigns default in the timely discharge or performance of their respective obligations under the Merger Agreement, in whole or in part, Ultimate Parent will fully and punctually discharge and perform such obligations. The Ultimate Parent Guarantee will remain in full force and effect until all such obligations have been paid and performed in full.
Appraisal Rights
If the Merger is consummated, shares of Hibbett Common Stock held by Hibbett stockholders who do not vote in favor of the adoption of the Merger Agreement, who continuously hold their shares of Hibbett Common Stock through the Effective Time of the Merger and who properly demand appraisal of their shares (and who do not withdraw or otherwise lose their appraisal rights), and who otherwise comply with the procedures of Section 262 of the DGCL (“Section 262”) will not be converted into the right to receive Transaction Consideration, but the holders of such Dissenting Shares will be entitled to receive such consideration as shall be determined pursuant to Section 262. This means that such Hibbett stockholders will be entitled to have their shares of Hibbett Common Stock appraised by the Court of Chancery of the State of Delaware (the “Court of Chancery”) and to receive payment in cash of the “fair value” of the shares of Hibbett Common Stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest to be paid upon the amount determined to be fair value, if any, as determined by the Court of Chancery. Hibbett stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process.
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Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 could be more than, the same as or less than the value of the consideration they would receive pursuant to the Merger if they did not seek appraisal of their shares.
To exercise your appraisal rights, you must, among other things, submit a written demand for appraisal in accordance with Section 262 to Hibbett before the vote is taken on the adoption of the Merger Agreement, you must not vote (in person or by proxy) in favor of the proposal to adopt the Merger Agreement and you must continue to hold the shares of Hibbett Common Stock of record through the Effective Time. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in this Proxy Statement in the section entitled “Appraisal Rights” beginning on page 15 of this Proxy Statement, and Section 262 regarding appraisal rights is reproduced and attached as Annex C to this Proxy Statement. If you hold your shares of Hibbett Common Stock through a broker, bank or other nominee and you wish to exercise appraisal rights, you should consult with your broker, bank or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such broker, bank or other nominee.
Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.
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QUESTIONS AND ANSWERS
The following questions and answers are intended to address some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that may be important to you as a Hibbett stockholder. You are encouraged to read carefully the more detailed information contained elsewhere in this Proxy Statement, the annexes to this Proxy Statement and the documents we refer to in this Proxy Statement. You may obtain the information incorporated by reference in this Proxy Statement without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 117 of this Proxy Statement.
Q:
Why am I receiving these materials?
A:
On April 23, 2024, Hibbett entered into the Merger Agreement providing for the Merger of Merger Sub with and into Hibbett, with Hibbett surviving the Merger as a wholly owned subsidiary of Parent. The Board is furnishing this Proxy Statement and form of proxy card to the holders of Hibbett Common Stock in connection with the solicitation of proxies in favor of the proposal to adopt the Merger Agreement and to approve the other proposals to be voted on at the Special Meeting or any adjournment or postponement thereof. This Proxy Statement includes information that we are required to provide to you under the SEC rules and is designed to assist you in voting on the matters presented at the Special Meeting. Hibbett stockholders of record as of the close of business on June 3, 2024 may attend the Special Meeting and are entitled and requested to vote on the Special Meeting Proposals.
Q:
When and where is the Special Meeting?
A:
The Special Meeting will be held on July 19, 2024 at 9:00 a.m., Central Time. The Special Meeting will be held in virtual format and conducted via a live webcast at www.virtualshareholdermeeting.com/HIBB2024.
Q:
What is the proposed Merger and what effects will it have on Hibbett?
A:
The proposed Merger is the acquisition of Hibbett by Parent through the merger of Merger Sub with and into Hibbett pursuant to the Merger Agreement. If the proposal to adopt the Merger Agreement is approved by the requisite number of shares of Hibbett Common Stock, and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into Hibbett, with Hibbett continuing as the Surviving Corporation. As a result of the Merger, Hibbett will become a direct, wholly owned subsidiary of Parent and you will no longer own shares of Hibbett Common Stock. Hibbett expects to delist its common stock from Nasdaq and de-register its common stock under the Exchange Act as soon as practicable after the Effective Time. Thereafter, Hibbett would no longer be a publicly traded company, and Hibbett will no longer file periodic reports with the SEC on account of Hibbett Common Stock.
Q:
What will I receive if the Merger is consummated?
A:
Upon the consummation of the Merger, you will be entitled to receive the Transaction Consideration of $87.50 in cash, without interest and less any applicable withholding taxes, for each share of Hibbett Common Stock that you own, unless you have properly exercised and perfected your demand for appraisal rights under the DGCL with respect to such shares. For example, if you own 100 shares of Hibbett Common Stock, you will be entitled to receive $8,750.00 in cash, without interest and less any applicable withholding taxes, in exchange for your 100 shares of Hibbett Common Stock. In either case, your shares will be cancelled and you will not own nor be entitled to acquire shares in the Surviving Corporation or Parent.
Q:
Who is entitled to vote at the Special Meeting?
A:
Only stockholders of record as of the close of business on June 3, 2024 are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. If your shares of Hibbett Common Stock are held in street name and you do not instruct your broker, bank or other nominee how to vote your shares, then, because all of the Special Meeting Proposals are “non-routine matters,” your broker, bank or other nominee would not have discretionary authority to vote your shares on the Special Meeting Proposals. Instructions on how to vote shares held in street name are described under the question “How may I vote?” below.
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Q:
How may I vote?
A:
For Hibbett stockholders of record: If you are eligible to vote at the Special Meeting and are a stockholder of record, you may cast your shares in any of four ways:
by voting over the Internet using the website indicated on the enclosed proxy card;
by telephone using the toll-free number on the enclosed proxy card;
by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided; or
by attending the Special Meeting in a virtual format and voting by virtual ballot.
For holders in street name: If your shares of Hibbett Common Stock are held in street name and you do not instruct your broker, bank or other nominee how to vote your shares, then, because all of the Special Meeting Proposals are “non-routine matters,” your broker, bank or other nominee would not have discretionary authority to vote your shares on the Special Meeting Proposals. If your shares of Hibbett Common Stock are held in street name, your broker, bank or other nominee has enclosed a voting instruction form with this Proxy Statement. We encourage you to authorize your broker, bank or other nominee to vote your shares “FOR” each of the Special Meeting Proposals by following the instructions provided on the voting instruction form.
If you submit your proxy by Internet, telephone or mail, and you do not subsequently revoke your proxy, your shares of Hibbett Common Stock will be voted in accordance with your instructions.
Even if you plan to attend the Special Meeting and vote by virtual ballot, you are encouraged to vote your shares of Hibbett Common Stock by proxy. If you are a stockholder of record or if you obtain a valid legal proxy to vote shares which you beneficially own and wish to change your vote, you may still vote your shares of Hibbett Common Stock by virtual ballot at the Special Meeting even if you have previously voted by proxy.
Q:
How many votes do I have?
A:
Each holder of Hibbett Common Stock is entitled to cast one vote on each matter properly brought before the Special Meeting for each share of Hibbett Common Stock that such holder owned as of the Record Date.
Q:
May I attend the Special Meeting and vote in person?
A:
Hibbett will hold the Special Meeting in a virtual meeting format only on the virtual meeting website. You will not be able to attend the Special Meeting physically in person. Once admitted to the Special Meeting, stockholders may vote their shares and view a list of stockholders by following the instructions available on the meeting website. To vote during the Special Meeting, you must do so by logging into www.virtualshareholdermeeting.com/HIBB2024 using the 16-digit control number included in your proxy materials.
In any case, we recommend that you submit your proxy via the Internet or by telephone by following the instructions on the enclosed proxy card, or by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided—whether or not you plan to attend the Special Meeting. If you properly and timely submit your proxy, the individuals named as your proxy holders will vote your shares as you have directed. If you attend the Special Meeting in a virtual format and vote by virtual ballot, your vote by virtual ballot will revoke any proxy previously submitted. If you hold your shares in street name, you have the right to direct your bank or broker how to vote your shares. Please follow the instructions provided by your bank or broker to ensure your vote can be counted.
Q:
What matters will be voted on at the Special Meeting?
A:
You are being asked to consider and vote on the following proposals:
to adopt the Merger Agreement;
to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger; and
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to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Q:
How does the Transaction Consideration compare to the market price of Hibbett Common Stock prior to the announcement of the Merger?
A:
The Transaction Consideration of $87.50 per share represents a premium of approximately (i) 21% to $72.49 per share, the closing price of Hibbett Common Stock on Nasdaq on April 22, 2024, the last trading day prior to the public announcement of the execution of the Merger Agreement, and (ii) 29% to the 120-trading day volume weighted average price of Hibbett Common Stock as of the close of trading on April 22, 2024.
Q:
What do I need to do now?
A:
Hibbett encourages you to read the accompanying Proxy Statement, including all documents incorporated by reference into the accompanying Proxy Statement, and its annexes carefully and in their entirety. Then as promptly as possible, follow the instructions on the enclosed proxy card to submit your proxy electronically over the Internet or by telephone, so that your shares can be voted at the Special Meeting. We encourage all stockholders to vote electronically. Alternatively, if you do not have access to a touch-tone phone or the Internet, you may sign, date and return the enclosed proxy card in the postage-paid envelope provided. If your shares of Hibbett Common Stock are held in street name, your broker, bank or other nominee has enclosed a voting instruction form with this Proxy Statement. Please do not send your stock certificate(s) with your proxy card. See “How may I vote?” in this section of the Proxy Statement for more information.
Q:
How does the Board recommend that I vote?
A:
On April 22, 2024, the Board, after considering various factors, including those described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Recommendation of the Board and Reasons for the Merger” beginning on page 55 of this Proxy Statement, and after consultation with Hibbett’s independent legal and financial advisors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Hibbett and its stockholders, (ii) determined that it is in the best interests of Hibbett and its stockholders to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Hibbett of the Merger Agreement, the performance by Hibbett of its covenants and agreements contained therein and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (iv) directed that the approval of the adoption of the Merger Agreement be submitted to the stockholders of Hibbett, and (v) resolved to recommend that the Hibbett stockholders vote in favor of the approval of the Merger, the Merger Agreement and the transactions contemplated thereby and the adoption of the Merger Agreement.
The Board unanimously recommends that you vote (i) “FOR” the proposal to approve the adoption of the Merger Agreement, and the transactions contemplated by the Merger Agreement, including the Merger; (ii) “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (iii) “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Q:
Should I send in my stock certificate(s) now?
A:
No. If you are a record holder, after the Merger is consummated, under the terms of the Merger Agreement, you will receive a letter of transmittal instructing you to send your stock certificate(s) to the Paying Agent (as defined in the section entitled “Terms of the Merger Agreement—Exchange and Payment Procedures” beginning on page 83 of this Proxy Statement) in order to receive the cash payment of the Transaction Consideration for each share of Hibbett Common Stock represented by such stock certificate(s). You should
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use the letter of transmittal to exchange your stock certificates for the Transaction Consideration to which you are entitled upon the consummation of the Merger. If you hold your shares in “street name,” please contact your broker, bank or other nominee for instructions as to how to effect the surrender of your shares of Hibbett Common Stock in exchange for the Transaction Consideration in accordance with the terms of the Merger Agreement. Please do not send in your stock certificates now.
Q:
If I do not know where my stock certificates are, how will I get the Transaction Consideration for my shares of Hibbett Common Stock?
A:
If the Merger is consummated, the transmittal materials you will receive after the closing of the Merger will include the procedures that you must follow if you cannot locate your stock certificate(s). This will include an affidavit that you will need to sign attesting to the loss of your stock certificates. You may also be required to post a bond as indemnity against any potential loss.
Q:
What happens if the Merger is not consummated?
A:
If the Merger Agreement is not adopted by Hibbett stockholders or if the Merger is not consummated for any other reason, Hibbett stockholders will not receive any payment for their shares of Hibbett Common Stock. Instead, Hibbett will remain an independent public company, Hibbett Common Stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and we will continue to file periodic reports with the SEC on account of Hibbett Common Stock.
Under certain specified circumstances in which the Merger is not consummated, Hibbett may be required to pay Parent a termination fee, or under certain other specified circumstances, Hibbett may be entitled to receive a reverse termination fee from Parent, upon the termination of the Merger Agreement, as described in the sections entitled “Terms of the Merger Agreement—Termination Fees” beginning on page 103 of this Proxy Statement.
Q:
Do any of Hibbett’s directors or officers have interests in the Merger that may be in addition to or differ from those of Hibbett stockholders generally?
A:
Yes. In considering the recommendation of the Board with respect to the proposal to adopt the Merger Agreement, you should be aware that Hibbett’s directors and executive officers may have interests in the Merger different from, or in addition to, the interests of Hibbett stockholders generally. The Board was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, in approving the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by Hibbett stockholders. For a description of the interests of Hibbett’s directors and executive officers in the Merger, see the section entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on page 70 of this Proxy Statement.
Q:
Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for Hibbett’s named executive officers in connection with the Merger?
A:
Under SEC rules, we are required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger, commonly referred to as “golden parachute” compensation.
Q:
What vote is required to approve the proposals submitted to a vote at the Special Meeting?
A:
The affirmative vote of a majority of the outstanding shares of Hibbett Common Stock entitled to vote thereon is required to adopt the Merger Agreement. The affirmative vote of the holders of a majority in voting power of the Hibbett Common Stock entitled to vote thereon, which are present or represented by proxy, at the Special Meeting, provided a quorum is present, is required to approve: (i) by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (ii) the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. This means that the proposal to adopt the Merger Agreement will be approved if the number of shares voted “FOR” such
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proposal is greater than 50% of the total number of outstanding shares of Hibbett Common Stock entitled to vote at the Special Meeting. The failure of any stockholder of record to grant a proxy electronically over the Internet or by telephone, submit a signed proxy card, or to vote by virtual ballot at the virtual Special Meeting will have the same effect as a vote against the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger or the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Abstentions will be counted as votes against the proposal to adopt the Merger Agreement, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Because all of the proposals presented to stockholders will be considered non-discretionary, there will not be any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.
As of June 3, 2024, the Record Date for determining who is entitled to vote at the Special Meeting, there were approximately 11,948,003 shares of Hibbett Common Stock issued and outstanding. Each holder of Hibbett Common Stock is entitled to one vote per share of Hibbett Common Stock owned by such holder as of the Record Date.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares are registered directly in your name with our transfer agent, Computershare, Inc., you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this Proxy Statement and your proxy card have been sent directly to you by Hibbett. As the stockholder of record you have the right to vote by proxy, which involves granting your voting rights directly to Hibbett or to a third party, or to vote by virtual ballot at the Special Meeting.
If your shares are held through a broker, bank or other nominee, you are considered the beneficial owner of those shares. In that case, this Proxy Statement has been forwarded to you by your broker, bank or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares. Without your voting instructions, because of the non-routine nature of the Special Meeting Proposals, your broker, bank or other nominee may not vote your shares with respect to the Special Meeting Proposals.
Q:
What is a proxy?
A:
A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of Hibbett Common Stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Hibbett Common Stock is called a “proxy card.” The Board has designated David Benck, Hibbett’s Senior Vice President and General Counsel, and Elaine Rodgers, Hibbett’s Corporate Secretary, and each of them, with full power of substitution, as proxies for the Special Meeting.
Q:
Can I change or revoke my proxy?
A:
You may change or revoke your previously submitted proxy at any time before the Special Meeting or, if you attend the virtual Special Meeting, by voting by virtual ballot at the Special Meeting.
If you hold your shares as a record holder, you may change or revoke your proxy in any one of the following ways:
by re-voting at a subsequent time by Internet or by telephone following the instructions on the enclosed proxy card;
by signing a new proxy card with a date later than your previously delivered proxy and submitting it following the instructions on the enclosed proxy card;
by delivering a signed revocation letter to Hibbett’s Corporate Secretary, at Hibbett’s mailing address on the first page of this Proxy Statement before the Special Meeting, which states that you have revoked your proxy; or
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by attending the Special Meeting in a virtual format and voting by virtual ballot. Attending the Special Meeting will not in and of itself revoke a previously submitted proxy. You must specifically vote by virtual ballot at the Special Meeting in order for your previous proxy to be revoked.
Your latest dated proxy card, Internet or telephone vote is the one that is counted.
If your shares are held in street name by a broker, bank or other nominee, you may change your voting instructions by following the instructions of your broker, bank or other nominee.
Q:
If a Hibbett stockholder gives a proxy, how will the shares be voted?
A:
Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.
If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the proposal to adopt the Merger Agreement, “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained, in the event such proposal is called to a vote.
Q:
I understand that a quorum is required in order to conduct business at the Special Meeting. What constitutes a quorum?
A:
The holders of a majority in voting power of all issued and outstanding Hibbett Common Stock entitled to vote at the Special Meeting, present or represented by proxy, constitutes a quorum for the transaction of business at the Special Meeting. As of the close of business on the Record Date, there were 11,948,003 shares of Hibbett Common Stock issued and outstanding and entitled to vote. If you submit a properly executed proxy by Internet, telephone or mail, you will be considered a part of the quorum. In addition, abstentions will be counted for purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum. As a result, at least 5,974,002 shares must be present or represented by proxy to have a quorum. If a quorum is not present at the Special Meeting, the stockholders entitled to vote thereat, present in person or represented by proxy, will have power to adjourn the Special Meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.
Q:
How can I obtain a proxy card?
A:
If you lose, misplace or otherwise need to obtain a proxy card, please follow the applicable procedure below.
For Hibbett stockholders of record, please call MacKenzie Partners, Inc. at +1 (800) 322-2885 (toll-free).
For holders in “street name,” please contact your account representative at your broker, bank or other similar institution.
Q:
What happens if I sell or otherwise transfer my shares of Hibbett Common Stock after the close of business on the Record Date but before the Special Meeting?
A:
The Record Date is earlier than both the date of the Special Meeting and the date the Merger is expected to be consummated. If you sell or transfer your shares of Hibbett Common Stock after the close of business on the Record Date but before the Special Meeting, unless special arrangements (such as the provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies Hibbett in writing of such special arrangements, you will transfer the right to receive the Transaction Consideration, if the Merger is consummated, to the person to whom you sell or transfer your
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shares of Hibbett Common Stock, but you will retain your right to vote these shares at the Special Meeting. Even if you sell or otherwise transfer your shares of Hibbett Common Stock after the close of business on the Record Date, you are encouraged to complete, date, sign and return the enclosed proxy card or vote via the Internet or telephone.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please vote via the Internet or telephone (or complete, date, sign and return) with respect to each proxy card and voting instruction card that you receive.
Q:
What happens if I sell my shares of Hibbett Common Stock after the Special Meeting but before the Effective Time?
A:
If you transfer your shares of Hibbett Common Stock after the Special Meeting but before the Effective Time, you will have transferred the right to receive Transaction Consideration to the person to whom you transfer your shares of Hibbett Common Stock. In order to receive the Transaction Consideration, you must hold your shares of Hibbett Common Stock through the Effective Time.
Q:
Who will count the votes?
A:
Hibbett has retained a representative of Broadridge Financial Solutions, Inc. to serve as inspector of election in connection with the Special Meeting. The inspector of elections appointed for the Special Meeting will tabulate votes cast by proxy or by virtual ballot at the Special Meeting. The inspector of elections will also determine whether a quorum is present.
Q:
Who will solicit votes for and bear the cost and expenses of this proxy solicitation?
A:
The cost of this proxy solicitation will be borne by Hibbett. Our directors, officers and employees may solicit proxies in person, by mail, telephone, facsimile and email, or by other electronic means. We will pay these directors, officers and employees no additional compensation for these services. We will reimburse banks, brokers and other nominees for their reasonable, out-of-pocket expenses incurred in forwarding this Proxy Statement and related materials to, and obtaining instructions relating to such materials from, beneficial owners of Hibbett Common Stock. Hibbett has retained MacKenzie Partners, Inc. (“MacKenzie Partners”) as its proxy solicitor. MacKenzie Partners will solicit proxies in person, by mail, telephone, facsimile and email, or by other electronic means. Under our agreement with MacKenzie Partners, MacKenzie Partners will receive an estimated fee not to exceed $25,000 plus reimbursement of its reasonable, out-of-pocket expenses for its services. In addition, MacKenzie Partners and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.
Q:
Where can I find the voting results of the Special Meeting?
A:
Hibbett intends to notify stockholders of the results of the Special Meeting by issuing a press release, which it will also file with the SEC as an exhibit to a Current Report on Form 8-K.
Q:
Will I be subject to U.S. federal income tax upon the exchange of Hibbett Common Stock for cash pursuant to the Merger?
A:
The exchange of Hibbett Common Stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. Holder (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement) who exchanges shares of Hibbett Common Stock for cash in the Merger generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash such U.S. Holder receives with respect to such shares of Hibbett Common Stock in the Merger and such U.S. Holder’s adjusted tax basis in such shares. A Non-U.S. Holder (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal
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Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement) who exchanges shares of Hibbett Common Stock for cash in the Merger generally will not recognize gain or loss for U.S. federal income tax purposes unless such Non-U.S. Holder has certain connections with the United States, but such Non-U.S. Holder may be subject to U.S. backup withholding unless such Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from U.S. backup withholding.
For a more detailed description of the U.S. federal income tax consequences of the Merger, see the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement.
Q:
What will the holders of outstanding Hibbett equity awards receive in the Merger?
A:
Pursuant to the Merger Agreement (unless otherwise mutually agreed by Parent and the applicable holder thereof), at the Effective Time:
each Company Option that is outstanding as of immediately prior to the Effective Time, whether vested or unvested, will be cancelled by virtue of the Merger without any action on the part of the holder thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock subject to such Company Option as of immediately prior to the Effective Time and (2) the excess, if any, of the Transaction Consideration over the exercise price per share of Hibbett Common Stock subject to such Company Option as of immediately prior to the Effective Time. Any Company Option with an exercise price per share of Hibbett Common Stock equal to or in excess of the Transaction Consideration will be cancelled and have no further force or effect by virtue of the Merger without any action on the part of the holder thereof and without any payment to the holder thereof;
each Specified Company PSU Award that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Specified Company PSU Award, assuming that any performance based vesting conditions applicable to such Specified Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company PSU Award with Parent and its affiliates (including the Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company PSU Award (as provided for in the 2015 Equity Incentive Plan and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing of the Merger with respect to such Specified Company PSU Award), except for any performance-vesting conditions and as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s);
each Cashed-Out Company PSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Cashed-Out Company PSU Award, assuming that any
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performance based vesting conditions applicable to such Cashed-Out Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration;
each Specified Company RSU Award that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Specified Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company RSU Award with Parent and its affiliates (including the Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company RSU Award (as provided for in the 2015 Equity Incentive Plan and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing of the Merger with respect to such Specified Company RSU Award), except as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s);
each Cashed-Out Company RSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration; and
each Company DSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Closing Date and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Company DSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration.
In addition, prior to the Effective Time, (i) participation in the ESPP will be limited to those employees of Hibbett and its subsidiaries who were participating in the ESPP on April 23, 2024, (ii) the offering under the ESPP in effect as of April 23, 2024 will be the final offering under the ESPP and no offering will commence on or after April 23, 2024, (iii) all further payroll deductions under the ESPP will cease effective as of the conclusion of the final offering; (iv) each purchase right under the ESPP outstanding as of April 23, 2024 will automatically be exercised no later than the Final Exercise Date; (v) each ESPP participant’s accumulated contributions under the ESPP will be used to purchase whole shares of Hibbett Common Stock in accordance with the terms of the ESPP as of the Final Exercise Date, which shares of Hibbett Common Stock will at the Effective Time be automatically converted into the right to receive the Transaction Consideration; and (vi) the ESPP will terminate effective as of immediately prior to (and subject to the occurrence of) the Effective Time, but subsequent to the exercise of purchase rights on the Final Exercise Date (in accordance with the terms of the ESPP). At the Effective Time, any funds credited as of such date under the ESPP that are not used to purchase shares of Hibbett Common Stock on the Final Exercise Date within the associated accumulated payroll withholding account for each participant under the ESPP will be refunded to the applicable participant in accordance with the terms of the ESPP.
For additional information regarding the treatment of Hibbett’s outstanding equity awards, see the section entitled “Terms of the Merger Agreement—Transaction Consideration—Outstanding Hibbett Equity Awards” beginning on page 81 of this Proxy Statement.
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Q:
When do you expect the Merger to be consummated?
A:
Hibbett and Parent are working toward consummating the Merger as quickly as possible. Assuming the timely receipt of required regulatory approvals and satisfaction or waiver (in accordance with the terms of the Merger Agreement) of other closing conditions, including approval by Hibbett’s stockholders of the proposal to adopt the Merger Agreement, we anticipate that the Merger will be completed in the third quarter of the 2024 calendar year.
Q:
Are there any other risks to me from the Merger that I should consider?
A:
Yes. There are risks associated with all business combinations, including the Merger. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this Proxy Statement.
Q:
Am I entitled to appraisal rights under the DGCL?
A:
If the Merger is consummated, stockholders who do not vote in favor of the adoption of the Merger Agreement, who continuously hold their shares of Hibbett Common Stock through the Effective Time of the Merger and who properly demand appraisal of their shares (and who do not withdraw or otherwise lose their appraisal rights), and who otherwise comply with the procedures of Section 262 will not be converted into the right to receive Transaction Consideration, but the holders of such Dissenting Shares will be entitled to receive such consideration as shall be determined pursuant to Section 262. This means that Hibbett stockholders are entitled to have their shares appraised by the Court of Chancery and to receive payment in cash of the “fair value” of the shares of Hibbett Common Stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest to be paid upon the amount determined to be fair value, if any, as determined by the Court of Chancery. Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in the section entitled “Appraisal Rights” beginning on page 111 of this Proxy Statement, and the relevant section of the DGCL regarding appraisal rights is reproduced and attached as Annex C to this Proxy Statement.
Q:
How can I obtain more information about Hibbett?
A:
You can find more information about Hibbett from various sources described in the section entitled “Where You Can Find More Information” beginning on page 117 of this Proxy Statement.
Q:
Who can help answer my questions?
A:
If you have any questions concerning the Merger, the Special Meeting or this Proxy Statement, would like additional copies of this Proxy Statement or need help voting your shares of Hibbett Common Stock, please contact Hibbett’s proxy solicitor:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
 +1 (800) 322-2885 (TOLL-FREE)
Email: proxy@mackenziepartners.com
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement, and the documents to which Hibbett refers you in this Proxy Statement, as well as information included in oral statements or other written statements made or to be made by Hibbett or on Hibbett’s behalf, contain forward-looking statements, which include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by the following words: “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “ongoing,” “outlook,” “should,” “seek,” “target,” “will,” “would,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, Hibbett. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including: (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect Hibbett’s business and the price of Hibbett Common Stock; (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the Merger Agreement by Hibbett’s stockholders; (iii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring Hibbett to pay a termination fee; (iv) the effect of the announcement or pendency of the proposed transaction on Hibbett’s business relationships, operating results and business generally; (v) risks that the proposed transaction disrupts Hibbett’s current plans and operations; (vi) Hibbett’s ability to retain and hire key personnel in light of the proposed transaction; (vii) risks related to diverting management’s attention from Hibbett’s ongoing business operations; (viii) unexpected costs, charges or expenses resulting from the proposed transaction; (ix) potential litigation relating to the transaction that could be instituted against JD Sports, Hibbett or their, or their affiliates, respective directors, managers or officers, including the effects of any outcomes related thereto; (x) continued availability of capital and financing and rating agency actions; (xi) certain restrictions during the pendency of the transaction that may impact Hibbett’s ability to pursue certain business opportunities or strategic transactions; (xii) unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war, hostilities, epidemics or pandemics, as well as management’s response to any of the aforementioned factors; (xiii) other risks described in Hibbett’s filings with the SEC, such risks and uncertainties described under the headings “Forward-Looking Statements,” “Risk Factors” and other sections of Hibbett’s Annual Report on Form 10-K filed with the SEC on March 25, 2024 (the “Base 2024 Form 10-K”), as amended by our Annual Report on Form 10-K/A, filed with the SEC on May 29, 2024 (as amended, the “2024 Form 10-K”) and subsequent filings; and (xiv) those risks and uncertainties described elsewhere in this proxy statement. While the list of risks and uncertainties presented here is, and the discussion of risks and uncertainties presented elsewhere in this proxy statement will be, considered representative, no such list or discussion should be considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, and legal liability to third parties and similar risks, any of which could have a material adverse effect on the completion of the transaction and/or Hibbett’s consolidated financial condition, results of operations, credit rating or liquidity. The forward-looking statements speak only as of the date they are made. Hibbett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
All of the forward-looking statements Hibbett makes in this Proxy Statement are qualified by the information contained or incorporated by reference herein, including, but not limited to, (i) the information contained under this heading and (ii) the information in Hibbett’s consolidated financial statements and notes thereto included in the 2024 Form 10-K, and subsequent periodic and interim report filings (see the section entitled “Where You Can Find More Information” beginning on page 117 of this Proxy Statement).
Discussions of additional risks and uncertainties are contained in Hibbett’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Hibbett’s judgment only as of the date on which such statements are made. Hibbett undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.
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THE SPECIAL MEETING
Date, Time and Place of the Special Meeting
This Proxy Statement is being furnished to Hibbett stockholders as a part of the solicitation of proxies by the Board for use at the Special Meeting to be held on July 19, 2024 at 9:00 a.m., Central Time, unless the meeting is adjourned or postponed. The Special Meeting will be held in virtual format and conducted via a live webcast at www.virtualshareholdermeeting.com/HIBB2024.
Purpose of the Special Meeting
At the Special Meeting, Hibbett stockholders will be asked to consider and vote on proposals to:
adopt the Merger Agreement;
approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger; and
approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Record Date; Shares Entitled to Vote; Quorum
Only Hibbett stockholders of record as of the close of business on June 3, 2024 are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. A list of stockholders entitled to vote at the Special Meeting will be available for inspection in Hibbett’s headquarters located at 2700 Milan Court, Birmingham, Alabama 35211, during regular business hours for a period of at least ten (10) days before the Special Meeting.
The inspector of elections appointed for the Special Meeting will tabulate votes cast by proxy or by virtual ballot at the Special Meeting. The inspector of elections will also determine whether a quorum is present. The holders of a majority of Hibbett Common Stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at the Special Meeting for the transaction of business. Abstentions will be counted as present for the purpose of determining the presence of a quorum. Broker non-votes will not be counted for purposes of determining whether a quorum is present.
With respect to shares held in street name, your broker, bank or other nominee generally has the discretionary authority to vote uninstructed shares on “routine” matters, but cannot vote such uninstructed shares on “non-routine” matters. A “broker non-vote” will occur if your broker, bank or other nominee cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker, bank or other nominee chooses not to vote on a matter for which it does have discretionary voting authority.
Vote Required; Abstentions and Broker Non-Votes
The affirmative vote of a majority of the outstanding shares of Hibbett Common Stock entitled to vote thereon is required to adopt the Merger Agreement. The affirmative vote of the holders of a majority in voting power of Hibbett Common Stock entitled to vote thereon, which are present, or represented by proxy, at the Special Meeting, provided a quorum is present, is required to approve: (i) by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and (ii) the proposal approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. This means that the proposal to adopt the Merger Agreement, and the transactions contemplated thereby, including the Merger, will be approved if the number of shares voted “FOR” such proposal is greater than 50% of the total number of outstanding shares of Hibbett Common Stock entitled to vote at the Special Meeting. The failure of any stockholder of record to grant a proxy electronically over the Internet or by telephone, submit a signed proxy card, or to vote by virtual ballot at the Special Meeting will have the same effect as a vote against the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger or the proposal to approve one or more adjournments of the Special Meeting from
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time to time, if necessary or appropriate. Abstentions will be counted as votes against the proposal to adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, the proposal to approve compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate. Because each of the proposals presented to stockholders will be considered non-discretionary, there will not be any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.
Shares Held by Hibbett’s Directors and Executive Officers
At the close of business on the Record Date, Hibbett’s directors and executive officers beneficially owned and were entitled to vote, in the aggregate, 384,985 shares of Hibbett Common Stock, which represented approximately 3.2% of the shares of outstanding Hibbett Common Stock on that date. The directors and executive officers have informed Hibbett that they currently intend to vote all of their shares of Hibbett Common Stock “FOR” the adoption of the Merger Agreement, “FOR” the non-binding, advisory proposal regarding compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Voting of Proxies
For Stockholders of Record
If your shares of Hibbett Common Stock are held in your name by Hibbett’s transfer agent, Computershare, Inc., you can vote:
Via the Internet — If you choose to vote via the Internet, go to the website indicated on the enclosed proxy card and follow the instructions. You will need the control number shown on your proxy card in order to vote.
Via Telephone — If you choose to vote via telephone, use a touch-tone telephone to call the toll-free phone number indicated on the enclosed proxy card and follow the voice prompts. You will need the control number shown on your proxy card in order to vote.
For purposes of expediency, we encourage all stockholders to vote electronically, if possible. However, if you do not have access to a touch-tone phone or the Internet, you can vote:
Via Mail — If you choose to vote via mail, mark your proxy card, date and sign it, and return it in the postage-paid envelope provided. Proxy cards that are returned without a signature will not be counted as present at the Special Meeting and cannot be voted. If you are a stockholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Board.
Voting instructions are included on your enclosed proxy card. All shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholders. Properly executed proxies that do not contain voting instructions will be voted “FOR” adoption of the Merger Agreement, “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, and “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained. No proxy that is specifically marked against adoption of the Merger Agreement will be voted in favor of the proposed compensation arrangements for Hibbett’s named executive officers in connection with the Merger, unless it is specifically marked “FOR” the approval of such proposal.
For Beneficial Owners
If your shares of Hibbett Common Stock are held in a street name and you do not instruct your broker, bank or other nominee how to vote your shares, then, because all of the Special Meeting Proposals are “non-routine matters,” your broker, bank or other nominee would not have discretionary authority to vote your shares on the
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Special Meeting Proposals. If your shares of Hibbett Common Stock are held in street name, your broker, bank or other nominee has enclosed a voting instruction form with this Proxy Statement. We encourage you to authorize your broker, bank or other nominee to vote your shares “FOR” each of the Special Meeting Proposals by following the instructions provided on the voting instruction form. If you do not vote via the Internet or telephone through your broker, bank or other nominee or do not return your bank’s, broker’s or other nominee’s voting form, or do not attend the Special Meeting and vote with a proxy from your broker, bank or other nominee, it will be counted as a vote against the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger or the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate.
How You May Revoke or Change Your Vote
Stockholders of record retain the power to revoke their proxy or change their vote at any time before it is voted at the Special Meeting, even if they sign the proxy card or voting instruction card in the form accompanying this Proxy Statement, via telephone or via the Internet. Stockholders of record can revoke their proxy or change their vote at any time before it is exercised by giving written notice specifying such revocation, to the attention of our Corporate Secretary at Hibbett, Inc., 2700 Milan Court, Birmingham, Alabama 35211, so that it is received prior to 11:59 p.m., Central Time, on the night before the Special Meeting. Stockholders of record may also change their vote by timely delivery of a valid, later-dated proxy signed and returned by mail prior to 11:59 p.m., Central Time, on the night before the Special Meeting or by voting by virtual ballot at the Special Meeting. Virtual attendance at the Special Meeting will not in and of itself constitute revocation of your proxy.
If your shares of Hibbett Common Stock are held in the name of a broker, bank or other nominee, you should follow the instructions of such broker, bank or other nominee regarding the revocation of proxies. If you have voted via the Internet or via telephone, you may change your vote by signing on to the website and following the prompts or calling the toll-free number again and following the instructions.
Any adjournment, recess or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow Hibbett stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting which was adjourned, recessed or postponed.
Adjournments and Postponements
In addition to the proposal to approve the adoption of the Merger Agreement and the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by Hibbett to its named executive officers in connection with the Merger, Hibbett stockholders are also being asked to approve a proposal that will give the Board authority to adjourn the Special Meeting from time to time, if necessary or appropriate in the view of the Board, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained. In addition, the Board may postpone the Special Meeting before it commences in accordance with Hibbett’s bylaws.
If a quorum is not present or if there are not sufficient votes for the approval of the adoption of the Merger Agreement, Hibbett expects that the Special Meeting will be adjourned, in order to solicit additional proxies in accordance with the Merger Agreement. At any subsequent reconvening of the Special Meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Special Meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent meeting.
If the Special Meeting is adjourned, we are not required to give notice of the time and place of the adjourned meeting if announced at the Special Meeting at which the adjournment is taken, unless the adjournment is for more than 30 days or the Board fixes a new record date for the Special Meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the original Special Meeting.
Tabulation of Votes
All votes will be tabulated by the inspector of elections appointed for the Special Meeting. The inspector of elections will separately tabulate affirmative and negative votes and abstentions.
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Solicitation of Proxies
The cost of this proxy solicitation will be borne by Hibbett. Our directors, officers and employees may solicit proxies by mail, telephone, facsimile and email, or by other electronic means. We will pay these directors, officers and employees no additional compensation for these services. We will reimburse banks, brokers and other nominees for their reasonable, out-of-pocket expenses incurred in forwarding this Proxy Statement and related materials to, and obtaining instructions relating to such materials from, beneficial owners of Hibbett Common Stock.
Hibbett has retained MacKenzie Partners as its proxy solicitor. MacKenzie Partners will solicit proxies by mail, telephone and email, or by other electronic means. Under our agreement with MacKenzie Partners, MacKenzie Partners will receive an estimated fee not to exceed $25,000 plus reimbursement of its reasonable, out-of-pocket expenses for its services. In addition, MacKenzie Partners and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.
Anticipated Date of Consummation of the Merger
Assuming timely satisfaction of necessary closing conditions, including, among other things, the Hibbett Stockholder Approval and receipt of required regulatory approvals, we currently anticipate that the Merger will be consummated in the third quarter of the 2024 calendar year.
Attending the Special Meeting
Only stockholders of record or beneficial owners of Hibbett Common Stock as of the close of business on the Record Date or their duly appointed proxies are entitled to attend the Special Meeting. You can virtually attend, and vote in the Special Meeting by accessing a virtual live website using the Internet at www.virtualshareholdermeeting.com/HIBB2024. Please note that you will not be able to attend the Special Meeting in person. If you are a stockholder of record, instructions on how to attend and participate online are provided on the proxy card. If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker or other nominee, you will need to contact your broker, bank or other nominee that holds your shares of Hibbett Common Stock to obtain your control number in order to vote on the Special Meeting website. We expect check-in to be available starting around 8:45 a.m. Central Time, on the day of the Special Meeting, July 19, 2024, and you should allow ample time for online check-in proceedings. If you encounter any difficulties accessing the virtual live webcast during the check-in or meeting time, please call the support team pursuant to the instructions provided on the virtual meeting website.
Everyone who attends the Special Meeting must abide by the rules for the conduct of the Special Meeting. The rules of conduct for the Special Meeting will be available for Hibbett stockholders that access the Special Meeting via www.virtualshareholdermeeting.com/HIBB2024 by using the 16-digit control number included in your proxy materials. Even if you plan to attend the Special Meeting, please submit your proxy and vote by telephone, Internet or mail so your vote will be counted if you later decide not to (or are otherwise unable to) attend the Special Meeting. No recordings of the Special Meeting will be permitted.
Assistance
If you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact MacKenzie Partners, our proxy solicitor, by calling +1 (800) 322-2885 (TOLL-FREE).
Rights of Stockholders Who Seek Appraisal
If the Merger is consummated, Hibbett stockholders who (i) do not vote in favor of the adoption of the Merger Agreement, (ii) continuously hold their shares of Hibbett Common Stock through the Effective Time of the Merger, (iii) properly demand appraisal of their shares (and who do not withdraw or otherwise lose their appraisal rights), and (iv) otherwise comply with the procedures of Section 262 will not be converted into the right to receive Transaction Consideration, but the holders of such Dissenting Shares will be entitled to receive such consideration as shall be determined pursuant to Section 262. This means that Hibbett stockholders will be entitled to have their shares of Hibbett Common Stock appraised by the Court of Chancery and to receive payment in cash of the “fair value” of the shares of Hibbett Common Stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest to be paid upon the amount
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determined to be fair value, if any, as determined by the Court of Chancery. Hibbett stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process.
Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 could be more than, the same as or less than the value of the consideration they would receive pursuant to the Merger if they did not seek appraisal of their shares.
To exercise your appraisal rights, you must, among other things, submit a written demand for appraisal in accordance with Section 262 to Hibbett before the vote is taken on the adoption of the Merger Agreement, you must not vote (in person or by proxy) in favor of the proposal to adopt the Merger Agreement and you must continue to hold the shares of Hibbett Common Stock of record through the Effective Time. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in this Proxy Statement in the section entitled “Appraisal Rights” beginning on page 15 of this Proxy Statement, and Section 262 regarding appraisal rights is reproduced and attached as Annex C to this Proxy Statement. If you hold your shares of Hibbett Common Stock through a broker, bank or other nominee and you wish to exercise appraisal rights, you should consult with your broker, bank or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such broker, bank or other nominee.
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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

THE MERGER
The discussion of the Merger in this section and elsewhere in this Proxy Statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this Proxy Statement and is incorporated into this Proxy Statement by reference. This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety as it is the legal document that governs the Merger.
Additional information about Hibbett may be found elsewhere in this Proxy Statement and in Hibbett’s other public filings. See the section entitled “Where You Can Find More Information” beginning on page 117 of this Proxy Statement.
Parties Involved in the Merger
Hibbett, Inc.
2700 Milan Court
Birmingham, AL 35211
Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with 1,169 Hibbett, City Gear and Sports Additions specialty stores located in 36 states nationwide as of May 4, 2024. Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan, New Balance and Adidas. Consumers can browse styles, find new releases, shop looks and make purchases online or in their nearest store.
Hibbett’s principal executive offices are located at 2700 Milan Court, Birmingham, AL 35211, and its telephone number is +1 (205) 942-4292.
Hibbett Common Stock is currently listed on Nasdaq under the symbol “HIBB.”
Genesis Holdings, Inc.
3308 N. Mitthoeffer Road,
Indianapolis, IN 46235
Parent is an Indiana corporation and a subsidiary of JD Sports. Parent serves as a holding company through which JD Sports owns certain of its businesses that conduct operations in the United States, including Finish Line, Shoe Palace and DTLR.
Parent’s principal executive offices are located at 3308 N. Mitthoeffer Road, Indianapolis, IN 46235, and its telephone number is +1 (317) 899-1022.
Steps Merger Sub, Inc.
3308 N. Mitthoeffer Road,
Indianapolis, IN 46235
Merger Sub is a Delaware corporation and a wholly owned subsidiary of Parent, formed on April 15, 2024 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement, including the Merger. Merger Sub has not conducted any business operations except in furtherance of this purpose and activities incident to its formation. Upon the consummation of the Merger, Merger Sub will cease to exist.
Merger Sub’s principal executive offices are located at 3308 N. Mitthoeffer Road, Indianapolis, IN 46235, and its telephone number is +1 (317) 899-1022.
JD Sports Fashion plc
Edinburgh House, Hollinsbrook Way,
Pilsworth, Bury, Lancashire, United Kingdom BL9 8RR
JD Sports is a company incorporated in England and Wales. It is a leading global omni-channel retailer of sports fashion brands. JD Sports provides customers with the latest exclusive products from its strategic partnerships with the most-loved premium brands–including Nike, Adidas and The North Face. The vision of JD Sports is to inspire the emerging generation of consumers through a connection to the universal culture of sport, music and fashion. JD Sports focuses on four strategic pillars: global expansion focused on the JD Sports brand first;
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leveraging complementary concepts; moving beyond physical retail by creating a lifestyle ecosystem of relevant products and services; and doing the best for its people, partners and communities.
JD Sports is a constituent of the FTSE 100 index and had 3,313 stores worldwide as of March 2, 2024.
JD Sports’ principal executive offices are located at Edinburgh House, Hollinsbrook Way, Pilsworth, Bury, Lancashire, United Kingdom BL9 8RR, and its telephone number is +44 (0)161 767 1000.
JD Sports has entered into the Merger Agreement solely for purposes of certain provisions specified therein.
Effects of the Merger
If the Merger Agreement is adopted by Hibbett stockholders and certain other conditions to the consummation of the Merger are either satisfied or waived, Merger Sub will merge with and into Hibbett, with Hibbett surviving the Merger as the Surviving Corporation. As a result of the Merger, Hibbett, Inc. will become a wholly owned subsidiary of Parent, and Hibbett Common Stock will no longer be publicly traded. In addition, Hibbett Common Stock will be delisted from Nasdaq and deregistered under the Exchange Act, in each case, in accordance with applicable laws, rules and regulations, and Hibbett will no longer file periodic reports with the SEC on account of Hibbett Common Stock. If the Merger is consummated, you will not own any shares of capital stock of the Surviving Corporation.
The Effective Time will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware, or on such later date and time as Hibbett and Parent may agree and specify in the certificate of merger.
Effect on Hibbett if the Merger Is Not Consummated
If the Merger Agreement is not adopted by Hibbett stockholders or if the Merger is not consummated for any other reason, Hibbett stockholders will not receive any payment for their shares of Hibbett Common Stock. Instead, Hibbett will remain an independent public company, Hibbett Common Stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and Hibbett will continue to file periodic reports with the SEC on account of Hibbett Common Stock. In addition, if the Merger is not consummated, Hibbett expects that Hibbett’s management will operate the business in a manner similar to that in which it is being operated today.
Furthermore, if the Merger is not consummated, and depending on the circumstances that would have caused the Merger not to be consummated, it is possible that the price of Hibbett Common Stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of Hibbett Common Stock would return to the price at which it trades as of the date of this Proxy Statement.
Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of Hibbett Common Stock. If the Merger is not consummated, the Board will continue to evaluate and review Hibbett’s business operations, properties, capitalization and strategic alternatives to enhance stockholder value. If the Merger Agreement is not adopted by Hibbett’s stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Hibbett will be offered or that Hibbett’s business, prospects or results of operations, or the trading price of Hibbett Common Stock, will not be adversely impacted.
In addition, under specified circumstances, Hibbett may be required to pay Parent the Company Termination Fee, or may be entitled to receive the Parent Termination Fee from Parent, upon the termination of the Merger Agreement, as described in the section entitled “Terms of the Merger Agreement—Termination Fees” beginning on page 103 of this Proxy Statement.
Transaction Consideration
Upon the consummation of the Merger, each share of Hibbett Common Stock issued and outstanding immediately prior to the Effective Time (other than any (i) Cancelled Shares and (ii) Dissenting Shares) will be automatically converted into the right to receive Transaction Consideration.
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Background of the Merger
As part of its ongoing oversight and evaluation of Hibbett’s business, the Board, together with Hibbett senior management, regularly reviews and assesses opportunities to increase stockholder value, including evaluating various strategic alternatives with the goal of maximizing stockholder value. As part of these ongoing evaluations, the Board and Hibbett senior management have, from time to time and with the assistance of Hibbett’s outside financial and legal advisors, considered various strategic alternatives, including the continued execution of Hibbett’s strategy as a standalone public company or possible strategic transactions, including acquisitions, dispositions, or the possible sale of Hibbett to, or combination of Hibbett with, an outside party.
As an active participant in the athletic apparel and footwear retail industry, JD Sports is well known to Hibbett, as are other industry participants. From time to time, at various industry and vendor-sponsored events and otherwise, members of Hibbett management have met with members of management of JD Sports and other industry participants. At various points, the Board, together with Hibbett’s management and outside advisors, has discussed the potential for strategic transactions with certain such parties. However, all of these discussions were general in nature and did not advance beyond preliminary and notional conversations.
On September 28, 2023, in its quarterly earnings call, Nike, Inc. (“Nike”), Hibbett’s largest merchandise vendor partner, noted Nike’s increased focus on engaging with fewer multi-brand retail partners but doing so in ways that would elevate consumers’ retail experiences and connect Nike’s digital membership with the retail partners’ own. As an example of this engagement, Nike cited Hibbett by name and noted that a connected partnership between Nike and Hibbett would be coming online in October 2023.
On September 29, 2023, Mike Longo, President and Chief Executive Officer of Hibbett, received an email from the chief executive officer (the “CEO of Company A”) of another athletic apparel and footwear retail company (“Company A”), congratulating Hibbett on the positive mention in Nike’s earnings call discussion and asking to set up a telephone conversation in the coming weeks to discuss business opportunities. No further details about Company A’s intentions were given at that time, but Mr. Longo and the CEO of Company A agreed on October 16, 2023 as a mutually convenient date for a discussion.
On October 9, 2023, Mr. Longo was in New York, New York for business travel and had an informal meeting with a senior executive of a merchandise vendor of Hibbett and Régis Schultz, Chief Executive Officer of JD Sports. At the meeting, the participants discussed trends in the retail industry, challenges of the current economic environment, and similar matters of general business interest. Following the meeting, Mr. Schultz asked Mr. Longo to continue the discussion privately, and the third participant in the meeting departed. Mr. Schultz then stated to Mr. Longo that JD Sports had a strong interest in exploring a potential strategic combination with Hibbett and proposed to enter into a confidentiality agreement as soon as practicable to facilitate further discussions, including a proposed in-person meeting between certain key members of both companies’ management teams in early November 2023. No specific terms of a potential transaction were proposed or discussed at that time. Mr. Longo replied that he would confer with the Board and respond to the proposal in due course.
Later on October 9, 2023, Mr. Longo spoke with Anthony Crudele, the independent Chairman of the Board of Hibbett, and informed Mr. Crudele of the conversation with Mr. Schultz and the expression of interest from JD Sports. Mr. Crudele directed Mr. Longo to maintain the dialogue with JD Sports pending a full discussion among the Board at a meeting scheduled for later in October 2023, and to explore further the parameters of the in-person meeting proposed by Mr. Schultz. Mr. Crudele began informing the other Board members on an individual basis of the JD Sports interest promptly after the discussion with Mr. Longo.
Also on October 9, 2023, Mr. Longo contacted representatives of Solomon Partners Securities, LLC (“Solomon Partners”), Hibbett’s longtime financial advisor, to provide background with respect to JD Sports’ expression of interest and Mr. Longo’s upcoming conversation with the CEO of Company A, among other matters.
On October 16, 2023, Mr. Longo had a telephone call with the CEO of Company A, as previously scheduled. During the conversation, they discussed general business and industry issues. There was some discussion of possible strategic opportunities for Hibbett and Company A together in the future, including a possible combination transaction, but no specific proposals were made at that time. Following the conversation, Mr. Longo reported the call with Company A to Mr. Crudele, and, although no specific proposals were made by Company A, Mr. Crudele directed Mr. Longo to remain open to any further dialogue that may be initiated by Company A and report back if any occurred.
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On October 17, 2023, the CEO of Company A contacted Mr. Longo via text message to thank him for the earlier discussion and asked for a follow-up call. The follow-up call was scheduled for October 18, 2023.
Also on October 17, 2023, a senior executive of another athletic apparel and footwear retail industry participant (“Company B”) contacted a representative of Solomon Partners and noted that Company B was aware of rumors that Hibbett may be interested in exploring a sale transaction, and, if so, Company B would like to participate in any sale process. The representative of Company B did not make a further specific proposal at that time, but the Solomon Partners representative committed to convey Company B’s interest to the Board and to respond in due course. The Solomon Partners representative reported the contact to Messrs. Crudele and Longo later that day.
On October 18, 2023, Mr. Longo and the CEO of Company A had a follow-up discussion by telephone. The CEO of Company A stated that Company A was interested in exploring a potential acquisition of Hibbett by Company A and desired to enter into a confidentiality agreement as soon as practicable to facilitate further discussions, including an in-person meeting among the management teams and financial advisors of both companies at a date to be determined in early November 2023. No specific transaction terms were proposed. The CEO of Company A also identified Company A’s financial advisor in strategic transactions of this type (“Financial Advisor A”). Mr. Longo responded that he would convey Company A’s interest to the Board and respond in due course. After the call, Mr. Longo contacted Mr. Crudele to recount the further conversation, and Mr. Crudele again directed Mr. Longo to maintain the dialogue with Company A and noted that he would inform the other Board members of this conversation, which he subsequently did.
Also on October 18, 2023, Mr. Longo sent a text message to Mr. Schultz asking for a follow-up call to their discussion on October 9, 2023 to explore further the parameters of the proposed in-person meeting sought by JD Sports. Mr. Schultz responded in agreement via text message on October 19, 2023.
On October 19, 2023, the senior executive of Company B had a call with representatives of Solomon Partners and again noted that Company B would be disappointed not to participate in any transaction discussions involving Hibbett. The Solomon Partners representatives again committed to relay this interest to the Board and did so to Messrs. Crudele and Longo later that day.
On October 20, 2023, Messrs. Longo and Schultz had a call to further discuss JD Sports’ interest in a transaction, and Mr. Schultz reiterated that JD Sports was highly interested in pursuing an acquisition of Hibbett. Mr. Schultz proposed that a limited group of senior management of JD Sports and its subsidiaries meet with Mr. Longo and Jared Briskin, Hibbett’s Executive Vice President, Merchandising, during early November 2023 in either New York or Indianapolis, Indiana, where the headquarters of JD Sports’ Finish Line business is located. Mr. Longo stated that he would relay these details to the Board and recounted them to Mr. Crudele in a discussion later that same day.
On October 23, 2023, Hibbett issued a press release announcing the launch of the Hibbett Rewards X Nike Membership program, which directly links the customer loyalty programs of Hibbett and Nike and provides exclusive shopping experiences, personalized content and early access to the latest product launches to members.
Also on October 23, 2023, Solomon Partners provided the Board with certain information regarding Solomon Partners’ material investment banking relationships during the prior two-year period with Hibbett, JD Sports, Company A, Company B and a fourth athletic apparel and footwear retail company (“Company C”), which Solomon Partners had identified as a potentially interested party and which subsequently contacted Hibbett on October 26, 2023 about its interest in a potential transaction.
On October 25, 2023, the Board held a meeting via videoconference with Mr. Briskin and David Benck, Hibbett’s Senior Vice President and General Counsel, and representatives of Solomon Partners and Hibbett’s outside counsel, Bass, Berry & Sims PLC (“Bass Berry”), participating, to review the expressions of interest in an acquisition of Hibbett by JD Sports, Company A, and Company B. At the meeting, Mr. Longo and the Solomon Partners representatives recounted details of their various conversations with the representatives of the interested parties. The Solomon Partners representatives also reviewed the macroeconomic and industry environment and challenges, peer companies’ growth trends and publicly disclosed projections, and the strategic rationales and likely motivation levels of the interested parties as well as any other potentially interested parties, noting the unlikelihood of competitive interest levels among private equity sponsors given the general decline in such sponsors’ acquisition activity in the retail industry in recent years combined with the limited number of such sponsors with the resources to acquire Hibbett, as well as the impact of higher interest rates on sponsors’ ability
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to generate their desired returns. Mr. Longo provided details about the requests for in-person meetings from JD Sports and Company A and proposed scheduling to coordinate meetings with all three interested parties in New York on November 9 and 10, 2023. The representatives of Bass Berry reviewed with the Board their fiduciary duties under applicable law in connection with responding to the unsolicited expressions of interest in a potential sale transaction. Representatives of Solomon Partners then reviewed potential process considerations for the Board in determining whether to pursue the interested parties’ expressions of interest and, if the Board should direct it, outreach to other potentially interested parties to gauge interest from others in a possible acquisition of Hibbett. The representatives of Solomon Partners and Bass Berry discussed with the Board the risks and benefits of various market check strategies, from a full public auction-style solicitation of interest, to a targeted outreach to a list of selected potential buyers likely to have both potential interest and the ability to complete a transaction, to a strategy of continuing discussions with the interested parties that had contacted Hibbett and no additional outreach to other parties. The Solomon Partners representatives provided their view that the three strategic parties that had contacted Hibbett to date, plus Company C, represented the potential counterparties likely to have the strongest strategic rationales, resources sufficient to execute a transaction, and likely motivation to deliver the greatest value to Hibbett stockholders. Following discussion, based on the information provided by Solomon Partners and with the assistance of Solomon Partners’ input (including Solomon Partners’ discussion of the unlikelihood of competitive interest levels among private equity sponsors), the Board determined at that time not to actively seek additional parties’ participation in the process, particularly in view of the strong strategic rationales and likely motivation of the interested parties that had contacted Hibbett to date and the leak risk that would ensue from actively seeking to expand the group of interested parties. In light of the simultaneous contacts from three separate interested parties, the Board also established a Strategic Review Committee comprised of Mr. Crudele (as Chair of the Strategic Review Committee), Dorlisa Flur and Linda Hubbard, all three of whom are independent and disinterested directors, to facilitate more rapid responses to the three parties as developing events might warrant. The Board also directed the Strategic Review Committee to consider whether the formal engagement of an independent financial advisor was in the best interests of Hibbett and its stockholders in connection with the Board’s evaluation of these expressions of interest, including the potential engagement of Solomon Partners in such capacity. The Board further authorized Mr. Benck and Bass Berry to prepare and negotiate suitable confidentiality agreements, with customary “standstill” provisions, with the interested parties and authorized Hibbett management and Solomon Partners to provide (subject to the execution of such confidentiality agreements) customary business information to the parties and to participate in the in-person meetings proposed to be held in New York on November 9 and 10, 2023. The Board also directed management to begin preparing a five-year long-range forecast for review and approval by the Board in connection with its evaluation of these expressions of interest.
Later on October 25, 2023, the CEO of Company A emailed Mr. Longo to request a follow-up call. On October 26, 2023, Mr. Longo and the CEO of Company A had a telephone call to discuss further the subject matter to be covered at an in-person meeting agreed to be held on November 9, 2023. Mr. Longo and the CEO of Company A further discussed general business matters and Hibbett’s capabilities and leadership team. Mr. Longo also asked for the contact information of Financial Advisor A, which the CEO of Company A provided later that same day.
On October 26, 2023, the chief executive officer (the “CEO of Company C”) of Company C contacted Mr. Longo via text message and asked for a call. Mr. Longo spoke with the CEO of Company C by telephone later that day, and the CEO of Company C stated that Company C had strong interest in exploring a potential acquisition of Hibbett, and that Company C desired to enter into a confidentiality agreement to facilitate discussions of such matters and to set up an in-person meeting between senior management of Hibbett and Company C at a date to be determined. No specific transaction terms were proposed. Mr. Longo noted that he would confer with the Board and respond in due course. Promptly after the conclusion of the call, Mr. Longo had a call with Mr. Crudele and recounted the discussion with the CEO of Company C. Mr. Crudele directed Mr. Longo to maintain the dialogue with Company C and noted that he planned to convene a meeting of the Strategic Review Committee in the coming days to receive an update on communications with the interested parties.
On October 26, 2023, at the direction of the Board, representatives of Solomon Partners contacted representatives of Company B and notified them of the opportunity—subject to execution of a suitable confidentiality agreement—to review limited business information and participate in in-person meetings with senior management of Hibbett in New York on November 9 or 10, 2023.
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On October 27, 2023, Messrs. Longo and Schultz had a telephone call during which they discussed industry trends and the potential for synergy opportunities resulting from a possible strategic combination between Hibbett and JD Sports. During the call, Messrs. Longo and Schultz also confirmed the in-person meeting in New York on November 10, 2023. Separately, at the direction of the Board, representatives of Solomon Partners conducted a call with a representative of JD Sports and representatives of Robert W. Baird & Co. Incorporated, JD Sports’ financial advisor (“Baird”), to discuss the subject matter to be covered in the November meeting and other process considerations.
On October 27, 2023, at the direction of the Board, representatives of Solomon Partners had a telephone call with representatives of Financial Advisor A to discuss the opportunity for a transaction between Hibbett and Company A, the subject matter to be covered in the November meeting and other process considerations.
On October 27, 2023, at the direction of the Board, representatives of Solomon Partners had a telephone call with representatives of Company C to discuss the opportunity for a transaction between Hibbett and Company C. That same day, the CEO of Company C contacted Mr. Longo via text message to reiterate Company C’s interest in an in-person meeting with senior management of Hibbett in New York on November 9 or 10, 2023.
On October 30, 2023, the Strategic Review Committee held a meeting via videoconference, with Messrs. Longo and Benck and representatives of Bass Berry participating, to receive an update and discuss potential terms of the engagement of Solomon Partners to serve as the Company’s financial advisor in connection with the evaluation of the interested parties’ expressions of interest in an acquisition of Hibbett and any other strategic alternatives the Board might consider. Messrs. Longo and Crudele provided the other Strategic Review Committee members with an update on communications with the interested parties subsequent to the Board meeting on October 25, 2023, and Mr. Longo reviewed business information to be provided and subject matter areas to be covered in the in-person meetings on November 9 and 10, 2023. Mr. Crudele disclosed that his son was currently an employee of Solomon Partners (though walled off from Solomon Partners’ deal team on the matter), which employment he had held for less than two years, and, as a result, Mr. Crudele recused himself from consideration of Solomon Partners’ engagement, and Mr. Crudele and Mr. Longo, in view of management’s pre-existing working relationship with Solomon Partners of more than 10 years, departed the meeting. Mr. Benck and the Bass Berry representatives reviewed with the remaining Strategic Review Committee members the disclosures made by Solomon Partners of relationships with the interested parties. Following discussion, the Strategic Review Committee members present (those other than Mr. Crudele) approved the engagement of Solomon Partners, subject to finalizing the engagement letter. The Strategic Review Committee selected Solomon Partners as its financial advisor because Solomon Partners is a recognized financial advisory firm that has substantial experience in transactions similar to the Merger and has extensive familiarity both with Hibbett and its business and with the athletic apparel and footwear industry more broadly. On October 31, 2023, Ms. Flur, as the delegate of the Strategic Review Committee pursuant to its approval at the October 30, 2023 meeting, approved and executed a final form of engagement letter with Solomon Partners that was consistent with the Strategic Review Committee’s direction.
On October 30, 2023, representatives of Company B contacted representatives of Solomon Partners and confirmed Company B’s desire to review additional business information and participate in an in-person meeting in New York on November 9, 2023 and asked Solomon Partners to convey a confidentiality agreement for review when available.
On October 30, 2023, representatives of Company C contacted representatives of Solomon Partners to ask certain questions about trends in Hibbett’s business and discuss the upcoming meeting.
On October 30, 2023, Mr. Benck and Bass Berry provided a draft confidentiality agreement, which included customary “standstill” provisions, to Solomon Partners, which distributed it to each of Company A, Company B, Company C and JD Sports that same day. At the direction of the Board, Solomon Partners confirmed the availability of each of the interested parties and definitively set in-person meetings with Messrs. Longo and Briskin from Hibbett, representatives of Solomon Partners and representatives of the interested parties (and, if applicable, their respective financial advisors) to be held at Solomon Partners’ offices in New York on November 9, 2023, in the case of each of Company A and Company B, and on November 10, 2023, in the case of each of Company C and JD Sports.
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On October 31, 2023, representatives of Company B contacted Solomon Partners to introduce Company B’s legal counsel that would review and respond to the draft confidentiality agreement and provided a written summary of subject matter areas that Company B desired to have covered at the in-person meeting on November 9, 2023.
On November 1, 2023, Baird conveyed to Solomon Partners a revised draft of the confidentiality agreement between Hibbett and JD Sports. Over the following days, JD Sports, its outside counsel, Freshfields Bruckhaus Deringer LLP (“Freshfields”), Bass Berry and Mr. Benck negotiated the terms of the confidentiality agreement, which was executed by JD Sports and Hibbett on November 5, 2023 and included customary standstill provisions. The confidentiality agreement also included a “don’t ask, don’t waive” provision prohibiting JD Sports from requesting that Hibbett release it from its standstill restrictions.
On November 1, 2023, Company A provided to Solomon Partners a revised draft of the confidentiality agreement. Over the following days, Company A, Company A’s legal counsel, Bass Berry, and Mr. Benck negotiated the terms of the confidentiality agreement between Company A and Hibbett, which was executed on November 7, 2023 and included customary standstill provisions. The confidentiality agreement also included a “don’t ask, don’t waive” provision prohibiting Company A from requesting that Hibbett release it from its standstill restrictions.
On November 2, 2023, Company B provided a revised draft of the confidentiality agreement, and Hibbett and Company B executed the agreement later that day. The confidentiality agreement included customary standstill provisions as well as a “don’t ask, don’t waive” provision prohibiting Company B from requesting that Hibbett release it from its standstill restrictions.
On November 2, 2023, Company C provided a revised draft of the confidentiality agreement to Solomon Partners. Over the following days, Company C, its legal counsel, Bass Berry and Mr. Benck negotiated the terms of the confidentiality agreement between Company C and Hibbett, which was executed on November 8, 2023 and included customary standstill provisions. The confidentiality agreement also included a “don’t ask, don’t waive” provision prohibiting Company C from requesting that Hibbett release it from its standstill restrictions.
Although each of the interested parties’ confidentiality agreements contain standstill provisions customary for a public company sale process, all four allow the interested party to make acquisition proposals to the Board privately at any time, and all four also contain “fallaway” provisions that allow acquisition proposals to be made publicly by the interested party following the entry by Hibbett into a definitive agreement to sell the Company, including the Merger Agreement. As such, none of Company A, Company B or Company C is prohibited by any such standstill provisions from making an acquisition proposal.
On November 9, 2023, at Solomon Partners’ offices in New York, Messrs. Longo and Briskin, together with representatives of Solomon Partners, met with representatives of Company A and Financial Advisor A and, separately, with representatives of Company B. On November 10, 2023, again at Solomon Partners’ offices in New York, Messrs. Longo and Briskin, together with representatives of Solomon Partners, met with representatives of Company C and Company C’s financial advisor and, separately, with representatives of JD Sports and Baird. In each of these meetings, the Hibbett and Solomon Partners attendees discussed and responded to questions about Hibbett’s business, organization, strategy, technology and logistical capabilities and projected performance for the remainder of Hibbett’s 2024 fiscal year.
On November 14, 2023, Company C provided follow-up questions from the meeting to Solomon Partners, which Solomon Partners answered the next day.
On November 14, 2023, the Strategic Review Committee held a meeting via videoconference with Messrs. Longo, Briskin and Benck and representatives of Solomon Partners and Bass Berry present. Messrs. Longo and Briskin and the Solomon Partners representatives provided a detailed report on each of the four meetings with the interested parties. The Solomon Partners representatives then reviewed proposed future steps in the process, including requesting indications of interest from the interested parties in early to mid-December. Following discussion, the Strategic Review Committee directed Hibbett management to continue work on Hibbett’s long-range forecast, to be provided to the Board for review and, if deemed appropriate by the Board, considered for approval at the upcoming regular Board meeting later in November 2023, ahead of seeking any indications of interest from the interested parties, which the Strategic Review Committee directed take place by such date in December as Solomon Partners and Hibbett management deemed reasonable.
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On November 19, 2023, Company B contacted Solomon Partners to inquire about overall timing expectations of the process and discuss Company B’s ongoing efforts to model a transaction.
On November 19, 2023, Financial Advisor A contacted Solomon Partners to seek an update on the timing of Hibbett’s long-range forecast, request targeted due diligence calls with Hibbett management to discuss information technology and financial diligence and outline other likely areas of due diligence on Hibbett’s financial performance, capital expenditures and unit profitability.
On November 20, 2023, in an executive session conducted via videoconference as part of Hibbett’s regularly scheduled quarterly Board meeting, the Board was joined by Messrs. Briskin and Benck and Bob Volke, the Company’s Senior Vice President and Chief Financial Officer, as well as representatives of Solomon Partners and Bass Berry. In the executive session, the Solomon Partners representatives provided an update on discussions with each of the interested parties since the last meeting of the full Board on October 25, 2023, including in particular the in-person meetings held in New York on November 9 and 10, 2023. Following discussion of these matters, Hibbett’s senior management reviewed a draft of management’s current long-range forecast, which included forecasted financial information for Hibbett’s business through the end of fiscal 2029, and the underlying assumptions, including in particular with respect to store unit growth and certain expenses and other line items included in the forecast. Mr. Volke reviewed areas in which work to further refine the long-range forecast was ongoing. The representatives of Solomon Partners then provided Solomon Partners’ perspective on how strategic bidders like the interested parties typically evaluate such forecasts, and the Bass Berry representatives discussed with the Board their fiduciary duties in connection with the evaluation of the expressions of interest in an acquisition of Hibbett by the interested parties and potential disclosure obligations in the event of a transaction. The Solomon Partners representatives discussed potential next steps for delivery of the long-range forecast, if approved by the Board, to the interested parties as well as the solicitation of indications of interest from the interested parties, including such parties’ respective views on valuation, remaining due diligence needs and timing, with submissions to be requested by mid-December. Following discussion, the Board directed management to continue to prepare the long-range forecast and present an updated version for review and, if deemed appropriate by the Board, approval at a future meeting. The Board directed Solomon Partners to convey to the interested parties the expectation that responsive feedback on the topics discussed by Solomon Partners would be expected by mid-December.
On November 20 and 21, 2023, at the direction of the Board, Solomon Partners separately contacted each of the interested parties and reported the expectation that Hibbett’s long-range forecast would become available after the Thanksgiving holiday and that Hibbett would seek responsive feedback from the interested parties on their interest in a potential transaction with the Company, including on valuation, by mid-December.
On November 21, 2023, Hibbett released its third quarter fiscal 2024 earnings and conducted its quarterly earnings call. Hibbett reported positive results for the quarter and updated its guidance for the remainder of fiscal 2024, increasing its full-year fiscal 2024 diluted earnings per share guidance based on an expectation of EBIT margin improvements and lower interest and tax expense for the remainder of the year. The market responded favorably to the announcement, and Hibbett’s shares traded up approximately 10%, closing at a price of $58.85 per share on such date.
On November 25, 2023, Financial Advisor A contacted Solomon Partners to request targeted due diligence calls with Hibbett management to discuss information technology and financial diligence.
On November 27, 2023, the Board held a meeting via videoconference, with Messrs. Briskin, Volke and Benck, Chris Flynn, Hibbett’s Vice President, Finance, and representatives of Solomon Partners and Bass Berry present. Mr. Volke reviewed the Initial Hibbett Projections (as defined below) and the underlying assumptions, noting in detail changes made from the long-range forecast presented at the Board’s November 20, 2023 meeting, including in particular with respect to increased store growth relative to Hibbett’s historical store growth model, capital expenditures and increases in store-level wages. The Solomon Partners representatives and management also reviewed certain contextual information that was proposed to be delivered to the interested parties along with the Initial Hibbett Projections. Following discussion, the Board adopted the Initial Hibbett Projections, which are discussed in the section entitled “Proposal 1: Adoption of the Merger Agreement—Projections Prepared by Hibbett’s Management” beginning on page 67 of this Proxy Statement, and directed Solomon
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Partners to convey the Initial Hibbett Projections and related contextual information to the interested parties. The Solomon Partners representatives then reviewed plans for upcoming due diligence meetings with the interested parties and other upcoming steps in the process before responsive feedback on a transaction would be sought.
Later on November 27, 2023, at the direction of the Board, Solomon Partners separately conveyed the Initial Hibbett Projections and contextual information to each of Company A, Company B, Company C and JD Sports and requested their availability for a meeting with Hibbett senior management to review the information. (As further described below, each of Company A, Company C and JD Sports eventually participated in a further management meeting to review the Initial Hibbett Projections and contextual information with Hibbett management; Company B ultimately declined to do so.)
On November 29, 2023, at the direction of the Board, Solomon Partners conveyed to each of the interested parties (or, if applicable, their respective financial advisors) instructions for submitting a proposal with respect to a transaction, if interested, which proposals should include, among other things, feedback on valuation, remaining due diligence needs, plans to finance the transaction, and overall timing, by December 15, 2023.
Also on November 29, 2023, Mr. Longo received a message from the CEO of Company C congratulating Hibbett on its third quarter earnings results and reiterating Company C’s interest in a transaction.
On November 30, 2023, representatives of Hibbett management, Solomon Partners, Company A and Financial Advisor A held a videoconference to review the Initial Hibbett Projections and related contextual information.
On December 1, 2023, representatives of Company B contacted Solomon Partners to note that they planned to have a further discussion with Company B’s board of directors in the coming week and would be in touch about next steps.
On December 1, 2023, representatives of Baird contacted representatives of Solomon Partners to request a meeting with Hibbett management, JD Sports and both sides’ respective financial advisors to review the Initial Hibbett Projections and related contextual information, which meeting was subsequently scheduled for December 8, 2023.
On December 3, 2023, representatives of Financial Advisor A contacted representatives of Solomon Partners to request that Hibbett grant a waiver under the confidentiality agreement with Company A to allow Company A to contact financial sponsors that might provide equity financing for an acquisition of Hibbett as co-investors with Company A. The representatives of Financial Advisor A noted to the representatives of Solomon Partners that allowing Company A this permission was likely, in Financial Advisor A’s view, to increase the possibility that Company A would submit a value-maximizing proposal. The Solomon Partners representatives replied that the request would be relayed to the Board, and Solomon Partners would reply in due course. After the call, Solomon Partners reported the request to Mr. Crudele, Mr. Longo and Bass Berry, and, after discussion, Mr. Crudele determined to convene the Strategic Review Committee to consider the request.
On December 4, 2023, the Strategic Review Committee met via videoconference, with Messrs. Longo, Benck, Volke and Flynn and representatives of Bass Berry present. Mr. Longo reported the request from Financial Advisor A to permit Company A to approach financial sponsors to provide equity financing as co-investors to increase the possibility that Company A would submit a value-maximizing proposal and reviewed with the Strategic Review Committee certain considerations with respect to the request that had previously been discussed with Solomon Partners and Bass Berry—namely, the likelihood that granting such permission would enable Company A to make a proposal (whether an all-cash proposal or a proposal reflecting consideration comprised of a mix of cash together with Company A stock) reflecting higher value and the related possibility that Company A might not proceed with delivering a proposal at all if permission was denied, as well as, on the other hand, the increased risk of a public leak that could ensue from allowing unlimited contacts to potential financing sources. Mr. Longo relayed a potential counterproposal that had previously been discussed with Solomon Partners and Bass Berry under which permission might be granted under strict limitations as to the number and type of potential financing sources that could be contacted by Company A. The Strategic Review Committee members engaged in a discussion of these considerations with the members of management and the Bass Berry representatives, and, after discussion, the Strategic Review Committee directed management to relay to Solomon Partners the Strategic Review Committee’s instruction to convey the Board’s openness to considering any bona fide offer that would maximize value to Hibbett stockholders, regardless of the form of consideration, and, to facilitate such an offer from Company A, and the permission for Company A to conduct limited contacts with no
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more than three financial sponsors, to be identified to Solomon Partners in advance of such contacts, and subject to each such financial sponsor’s execution of an appropriate joinder to Company A’s confidentiality agreement. Later that day, Solomon Partners contacted Financial Advisor A to convey the Strategic Review Committee’s position and ask for Company A’s proposal on which financial sponsor(s) Company A would seek to contact. Financial Advisor A subsequently provided a list of three financial sponsors that Company A was considering contacting as potential co-investors.
On December 6, 2023, at the direction of the Board, representatives of Hibbett management, Solomon Partners and Company C held a videoconference to review the Initial Hibbett Projections and related contextual information.
On December 7, 2023, at the direction of the Board, Solomon Partners conveyed certain additional historical income statement information, as previously disclosed in Hibbett’s publicly filed documents, to each of the interested parties.
On December 7, 2023, representatives of Solomon Partners and representatives of Financial Advisor A had a call to discuss the potential equity co-investment request and the three potential equity financing sources Company A proposed to contact. Following this discussion, at the direction of the Board, Solomon Partners conveyed to Financial Advisor A a form of joinder to the confidentiality agreement between Hibbett and Company A to allow such potential equity financing sources to be contacted.
On December 7, 2023, representatives of Hibbett management, Solomon Partners, JD Sports management and Baird conducted a due diligence call with respect to Hibbett’s information technology.
On December 8, 2023, representatives of Hibbett management, Solomon Partners, JD Sports management and Baird held a videoconference to review the Initial Hibbett Projections and related contextual information.
On December 11, 2023, at the direction of the Board, Solomon Partners contacted Financial Advisor A to request an update on discussions with any of the three potential equity financing sources previously discussed. Financial Advisor A noted that no such approaches had yet been made, as Company A had decided to defer those contacts until after a meeting of Company A’s board of directors scheduled for December 12, 2023.
On December 11, 2023, at the direction of the Board, Solomon Partners conveyed a breakdown of logistics, store occupancy and SG&A expenses to each of the interested parties.
On December 12, 2023, the CEO of Company A called Mr. Longo to report that Company A’s board of directors had met that day and Company A would not be moving forward at that time, citing strong concerns of Company A’s board of directors about the leverage profile of the combined company following an all-cash acquisition at a premium to current share price levels following continued appreciation in the trading price of Hibbett Common Stock (which had closed at $65.44 on December 11, 2023, an increase of approximately 38% over the closing price on October 13, 2023, the last trading day before the initial conversation between the CEO of Company A and Mr. Longo) and a desire to focus on execution against Company A’s own strategic plan.
On December 13, 2023, at the direction of the Board, Solomon Partners conveyed the latest projected balance sheet of Hibbett as of the end of fiscal 2024 to Baird, Company B and Company C.
On December 13, 2023, representatives of Company B contacted Solomon Partners and reported that, after consideration, Company B’s board of directors did not believe that Company B was the best acquirer for Hibbett at present. The Company B representatives indicated that although they had tried to model the transaction in a number of ways, they could not find a solution that resonated with Company B’s board of directors in light of the expected cost of the transaction, and they did not see a way for Company B to add sufficient operational or strategic value to justify the transaction under those circumstances.
On December 14, 2023, representatives of Hibbett management, Solomon Partners and Company C conducted a due diligence call with respect to Hibbett’s information technology.
On December 14, 2023, notwithstanding the earlier statement of withdrawal from the CEO of Company A, representatives of Financial Advisor A and Solomon Partners had a telephone call in which Financial Advisor A conveyed that Company A would remain supportive of a transaction involving a mix of cash and Company A stock if Hibbett’s Board were open to such a structure. Financial Advisor A noted the strategic logic of the potential combination but stated that the debt levels required to complete an all-cash transaction would not be
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sustainable. Financial Advisor A confirmed that no outreach had been made to potential equity financing sources. The Solomon Partners representatives reiterated the Board’s openness to considering any bona fide offer that would maximize value to Hibbett stockholders, regardless of the form of consideration.
On December 15, 2023, a representative of Company C contacted a representative of Solomon Partners to report that Company C would not be submitting a proposal at that time due to integration concerns as Company C was focused on improving its own information technology infrastructure. Subsequently, one of Company C’s advisors informed Solomon Partners that it believed Company C would not be able to provide an attractive premium to then-current share prices of Hibbett Common Stock following continued appreciation in Hibbett Common Stock’s trading price (which had closed at $69.75 on December 14, 2023, an increase of approximately 47% over the closing price on October 25, 2023, the last trading day before the initial conversation between the CEO of Company C and Mr. Longo).
On December 15, 2023, Baird conveyed to Solomon Partners a letter containing JD Sports’ non-binding proposal (the “December 15 Proposal”) to acquire all of the outstanding shares of Hibbett Common Stock for an indicative price range of $85.00-90.00 in cash per share, subject to completion of JD Sports’ due diligence review. The proposed transaction would not require external financing and would not be subject to a financing condition. The December 15 Proposal also noted JD Sports’ view that regulatory obstacles to closing for antitrust reasons were not expected, the proposed transaction had the full support of JD Sports’ board of directors and majority shareholder, the Pentland Group, from which JD Sports intended to obtain an irrevocable undertaking at execution of a definitive merger agreement to vote all of its shares in JD Sports in favor of the transaction if a vote of JD Sports shareholders were required under applicable law and the rules of the Financial Conduct Authority, the primary governmental securities regulator in the United Kingdom (“FCA”).
On December 18, 2023, the Board held a meeting (the “December 18 Board Meeting”) via videoconference, with Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry present, to review the December 15 Proposal and determine responsive steps. The Solomon Partners representatives reviewed the industry and market environment, and recent trading performance of Hibbett Common Stock, noting that even after the favorable market reception of Hibbett’s third quarter earnings release on November 21, 2023 that had resulted in an approximate 10% increase on the day of the announcement, Hibbett Common Stock had continued to trade upward a further 18% since that date, resulting in a total increase in the prevailing trading price of Hibbett Common Stock of approximately 45% since October 25, 2023, the date of the first Board meeting to consider the inbound expressions of interest from the interested parties. In view of the nearly contemporaneous unsolicited approaches from four strategic potential acquirers (which the Board believed was not coincidental, as the senior executive of Company B that initially contacted Solomon Partners had expressly acknowledged that Company B’s initial approach was prompted by rumors that Hibbett may be considering a sale transaction) and the continued appreciation in the trading price of Hibbett Common Stock, the Solomon Partners representatives noted that Solomon Partners and Hibbett management had continued to monitor closely the possibility that discussions with the interested parties had leaked to the marketplace, but that neither Solomon Partners nor management was aware of any explicit leaks. The Solomon Partners representatives then updated the Board on the status of discussions with each of the interested parties leading up to the December 15 bid deadline date and noted that the three interested parties other than JD Sports had all withdrawn from the process in the days prior to the bid deadline, though there continued to be ongoing discussions with Financial Advisor A with regard to a potential proposal from Company A based on consideration consisting of a mix of cash and Company A stock. The Solomon Partners representatives noted that, in conveying Company C’s withdrawal from the process, one of Company C’s advisors had cited an inability to arrive at a valuation for Hibbett that it believed would be suitable given Hibbett’s recently materially increased trading prices, and that Company A’s shift in focus to a transaction that would depend on Company A stock for a material proportion of the consideration under such a proposal implied that generating an all-cash bid that would deliver suitable value and be competitive with any others’ interest may have been beyond Company A’s reach, given Company A’s then-current capital structure and in light of comments made by the CEO of Company A and Financial Advisor A.
At the December 18 Board Meeting, the Solomon Partners and Bass Berry representatives next discussed with the Board whether Solomon Partners should conduct active outreach to other potentially interested parties to gauge their interest in a possible acquisition of Hibbett. The representatives of Solomon Partners and Bass Berry discussed with the Board the risks and benefits of various market check strategies, from a full public auction-style solicitation of interest, to a targeted outreach to a list of selected potential buyers likely to have
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both potential interest and the ability to complete a transaction, to a strategy of continuing discussions with JD Sports and Company A and no additional outreach to other parties. The Solomon Partners representatives provided their view, based on the market factors that Solomon Partners had previously discussed with the Board (including Solomon Partners’ discussion of the unlikelihood of competitive interest levels among private equity sponsors), that the four interested parties that had contacted Hibbett to date represented the potential counterparties likely to have the strongest strategic rationales and available resources sufficient to execute a transaction, and likely motivation to deliver the greatest value. Following this discussion, reasoning that continuing to develop JD Sports’ and Company A’s interest would likely represent the best path to deliver the greatest value to Hibbett stockholders while minimizing the considerably increased risk of an explicit public leak that could ensue from actively seeking other parties’ interest, the Board determined, and directed Solomon Partners, not to actively seek out any additional parties’ participation in the process.
At the December 18 Meeting, the Solomon Partners representatives next reviewed the terms of the December 15 Proposal in detail, noting that the valuation range in the December 15 Proposal implied a valuation multiple of 5.7x-6.0x Hibbett last 12 months EBITDA and a multiple of 5.9x-6.2x projected EBITDA for fiscal 2024 as set forth in the Initial Hibbett Projections. The Solomon Partners representatives also noted that the all-cash proposal would not require external financing and that JD Sports had, in Solomon Partners’ view, ample resources to complete such a transaction. The Solomon Partners representatives and Bass Berry representatives then responded to questions from the Board about the proposed terms of the December 15 Proposal. Following this discussion, the Solomon Partners representatives reviewed certain potential responses to the December 15 Proposal with the Board. The Solomon Partners representatives outlined process considerations in the event the Board determined to continue discussions with JD Sports. The Bass Berry representatives reviewed with the Board the directors’ fiduciary duties under applicable law in connection with the consideration of the December 15 Proposal and the various potential responses outlined by Solomon Partners. Mr. Longo provided management’s view of the contacts with JD Sports since their initial approach in October, and the consistent expressions of strong strategic fit by JD Sports and JD Sports’ considerable enthusiasm for and confidence in a transaction. Following a discussion of these matters, the Board directed Solomon Partners to convey to JD Sports that the Board had strong support for the management team and Hibbett’s current strategy and believed that JD Sports should increase its indicative price range to reflect a higher valuation. Solomon Partners was further directed to request a response from JD Sports by December 22, 2023.
On December 19, 2023, representatives of Solomon Partners and Baird had a call to discuss the Board’s feedback on the December 15 Proposal. As directed by the Board, the Solomon Partners representatives conveyed the Board’s request for a higher valuation range implied by the December 15 Proposal. The Solomon Partners representatives asked for a response to the Board’s position by December 22, 2023. The Baird representatives committed to refer the Board’s feedback to JD Sports.
On December 20, 2023, representatives of Solomon Partners and Financial Advisor A had a call to discuss Company A’s continued evaluation of a possible acquisition proposal involving mixed consideration of both cash and Company A stock. As done previously, the Solomon Partners representatives reiterated that the Board would be willing to consider any bona fide proposal regardless of the nature of the consideration. The representatives of Financial Advisor A replied that they would confer with Company A and provide feedback to Solomon Partners in the coming days.
On December 21, 2023, Financial Advisor A contacted Solomon Partners to confirm Company A’s intention to work on potential deal structures involving Company A stock as some or all of the consideration to acquire Hibbett. Financial Advisor A indicated they expected that any such proposal from Company A would likely be provided after the holiday season, in January 2024.
On December 22, 2023, representatives of Solomon Partners and Baird had a call to discuss JD Sports’ response to the Board’s feedback on the December 15 Proposal. The Baird representatives conveyed that JD Sports was not inclined to modify its proposal to raise the valuation range beyond what was set forth in the December 15 Proposal, but noted that JD Sports remained confident that it could support a deal valuation at the upper end of the range in the December 15 Proposal if Hibbett met the projections for the remainder of fiscal 2024 that had previously been provided to JD Sports. The Solomon Partners representatives responded that they would report this response to the Board. Following the call, Solomon Partners relayed this response to Mr. Crudele and to Mr. Longo, and Mr. Crudele determined to call a further meeting of the Board to consider the response and next steps.
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On December 23, 2023, Solomon Partners conveyed to Financial Advisor A the updated projected balance sheet of Hibbett as of the end of fiscal 2024, which had previously been shared with representatives of JD Sports after Company A’s initial withdrawal from the process.
On December 27, 2023, the Board held a meeting via videoconference, with Messrs. Briskin, Volke and Benck and representatives of Solomon Partners and Bass Berry present. The Solomon Partners representatives provided an update on discussions with Financial Advisor A regarding a potential proposal based on a consideration mix of cash and stock, and noted that Financial Advisor A had indicated that such a proposal would be unlikely to be delivered until after the holiday season, in January 2024. The Solomon Partners representatives then reported on the response of JD Sports to the Board’s initial feedback to the December 15 Proposal, noting that JD Sports had declined to raise its price range but remained confident that it could support a valuation at or near the top of that range if Hibbett met the projections for the remainder of fiscal 2024. The Solomon Partners representatives responded to questions from the Board about the discussions with Baird and JD Sports’ position. Mr. Longo provided the Board with a business update on sales and profitability through the holiday season and noted that both were below original expectations, with the shortfall on profitability being less than that on sales. The Solomon Partners representatives provided a market update and reported that recent industry news and market conditions across the athletic apparel and footwear retail segment had generated negative pressure on trading prices of certain other industry participants, but that trading prices of Hibbett’s Common Stock had remained at the elevated levels to which they had steadily risen since the initial approaches by the interested parties in October 2023. The Solomon Partners representatives then reviewed potential further responses to JD Sports’ most recent position. Following discussion, the Board directed Solomon Partners to convey the Board’s view that an increased valuation at or above that set forth in the December 15 Proposal was appropriate in light of current trends and the considerable strategic benefits that JD Sports would likely derive from the proposed acquisition and to request an improved proposal.
Later on December 27, 2023, at the direction of the Board, a representative of Solomon Partners had a call with a representative of Baird to relay the Board’s position and again request an updated proposal from JD Sports. In response, the representative of Baird requested an update on Hibbett’s fiscal 2024 fourth quarter performance. The representative of Solomon Partners indicated that an update on fiscal 2024 fourth quarter performance to-date and an updated projection on performance through the end of fiscal 2024 were in the process of being prepared by Hibbett management and would be shared when available.
On January 4, 2024, at the direction of the Board, Solomon Partners had a call with Financial Advisor A to check on the status of Company A’s deliberations. Financial Advisor A reported that Company A was continuing to consider different deal structures and asked for an update on fiscal 2024 fourth quarter performance to-date and an updated projection on performance through the end of fiscal 2024. Solomon Partners noted those updates were in the process of being prepared by Hibbett management and would be shared when available. Later on January 4, 2024, Hibbett management completed the update on fiscal 2024 fourth quarter performance to-date and an updated projection on performance through the end of fiscal 2024, and, at the direction of the Board, Solomon Partners conveyed the same to Baird.
On January 8, 2024, a representative of an outside advisor to Company C contacted Solomon Partners via telephone and relayed that the advisor had been assisting Company C in analyzing an acquisition of Hibbett, and that a proposal might still be possible. The Company C advisor noted the matter was still under consideration by Company C and the advisor would keep Solomon Partners informed of developments if it seemed like a deal between Company C and Hibbett might still be possible.
On January 9, 2024, at the direction of the Board, Solomon Partners delivered the update on fiscal 2024 fourth quarter performance to-date and an updated projection on performance through the end of fiscal 2024 to Company A. In view of Company C’s previous withdrawal from the process and the speculative nature of the contacts from Company C’s outside advisor, these updates were not conveyed to Company C.
Also on January 9, 2024, representatives of Baird and Solomon Partners had a call in which Baird conveyed JD Sports’ response to the Board’s request for an updated proposal, noting that JD Sports continued to be unwilling to increase its price range at this time, but that JD Sports remained highly enthusiastic about a transaction and eager to conduct further due diligence to validate its proposal. To that end, Baird conveyed to
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Solomon Partners a comprehensive due diligence request outlining the information JD Sports desired to review. Solomon Partners conveyed this response to Messrs. Crudele and Longo, and Mr. Crudele determined to call a meeting of the Strategic Review Committee to consider next steps.
On January 10, 2024, the Strategic Review Committee held a meeting via videoconference, with Messrs. Longo, Briskin, Volke and Benck and representatives of Solomon Partners and Bass Berry in attendance. At the meeting, the representatives of Solomon Partners reported that they had provided Baird with an update on fiscal 2024 fourth quarter performance to-date and an updated projection on performance through the end of fiscal 2024. The Solomon Partners representatives also reported JD Sports’ refusal to increase the price range from the December 15 Proposal at this time but noted that a comprehensive due diligence request had been provided outlining the information that would be needed by JD Sports to validate its proposal fully. The Solomon Partners representatives further reported on JD Sports’ recent announcement of lower-than-expected sales results for the 22 weeks ended December 30, 2023 and lowered guidance, and the resulting decline of greater than 25% in JD Sports’ prevailing trading price, and provided a general market update. Mr. Crudele noted for discussion the possibility that allowing JD Sports to conduct further due diligence would allow the Board to further explore and negotiate JD Sports’ proposal with the potential to increase value, set against the potential cost and distraction to Hibbett as well as continued risk of a public leak of the discussions of an acquisition. Messrs. Longo and Briskin then provided a business update, noting the expectation of an unfavorable macroeconomic and industry environment for the remainder of fiscal 2024 and through much or all of fiscal 2025. Mr. Longo also noted that management expected significant challenges in the consumer environment in fiscal 2025 in connection with the impending U.S. presidential election along with any accompanying civic unrest that might affect Hibbett’s various retail locations. The Strategic Review Committee members engaged in a discussion with management and the Solomon Partners and Bass Berry representatives of the implications of these challenging conditions for fiscal 2025 results, including likely downward pressure on Hibbett’s stock price. Following this discussion, the representatives of Solomon Partners and Bass Berry reviewed potential next steps in engaging with JD Sports, including the potential provision of a draft merger agreement following the review and approval thereof by the Strategic Review Committee. Following discussion, the Strategic Review Committee members directed management, Solomon Partners and Bass Berry to convey to JD Sports that the Board viewed JD Sports’ proposal as uninspiring, but to proceed with responding to JD Sports’ due diligence request in such manner as they deemed appropriate in an effort to support a revised proposal reflecting improved value while taking into account competitive sensitivities. The Strategic Review Committee also directed Bass Berry and Mr. Benck to begin work on drafting a merger agreement that could be provided to JD Sports if subsequently approved by the Strategic Review Committee.
Between January 10 and January 22, 2024, Hibbett management, Solomon Partners and Bass Berry worked to populate a virtual data room with information responsive to JD Sports’ due diligence request. On January 22, 2024, access to the virtual data room was granted to JD Sports and its advisors, with certain competitively sensitive information being restricted to customary “clean room” handling procedures that would prevent general dissemination of such information within JD Sports.
On January 11, 2024, Solomon Partners had a call with Baird to relay the Strategic Review Committee’s determination to proceed with responses to JD Sports’ due diligence request. Also on that date, Mr. Schultz sent a text message to Mr. Longo informing Mr. Longo that he would be making a trip to the United States later that month and inquiring about the possibility of conducting Hibbett store visits during that trip. Mr. Schultz and Mr. Longo continued to exchange text messages between January 11, 2024 and the date of the store visits on January 26, 2024 to coordinate logistics with respect to the visits.
On or about January 18, 2024, Baird relayed to Solomon Partners a request from JD Sports for Messrs. Longo and Briskin to host in-person store visits at certain of Hibbett’s Atlanta, Georgia locations. The visits were subsequently held on January 26, 2024 and were attended by (i) representatives of JD Sports, including Mr. Schultz, (ii) a representative of the Pentland Group, JD Sports’ majority shareholder and (iii) George Mersho, a minority shareholder in a JD Sports subsidiary. The attendees toured several Hibbett and City Gear store locations in the Atlanta area and discussed Hibbett’s business model, logistical and inventory systems, and customer base, among other similar issues. Terms of a potential transaction were not discussed at this meeting.
From the opening of the virtual data room on January 22, 2024 until the execution of the Merger Agreement on April 23, 2024, representatives of Hibbett, Solomon Partners, Bass Berry and Ernst & Young LLP (“Ernst & Young”), Hibbett’s independent auditor, conducted a number of virtual due diligence meetings with
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representatives of JD Sports, Baird, Freshfields, and JD Sports’ other consultants and advisors. These due diligence sessions covered a variety of matters, including quality of earnings, financial and store performance, human resources, information technology, legal and regulatory, and tax matters. In addition, Hibbett, Solomon Partners and Bass Berry worked to fill documentary due diligence requests submitted by JD Sports and its advisors throughout this due diligence period on a similarly broad array of topics.
On January 25, 2024, Solomon Partners received a call from the outside advisor to Company C that had contacted Solomon Partners previously on January 8, 2024 about possible continuing interest of Company C in exploring a transaction. The Company C advisor reported that Company C was definitively declining to pursue discussions further, citing in particular the persistent increases in trading prices of Hibbett’s Common Stock, to which Company C did not believe it could provide a suitable premium based on its valuation of Hibbett’s business.
On February 7, 2024, the Strategic Review Committee held a virtual meeting, in which Messrs. Longo, Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated. The representatives of Solomon Partners and Hibbett senior management provided an update on the due diligence activities of JD Sports and its advisors and responded to questions from the Strategic Review Committee. Mr. Longo reported on requests from JD Sports to conduct in-person meetings later in February to tour a few select Hibbett and City Gear store locations as well as Hibbett’s distribution center in Alabaster, Alabama and to gather the senior management teams of both Hibbett and JD Sports for a “top-to-top” meeting and review of all major business functional areas, to be held in Birmingham, Alabama. The Solomon Partners representatives also reported that there had been no active engagement from Company A or its financial advisor for several weeks and Company B and Company C had both definitively withdrawn from the process and confirmed their compliance with requests to destroy confidential information in their possession. Following this update, Mr. Benck and the Bass Berry representatives presented the key terms and conditions of a proposed bid draft Merger Agreement for the Strategic Review Committee’s consideration and, if approved, delivery to JD Sports and its advisors. The Bass Berry representatives also responded to questions from the Strategic Review Committee with respect to the directors’ fiduciary duties in connection with a review of the draft Merger Agreement and consideration of its terms. The Strategic Review Committee provided direction on certain key terms of the draft Merger Agreement and directed Mr. Benck and Bass Berry to finalize the draft Merger Agreement consistent with the Strategic Review Committee’s direction and directed Solomon Partners to make such finalized draft Merger Agreement available to JD Sports and its advisors through the virtual data room.
On February 15, 2024, representatives of Hibbett, JD Sports, Solomon Partners, Baird and JD Sports’ logistics consultant engaged in a facility tour and conducted a due diligence meeting focused on Hibbett’s supply chain operations at Hibbett’s distribution center in Alabaster, Alabama.
On February 17, 2024, the draft Merger Agreement was made available to JD Sports and its advisors in the virtual data room. The draft Merger Agreement proposed (i) a “fiduciary out” termination fee payable by Hibbett under certain circumstances at 2.0% of the equity value of the transaction, (ii) a “hell or high water” efforts covenant requiring the buyer to take any and all actions, including engaging in dispositions of assets or agreeing to limitations on the post-closing business, necessary in order to secure regulatory clearance of the transaction, (iii) the ability of Hibbett to continue paying quarterly dividends during the period between signing and closing of the transaction and (iv) the cash out of all unvested Hibbett equity awards based on the Transaction Consideration at the closing of the transaction, among others terms.
On February 20, 2024, at the direction of the Board, Solomon Partners distributed to Baird a letter (the “February 20 Process Letter”) setting forth Hibbett’s instructions for the submission of a revised proposal to acquire Hibbett. The instruction letter noted that the revised proposal should, among other things, set forth a specific figure, and not a range, for the proposed purchase price per share of Hibbett Common Stock, be accompanied by a markup of the draft Merger Agreement made available through the virtual data room, and be received no later than March 7, 2024.
On February 21, 2024, the CEO of Company A called Mr. Longo and stated that Company A was declining to pursue discussions of an acquisition further at this time, citing Company A’s desire to focus primarily on execution of its existing strategic plan.
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On February 22, 2024, representatives of Bass Berry and Freshfields had a call to discuss the ongoing due diligence process, the agenda of the upcoming “top-to-top” meeting between the senior management teams and regulatory matters.
On February 23, 2024, at the direction of the Board, Solomon Partners conveyed to Baird Hibbett’s final fourth quarter and full year financial results for fiscal 2024, which had ended on February 3, 2024.
On February 27, 2024, Mr. Longo and Mr. Schultz exchanged text messages discussing the agenda for the upcoming “top-to-top” meeting between the senior management teams.
On February 27, 2024, the Strategic Review Committee held a virtual meeting, in which Messrs. Longo, Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated. The members of management and Solomon Partners representatives provided an update on due diligence activities, including the distribution center tour and the upcoming “top-to-top” meeting scheduled to take place on February 29 and March 1, 2024. Mr. Longo reviewed for the Strategic Review Committee the proposed agenda for and participants in that meeting and responded to questions about management’s preparations for the discussion. Messrs. Longo and Volke then reviewed management’s proposed fiscal 2025 operating plan and the Revised Hibbett Projections (as defined below), which reflected certain proposed revisions to the Initial Hibbett Projections previously approved by the Board in November 2023 and provided to JD Sports and the other interested parties at that time. The revisions included in the Revised Hibbett Projections were driven in part by management’s assessment of Hibbett’s final fiscal 2024 results, which had been lower than expectations, including EBITDA of $186.0 million that was $10.0 million (or 5.1%) below the EBITDA projection reflected in the Initial Hibbett Projections provided in November 2023, and $1.3 million (or 0.7%) below the EBITDA projection reflected in the fiscal 2024 projection flash update provided in January 2024. The Revised Hibbett Projections included reductions in projected EBITDA in fiscal 2025 to $195.1 million, a 2.6% reduction from the amount included in the Initial Hibbett Projections. Mr. Volke reviewed in detail the underlying assumptions and responded to questions from the directors and noted that the proposed 2025 operating plan and Revised Hibbett Projections were being submitted to the Board for review and, if deemed appropriate, approval at a special Board meeting to be held the next day. Mr. Crudele then turned the meeting to a discussion of projected next steps in the process with JD Sports and their interaction with Hibbett’s upcoming annual reporting season and customary annual compensation-setting process. Representatives of Solomon Partners outlined potential alternative prospective timelines that could follow the receipt of a revised proposal on or around the deadline of March 7, 2024 that had been established in the February 20 Process Letter. The directors, members of management and advisors discussed the advantages and disadvantages of delaying earnings reporting until a conclusion of discussions with JD Sports could be reached. Following discussion, the Strategic Review Committee directed management and the advisors to continue to work with JD Sports to facilitate a revised proposal as soon as possible for the Board to consider, and to plan for the Company’s annual reporting to take place as late as March 28, 2024 (or earlier if discussions with JD Sports were discontinued or delayed at any point).
On February 28, 2024, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated. The Solomon Partners representatives provided an update on discussions with JD Sports and the status of its due diligence investigation, the provision to JD Sports of a draft merger agreement and instructions to submit a revised proposal no later than March 7, 2024, and plans for the upcoming “top-to-top” meeting between the senior management teams. Messrs. Longo and Volke then reviewed the proposed 2025 operating plan and Revised Hibbett Projections and the underlying assumptions for each. Messrs. Longo and Volke responded to questions on these matters, and, after discussion, the Board unanimously approved the 2025 operating plan as presented and the Revised Hibbett Projections, and directed that Solomon Partners convey the latter to JD Sports prior to the start of the “top-to-top” meeting the next day. Solomon Partners made the Revised Hibbett Projections available to Baird that evening through the virtual data room.
On February 29 and March 1, 2024, the senior management teams of both Hibbett and JD Sports, along with representatives of Solomon Partners and Baird, met at a hotel conference center in Birmingham, Alabama for a series of meetings to further familiarize each management team with the other company’s business and leadership and engaged in Hibbett facility and store tours. On March 1, 2024, near the end of the two days of meetings,
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Mr. Schultz noted that, although JD Sports remained highly enthusiastic about pursuing a transaction, it would not be possible to meet the March 7, 2024 deadline for a revised proposal, because, owing to schedule conflicts, JD Sports’ board of directors would not be able to gather to approve such a proposal prior to a board meeting scheduled for March 21, 2024.
On March 5 and 6, 2024, the Board held its regular post-year end cycle of meetings at Hibbett’s headquarters in Birmingham, Alabama. On March 5, 2024, in an executive session that included only the Board members and Messrs. Longo, Briskin, Benck and Volke, joined virtually by representatives of Solomon Partners and Bass Berry, the representatives of Solomon Partners reviewed the discussions with all interested parties to date and reported Mr. Schultz’s statement that a revised proposal would not be forthcoming at or before the deadline of March 7, 2024 that had been established in the February 20 Process Letter, and indeed likely not until two weeks later, at the earliest. The Solomon Partners and Bass Berry representatives engaged in a discussion of process considerations and potential next steps, and the Bass Berry representatives reviewed with the Board again the directors’ fiduciary duties under applicable law in these circumstances. The Board and advisors then engaged in a discussion of whether to delay Hibbett’s earnings release until toward the end of March in hopes that discussions with JD Sports would have concluded prior to the release date. The Solomon Partners representatives also previewed upcoming key earnings announcements to be made by certain of Hibbett’s industry peers in the next three weeks. Following discussion, the Board determined to defer a decision on the timing of the earnings announcement until after further discussions to be held on the next day. The Solomon Partners and Bass Berry representatives departed the meeting. On March 6, 2024, on the second day of the Board meetings, in view of the uncertainty with respect to a revised proposal from JD Sports and concerns about market speculation that might be fueled by unexplained delay in Hibbett’s release of earnings, the Board determined to move forward with an earnings announcement on March 15, 2024. The Board directed management to announce the date of the release and related earnings call on March 11, 2024, if nothing changed in the interim in relation to the discussions with JD Sports.
On March 8, 2024, representatives of Bass Berry and Freshfields had a call to discuss certain high-level issues that Freshfields and JD Sports had identified in their review of the bid draft Merger Agreement.
On March 8, 2024, Gavin Bell, Hibbett’s Vice President of Investor Relations, received a call from one of Hibbett’s covering analysts, who asked whether the Company was in talks to be acquired by JD Sports. Mr. Bell responded that the Company’s longstanding policy was not to comment on market rumors, and the call concluded.
On March 10, 2024, the Board, along with Messrs. Briskin, Benck and Volke and representatives of Bass Berry and Solomon Partners, held a virtual meeting to discuss the analyst inquiry, the possibility of an explicit leak to the public of information about the discussions with JD Sports, and whether any of these factors would necessitate delaying the planned release of earnings on March 15, 2024. After discussion, the Board directed management to proceed as planned. The following day, Hibbett announced the details of the earnings release and conference call to take place on March 15, 2024.
On March 12, 2024, the initial draft of Hibbett’s disclosure letter to be delivered in connection with the Merger Agreement (the “Company Disclosure Letter”) was made available to JD Sports and its advisors through the virtual data room.
On March 15, 2024, Hibbett released its earnings for the fourth quarter and full fiscal year ended February 3, 2024 and provided guidance for fiscal 2025, of which the midpoint of guidance for revenue, operating profit and earnings per share were each below the median of analyst consensus estimates. In the earnings release and on the earnings conference call, management noted the expectation that business and economic challenges would persist throughout fiscal 2025 based on a number of factors, including continued consumer concerns about inflation and high interest rates, the highly promotional retail environment and its effects on margins, geopolitical conflicts and uncertainty in connection with the upcoming U.S. presidential election. On the earnings conference call to discuss these results and guidance, the same covering analyst that had contacted Hibbett previously asked in the question-and-answer portion of the call whether the Company was currently involved in any M&A activity, but did not name JD Sports. Management responded to the question by repeating that Hibbett’s policy was not to comment on such questions. Market reception of the announced results was mixed, with initial trading prices dropping 6% to $68.51 per share on the date of the earnings announcement, but then trading back up over the succeeding five trading days.
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On March 22, 2024, Mr. Longo received a text message from Mr. Schultz indicating that a revised proposal from JD Sports would be provided shortly. Soon thereafter on the same date, Baird conveyed to Solomon Partners a letter (the “March 22 Proposal”) from JD Sports setting forth a revised non-binding proposal to acquire all of the outstanding Hibbett Common Stock for $85.00 per share in cash. The March 22 Proposal noted that the proposed price of $85.00 remained within the range originally proposed in the December 15 Proposal despite Hibbett reporting a decline of approximately 5.0% in fiscal 2024 EBITDA from the original projection provided to JD Sports in November 2023, as well as a downward revision in projected 2025 EBITDA under the Revised Hibbett Projections. Representatives of Baird also communicated to Solomon Partners that challenging sector conditions further factored into JD Sports’ consideration of the March 22 Proposal. The March 22 Proposal stated that external financing would not be required for JD Sports to close the acquisition as proposed, and the transaction would not be subject to a financing condition. The March 22 Proposal further noted that JD Sports considered Mr. Longo and the Hibbett senior management team key to the future development and success not just of Hibbett’s business but also of JD Sports’ North American operations, and that JD Sports intended to put in place arrangements to motivate Hibbett senior management through compensation and incentive programs, which JD Sports would look forward to discussing with Hibbett senior management at an appropriate time and with the consent of the Board. The March 22 Proposal detailed remaining due diligence items to be completed and stated that the proposal had the full support of the JD Sports Board and of the Pentland Group as JD Sports’ majority shareholder, and that JD Sports expected to obtain from the Pentland Group an irrevocable undertaking to vote in favor of the transaction in the event that a shareholder vote of JD Sports was required to approve the transaction.
Also on March 22, 2024, Freshfields conveyed to Bass Berry an initial markup of the draft Merger Agreement, which provided, among other things, for (i) a “fiduciary out” termination fee of 4.0% of the equity value implied by the transaction, (ii) an “anti-hell or high water” antitrust efforts covenant that would not require JD Sports to engage in any dispositions of assets or agree to limitations on the post-closing business in order to secure regulatory clearance of the transaction, (iii) a restriction on the ability of Hibbett to pay dividends during the period between signing and closing of the transaction and (iv) the potential, subject to due diligence, for certain unvested Hibbett equity awards to be subject to rollover arrangements at the closing of the transaction. The markup also included certain buyer-favorable changes to the provisions governing the right to terminate the Merger Agreement and the nature of the parent guarantee from JD Sports on the obligations of Parent and Merger Sub, among other provisions, which were thereafter negotiated by the parties through the execution of the Merger Agreement. On March 23, 2024, Mr. Longo sent Mr. Schultz a text message confirming his receipt of the updated proposal and stating that the Board was reviewing such proposal and would provide a response after it completed its review.
On March 27, 2024, the Board held a virtual meeting (the “March 27 Board Meeting”), attended by Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry, to review the March 22 Proposal and markup of the Merger Agreement and consider next steps. Representatives of Solomon Partners recounted the history of discussions with JD Sports, including in particular the challenges that the difficult retail environment during the fourth quarter of Hibbett’s fiscal 2024 and early fiscal 2025 had presented for forecasting performance, resulting in missed projections on fiscal 2024 EBITDA relative to both the Initial Hibbett Projections provided to JD Sports in November 2023 and against the updated fiscal 2024 year-end projection provided following the holiday sales season in early January 2024. The Solomon Partners representatives reviewed trading performance of other companies in the sector, including JD Sports, which had declined greater than 25% following a lowering of guidance in early January 2024, and Nike, which had declined 7% the day after its third quarter earnings announcement earlier in March 2024 and had declined 22% over the previous year, as compared to the Company, which had traded up approximately 52% from October 9, 2023 (the date of the original meeting between Mr. Longo and Mr. Schultz) to March 22, 2024 (the date of the revised proposal from JD Sports) and had only temporarily suffered a slight decline following the announcement of earnings below expectations and more conservative guidance on March 15, 2024. The Solomon Partners representatives discussed with the Board the likelihood that Hibbett’s stock price was affected by rumors of the potential transaction, in light of the contemporaneous approach of all four interested parties in October 2023, the private and public questions from one of Hibbett’s covering analysts prior to and during the March 15, 2024 earnings conference call, and the general resilience of Hibbett’s price appreciation during late 2023 and early 2024, a period during which certain of Hibbett’s peer companies in the industry had experienced recalibrating declines in trading prices following announcement of challenged results.
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At the March 27 Board Meeting, the Solomon Partners representatives then reviewed the primary terms of the March 22 Proposal, including principally the $85.00 per share proposed price, which reflected an implied valuation of Hibbett at 5.8x last 12 months EBITDA, or 6.0x last 12 months EBITDA adjusted to eliminate the effect of the 53rd week in Hibbett’s 2024 fiscal year, and the effect of a non-recurring EBITDA benefit due to a change in Hibbett’s estimate of gift card breakage. The Solomon Partners representatives compared the value inherent in the March 22 Proposal to updated preliminary valuation analyses, including a preliminary discounted cash flow analysis, as well as comparative stock price analysis, and other measures. The Bass Berry representatives reviewed certain material issues presented by the markup of the Merger Agreement submitted by JD Sports and reviewed certain fiduciary duty considerations associated with the Board’s evaluation of the March 22 Proposal and the markup of the Merger Agreement. The Solomon Partners representatives then discussed potential responses to the proposal. The Board conducted an extensive discussion of these considerations, including in an executive session involving only the members of the Board, Mr. Benck and representatives of Bass Berry. Following discussion, the Board determined to direct Solomon Partners to convey to Baird and JD Sports that the value reflected by the March 22 Proposal was insufficient, but the Board was unwilling to make a counteroffer on price and other fundamental terms such as the “fiduciary out” termination fee when so many contingencies remained on JD Sports’ proposal, in the form of open due diligence items and significant open issues presented by the Merger Agreement markup, including with respect to the level of antitrust efforts to which JD Sports would commit. Accordingly, the Board’s view was that the parties and their advisors should continue to work to eliminate these contingencies and then see whether an agreement on price and other fundamental transaction terms could be reached. While the Board was not willing to make a specific counteroffer on price under these circumstances, the Board directed Solomon Partners to convey that the Board believed a valuation multiple in line with what Hibbett had paid in its acquisition of City Gear in 2018, approximately, 6.3x EBITDA, was an important point of reference for negotiation purposes.
Solomon Partners conveyed the Board’s response to the March 22 Proposal to Baird on March 28, 2024, and Baird indicated that it would confer with JD Sports and respond in due course.
On March 30, 2024, Baird and Solomon Partners had a further call during which Baird conveyed JD Sports’ intention, and direction to its advisors, to continue to work to complete due diligence and negotiate the open issues in the Merger Agreement in advance of a further discussion on fundamental transaction terms, including price.
On April 2, 2024, Freshfields conveyed to Bass Berry a markup of the Company Disclosure Letter.
On April 3, 2024, Mr. Schultz sent a text message to Mr. Longo to inquire about the Merger Agreement and deal progress generally. Mr. Longo replied that a revised draft of the Merger Agreement would be provided that day. Later on April 3, 2024, representatives of Bass Berry and Freshfields had a call to discuss certain open issues in the Merger Agreement, and thereafter Bass Berry conveyed a revised draft of the Merger Agreement to Freshfields. The revised draft provided, among other things, for (i) a “hell or high water” regulatory efforts covenant, (ii) the ability of Hibbett to continue paying quarterly dividends during the period between signing and closing of the transaction without the consent of JD Sports and (iii) the cash-out of all unvested Hibbett equity awards at the closing of the transaction based on the Transaction Consideration. The revised draft did not contain a proposal as to the size of the “fiduciary out” termination fee pending further discussion between the parties on fundamental transaction terms, including price.
On April 5, 2024, representatives of Freshfields and Bass Berry had a call to discuss open items relating to the employee benefits matters and the treatment of Hibbett equity awards in the Merger Agreement.
On April 7, 2024, representatives of Freshfields and Bass Berry had a further call to discuss open items in the Merger Agreement, and thereafter Freshfields conveyed a revised draft of the Merger Agreement to Bass Berry. Among other changes, the revised draft provided for (i) a “fiduciary out” termination fee set at a size of 3.25% of the equity value implied by the transaction, (ii) an “anti-hell or high water” regulatory efforts standard, paired with a reverse termination fee set at a size of 3.25% of the equity value implied by the transaction payable by JD Sports in the event that the Merger failed to close for reasons relating to antitrust laws, (iii) a restriction on the ability of Hibbett to pay dividends during the period between signing and closing of the transaction and (iv) certain unvested equity awards to be subject to rollover arrangements at the closing of the transaction.
On April 8, 2024, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated, for the primary purpose of reviewing in detail
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the material open issues in the draft Merger Agreement. The representatives of Bass Berry reviewed the open issues presented by the most recent draft of the Merger Agreement, including the size of the termination fees and the interaction between the proposed reverse termination fee and the covenants of JD Sports governing its efforts to secure antitrust clearance, the proposed treatment of outstanding equity awards of Hibbett employees, the provisions giving either side the right to terminate the Merger Agreement in certain circumstances, and the nature of the guarantee by JD Sports of the obligations of Parent and Merger Sub, among others. The Board provided direction to Bass Berry, Mr. Benck and Solomon Partners on seeking resolution of these items and directed them to continue to advance negotiations with JD Sports and its advisors consistent with those directions and report back to the Board.
On April 10, 2024, representatives of Bass Berry and Freshfields had a call to discuss open items in the Merger Agreement. In that discussion, the Freshfields representatives conveyed that JD Sports would require an opportunity to discuss post-closing employment arrangements with Mr. Longo, Mr. Briskin and potentially other members of Hibbett senior management at an appropriate point and with the consent of the Board in order for JD Sports to be willing to proceed to execution of the Merger Agreement.
On April 11, 2024, representatives of Bass Berry and Freshfields held a series of calls to negotiate open items in the Merger Agreement. The Bass Berry representatives conveyed the Board’s position that the size of the termination fees comprised a fundamental transaction term that should be deferred to the discussion of such items along with price. The Bass Berry and Freshfields representatives also conducted a further discussion of JD Sports’ desire to discuss post-closing employment arrangements with certain of Hibbett senior management, in which the Freshfields representatives confirmed JD Sports’ position that in order to be willing to proceed with a transaction, JD Sports would need to have definitive employment agreements with Messrs. Longo and Briskin in place concurrently with execution of the Merger Agreement, and would like to have discussions with other members of senior management as well. The representatives of Freshfields further confirmed that all such discussions would take place only after the parties had reached tentative agreement in principle on fundamental transaction terms, including price, and only with the prior consent of the Board. The Freshfields representatives also conveyed that, after further analysis by JD Sports and its financial and legal advisors, the proposed transaction would comprise a “Class 2 Transaction” under the rules of the FCA and, as such, would not require a vote of JD Sports’ shareholders. Following these negotiation calls, on April 11, 2024, Bass Berry sent to Freshfields a revised draft of the Merger Agreement, which, consistent with the Board’s position relayed on the negotiation calls previously, accepted the proposal for an “anti-hell or high water” regulatory efforts covenants paired with a reverse termination fee payable by JD Sports contingent upon the parties’ reaching agreement on the size of the termination fees as part of the discussion of fundamental transaction terms. The revised draft of the Merger Agreement further provided, among other things, for (i) the ability of Hibbett to continue paying quarterly dividends during the period between signing and closing of the transaction without the consent of JD Sports and (ii) the cash-out of all unvested Hibbett equity awards at the closing of the transaction based on the Transaction Consideration.
On April 12, 2024, Bass Berry conveyed a revised draft of the Company Disclosure Letter to Freshfields.
On April 12, 2024, Freshfields sent a further revised draft of the Merger Agreement to Bass Berry providing, among other things, for (i) a restriction on the ability of Hibbett to pay dividends during the period between signing and closing of the transaction and (ii) the rollover at the closing of the transaction of certain unvested equity awards held by employees other than certain members of management with change-in-control agreements in place. The revised draft of the Merger Agreement did not include proposals for the size of the termination fees. That evening, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated, to discuss open issues in the Merger Agreement and determine an approach to next steps in the overall negotiation. The Bass Berry representatives provided an update on open issues presented by the most recent draft of the Merger Agreement, including whether payment of Hibbett’s regular quarterly dividend should be prohibited between signing and closing, the size of the termination fees, and the proposed treatment of outstanding equity awards held by employees. Following discussion, the Board unanimously approved a direction to Solomon Partners and Bass Berry to convey a counterproposal to JD Sports and its advisors consisting of (i) a price of $91.80 per share, which value collectively factored in, among other things, (A) the Board’s previous view of the 6.3x EBITDA multiple as a point of reference for negotiation purposes, (B) the suspension of the quarterly dividend for nine months following the execution of the Merger Agreement, after which, if the Merger were still not closed, the Board
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could determine to pay a quarterly dividend not to exceed $0.25 per share, and (C) the rollover at the closing of the Merger of Hibbett equity awards granted in March 2024 and held by employees other than certain members of management with change-in-control agreements in place, with all other Hibbett equity awards being cashed out at the closing of the Merger based on the Transaction Consideration; (ii) a “fiduciary out” termination fee set at a size of 3.25% of the equity value implied by the transaction; (iii) a reverse termination fee for antitrust failure set at a size of 6.5% of the equity value implied by the transaction; and (iv) the aforementioned rollover at the closing of the Merger of Hibbett equity awards granted in March 2024.
On April 13, 2024, representatives of Solomon Partners and Baird had a call, during which the Solomon Partners representatives conveyed the Board’s counteroffer to Baird. Baird committed to convey the counteroffer to JD Sports and respond in due course.
On April 14, 2024, Bass Berry conveyed to Freshfields a revised draft of the Merger Agreement consistent with the Board’s counteroffer that had been relayed on April 13, 2024.
On April 15, 2024, representatives of Baird and Solomon Partners had a call, during which the Baird representatives conveyed JD Sports’ response to the Board’s counteroffer, consisting of (i) a price of $86.25 per share, again citing erosion of Hibbett’s performance and reduction in guidance since the Initial Hibbett Projections in November 2023, (ii) acceptance of the 3.25% “fiduciary out” termination fee, (iii) a $53.5 million reverse termination fee for antitrust failure, (iv) a restriction on the ability of Hibbett to pay dividends during the period between signing and closing of the transaction, and (v) a proposal that all employees’ equity awards granted prior to January 1, 2023 accelerate (to the extent not already vested when the closing occurs) and be paid out at closing, but all other awards (including those subject to change-in-control agreements, which would need to be waived) be converted to cash awards subject to the original vesting requirements. In addition, the Baird representatives noted that JD Sports’ willingness to proceed with execution of the Merger Agreement remained subject to JD Sports reaching concurrent agreement with Messrs. Longo and Briskin on post-closing employment agreements, to be negotiated only after agreement between the Board and JD Sports on principal transaction terms and only with the consent of the Board.
On April 15, 2024, Freshfields conveyed to Bass Berry a revised draft of the Merger Agreement reflecting JD Sports’ most recent offer, among other changes. Freshfields also conveyed a revised draft of the Company Disclosure Letter to Bass Berry that same day.
Also on April 15, 2024, Solomon Partners provided the Board with certain updated information regarding Solomon Partners’ material investment banking relationships with Hibbett, JD Sports, Company A, Company B and Company C during the prior two-year period.
Later on April 15, 2024, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated, to evaluate JD Sports’ latest offer. The representatives of Solomon Partners and Bass Berry reviewed the terms of the offer, and the Bass Berry representatives provided commentary on other open issues in the most recent draft of the Merger Agreement. Messrs. Longo and Volke also provided an update on results from the recently completed second period of fiscal 2025. Following discussion, the Board unanimously approved a direction to Solomon Partners and Bass Berry to convey a counterproposal consisting of (i) a price of $88.00 per share, (ii) confirmation of the Board’s agreement as to both termination fee amounts, (iii) acceptance of the restriction on dividends during the period between signing and closing, and (iv) acceptance of JD Sports’ most recent position on treatment of Hibbett equity awards, other than for those subject to contractual change-in-control agreements which the Board proposed would continue to accelerate and be paid out at the closing of the transaction.
On April 16, 2024, representatives of Solomon Partners and Baird had a call, during which the Solomon Partners representatives conveyed the Board’s position. The Baird representatives committed to convey the Board’s position to JD Sports and respond in due course.
On April 17, 2024, representatives of Baird and Solomon Partners had a call, during which the Baird representatives conveyed JD Sports’ position, consisting of (i) a price of $87.50 per share, (ii) acceptance of the Board’s most recent position on treatment of Hibbett equity awards and (iii) JD Sports’ continued desire to conduct negotiations with Messrs. Longo and Briskin once the parties reached agreement on principal transaction terms and the Board granted consent. The representatives of Baird noted that the proposed price of $87.50 was offered in the spirit of attempting to
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close out negotiations but that this value was as far as JD Sports was willing to move. That same day, representatives of Freshfields and Bass Berry had a call about open issues in the Merger Agreement. Following the call, Freshfields conveyed a revised draft of the Merger Agreement to Bass Berry reflecting these changes.
Later on April 17, 2024, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated, to discuss JD Sports’ most recent proposal. The representatives of Solomon Partners reviewed the proposal and relayed the additional commentary that had been provided by Baird with respect to JD Sports’ unwillingness to move further on price. The Bass Berry representatives provided an update on remaining open items in the Merger Agreement, and discussed with the Board members the fiduciary duty implications of reaching agreement in principle on key transaction terms and then consenting to allow JD Sports to conduct discussions with Messrs. Longo and Briskin regarding their post-closing employment arrangements, which, since first raising the issue, JD Sports had remained consistently firm was a condition to JD Sports’ willingness to proceed with execution of the Merger Agreement. Following discussion, the Board unanimously determined to move forward with a transaction at $87.50 per share, subject to review of a definitive Merger Agreement and, if requested by the Board, delivery of a fairness opinion from Solomon Partners, and to consent to discussions between JD Sports and Messrs. Longo and Briskin regarding their post-closing roles. The Board directed Solomon Partners to convey the Board’s position to JD Sports.
On April 18, 2024, representatives of Solomon Partners and Baird had a call, during which the Solomon Partners representatives conveyed the Board’s agreement in principle to move forward with a transaction at a price of $87.50 per share, subject to final resolution of remaining open issues in the Merger Agreement, and that the Board had consented to discussions between JD Sports and Messrs. Longo and Briskin regarding their post-closing roles. Prior to the commencement of these discussions with the prior consent of the Board on April 18, 2024, no Hibbett executive officer (including Mr. Longo and Mr. Briskin) or non-employee director had discussed or entered into any agreement with Parent or any of its affiliates regarding employment with, or the right to purchase or participate in the equity plans or arrangements of, JD Sports, Parent, the Surviving Corporation or any of their affiliates.
Between April 18 and April 22, 2024, Mr. Schultz, Mr. Longo, Mr. Briskin, other representatives of JD Sports management, Freshfields, and personal legal counsel to Messrs. Longo and Briskin held a number of discussions to negotiate terms of the retention agreements of Messrs. Longo and Briskin, to be entered into contemporaneously with the Merger Agreement and to be effective and conditioned upon the Closing.
Bass Berry conveyed a revised draft of the Company Disclosure Letter to Freshfields on April 19, 2024, and Bass Berry conveyed a revised draft of the Merger Agreement to Freshfields on April 20, 2024. Over the ensuing days through April 22, 2024, Bass Berry, Freshfields, Hibbett and JD Sports held a series of calls and exchanged multiple drafts of each of these documents as the parties worked to resolve any remaining issues and finalize the transaction documentation, culminating in a proposed final execution version of the Merger Agreement, along with all exhibits and schedules thereto (including the Company Disclosure Letter), being sent by Freshfields to Bass Berry early in the evening on April 22, 2024.
Later in the evening on April 22, 2024, the Board held a virtual meeting, in which Messrs. Briskin, Benck and Volke and representatives of Solomon Partners and Bass Berry participated, to review and consider the Merger Agreement and other transaction documentation in final form. Representatives of Bass Berry provided an update on discussions between the parties subsequent to the Board’s April 17, 2024, meeting. Messrs. Longo and Briskin confirmed that their retention agreements with JD Sports were finalized. The representatives of Bass Berry reviewed with the directors their fiduciary duties and a summary of the key terms of final version of the Merger Agreement that had been negotiated with JD Sports and provided to the Board, along with all exhibits and schedules thereto (including the final Company Disclosure Letter), prior to the meeting. Representatives of Solomon Partners presented materials reviewing JD Sports’ proposed acquisition of Hibbett, certain trading metrics of Hibbett Common Stock that suggested that the trading price may have been inflated by market rumors of the transaction, as previously described, and Solomon Partners’ financial analysis of the Merger. At the Board’s request, Solomon Partners delivered its oral opinion to the Board, and subsequently delivered its written opinion to the Board, that, as of April 22, 2024 and based upon and subject to the assumptions, qualifications, limitations and other matters set forth therein, the $87.50 in cash per share of Hibbett Common Stock to be paid to the holders (other than the Excluded Holders) of shares of Hibbett Common Stock, pursuant to the Merger Agreement, was fair from a financial point of view to such holders. For a detailed discussion of Solomon Partners’ opinion, please see below under the caption “Proposal 1: Adoption of the Merger Agreement—Opinion
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of Hibbett’s Financial Advisor. After further discussion of the proposed transaction (see below under the captions Proposal 1: Adoption of the Merger Agreement—Recommendation of the Board of Directors and Reasons for the Merger”), the Board unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Hibbett and its stockholders, (ii) determined that it is in the best interests of Hibbett and its stockholders to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Hibbett of the Merger Agreement, the performance by Hibbett of its covenants and agreements contained in the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (iv) directed that the approval of the adoption of the Merger Agreement be submitted to the holders of Hibbett Common Stock, and (v) subject to the terms of the Merger Agreement, resolved to recommend that the stockholders of Hibbett approve the adoption of the Merger Agreement at the Special Meeting.
Early in the morning of April 23, 2024, the parties executed the Merger Agreement. Prior to the opening of trading of JD Sports stock on the London Stock Exchange and of Hibbett common stock on Nasdaq, JD Sports and Hibbett each issued press releases announcing the execution of the Merger Agreement.
Recommendation of the Board and Reasons for the Merger
Recommendation of the Board to Adopt the Merger Agreement, Thereby Approving the Merger, the Merger Agreement and the Transactions Contemplated by the Merger Agreement
On April 22, 2024, the Board, after considering various factors, including those described under the heading “Reasons for the Merger” below, and after consultation with Hibbett’s independent legal and financial advisors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Hibbett and its stockholders, (ii) determined that it is in the best interests of Hibbett and its stockholders to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Hibbett of the Merger Agreement, the performance by Hibbett of its covenants and agreements contained in the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (iv) directed that the approval of the adoption of the Merger Agreement be submitted to the holders of Hibbett Common Stock, and (v) subject to the terms of the Merger Agreement, resolved to recommend that the Hibbett stockholders approve the adoption of the Merger Agreement at the Special Meeting.
The Board unanimously recommends that you vote (i) “FOR” the proposal to adopt the Merger Agreement, thereby approving the Merger, the Merger Agreement and the transactions contemplated thereby, (ii) “FOR” the non-binding, advisory proposal to approve compensation that will or may be payable by Hibbett to its named executive officers in connection with the Merger and contemplated by the Merger Agreement, and (iii) “FOR” the proposal to approve one or more adjournments of the Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement or to seek a quorum if one is not initially obtained.
Reasons for the Merger
In recommending that Hibbett’s stockholders vote in favor of the proposal to approve the adoption of the Merger Agreement, the Board, including its independent directors, considered a number of potentially positive factors, including, but not limited to, the following (which factors are not necessarily presented in order of relative importance):
Attractive Value. The Board believed that the Transaction Consideration represents attractive value for the shares of Hibbett Common Stock, based on, among other things, the Board’s familiarity with Hibbett’s current and historical financial condition, results of operations, business, competitive position and prospects, as well as Hibbett’s strategic plan and potential long-term value; and, after a thorough review of the process conducted, the Board determined that $87.50 per share in cash pursuant to the terms of the Merger Agreement afforded the best value reasonably available for holders of Hibbett Common Stock.
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Form of Consideration. The Board considered that the Transaction Consideration is all cash, which provides stockholders certainty of value and liquidity for their shares of Hibbett Common Stock, as compared to stock consideration whose value fluctuates, while eliminating exposure to long-term business and execution risks, as well as risks related to the financial markets generally.
Risks Inherent in Hibbett’s Strategic Plan; Strategic Alternatives. The Board considered the Board’s belief that the Merger and the receipt of the Transaction Consideration were more favorable to Hibbett’s stockholders than the alternative of continuing to execute on Hibbett’s existing strategic plan as a standalone public company, which belief was based on and informed by consideration of a number of factors, risks and uncertainties, including:
Hibbett’s historical results of operations, including Hibbett’s recent strategy requiring significant ongoing investments in improving Hibbett’s omni-channel platform to enhance its features and functionality and maximize consumers’ flexibility in interacting with Hibbett’s products, leveraging new technologies to upgrade Hibbett’s logistical and inventory management capabilities, and maintaining steady store growth and continuing to expand Hibbett’s footprint into new communities throughout the United States, which investments in long-term growth have generated challenges to Hibbett’s profitability with uncertain returns;
the fact that several of Hibbett’s key strategic initiatives, including the majority of the foregoing strategic investments in improving Hibbett’s business capabilities, were still in their nascency and were uncertain to deliver long-term results if Hibbett were to remain a standalone company;
Hibbett’s uncertain ability to realize its short-term and long-term strategic goals and meet the Revised Hibbett Projections (which are described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Projections Prepared by Hibbett’s Management” beginning on page 67 of this Proxy Statement) in light of the highly competitive athletic apparel and footwear retail industry, including as evidenced by Hibbett’s financial results for fiscal 2024 failing to meet the Initial Hibbett Projections approved by the Board in November 2023 as well as a reduction to management’s outlook for fiscal 2025 relative to the Initial Hibbett Projections;
Hibbett’s uncertain ability to retain management talent in an intensely competitive market environment;
the macroeconomic factors that in recent years have created significant ongoing challenges for the athletic apparel and footwear retail industry—many of which factors disproportionately affect the underserved communities and customers that are a focus of Hibbett’s business strategy—including significant and unpredictable inflationary pressures as well as high interest rates and levels of consumer debt that have contributed to declines in consumers’ discretionary spending and driven a persistent promotional environment to maintain customer traffic and sales that has challenged profitability, particularly after the withdrawal of stimulus and unemployment benefits and tax relief that were implemented in response to the initial outbreak of the COVID-19 pandemic;
Hibbett’s dependence on developing and maintaining strong relationships with its merchandise vendor partners to supply Hibbett with a strong, fresh mix of branded products that will drive consumer interest and demand, and the risk that a diminution in Hibbett’s relationship with one or more such merchandise vendor partners, a change in such merchandise vendor partners’ own business strategies, or a decline in such merchandise vendor partners’ ability to generate product innovation could have a material and adverse effect on Hibbett’s business, despite potentially being, in whole or in part, outside of Hibbett’s control;
the fact that numerous other participants in the athletic apparel and footwear retail industry are larger and possess greater resources than Hibbett;
continued uncertainty about electoral and geopolitical events both in the United States, where Hibbett operates, and internationally, where many of Hibbett’s key merchandise vendors have their primary manufacturing operations on which Hibbett’s supply chain depends; and
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the risks and uncertainties described in the “risk factors” and “forward looking statements” sections of Hibbett’s disclosures filed with the SEC, including that Hibbett’s actual financial results in future periods could differ materially and adversely from the projected results.
Premium to Market Prices. The Board considered that the Transaction Consideration of $87.50 per share in cash, to be received by the holders of shares of Hibbett Common Stock in the Merger, represents a premium of 20.7% over the closing price of Hibbett Common Stock on April 22, 2024 (the last trading day prior to the public announcement of Hibbett’s entry into the Merger Agreement). The Board further considered the likelihood that the prevailing trading price of Hibbett Common Stock immediately prior to execution of the Merger Agreement may have been inflated by market rumors of the potential transaction, as suggested by (i) the nearly contemporaneous unsolicited approaches by four strategic potential acquirers (which the Board believed was not coincidental, as one interested party had expressly acknowledged that its initial approach was prompted by rumors that Hibbett may be considering a sale transaction), (ii) persistent stock price appreciation beginning in late 2023 after the four unsolicited expressions of interest in an acquisition, despite unfavorable market conditions during portions of that period that led to negative corrections in the prevailing trading prices of many other industry participants, including JD Sports, and (iii) direct questions about Hibbett’s exploration of a sale to JD Sports from at least one covering analyst during March 2024, over a month prior to the announcement of Hibbett’s entry into the Merger Agreement. The Board’s considerations included that the Transaction Consideration of $87.50 per share represents a premium of:
approximately 83.3% over the closing stock price of $47.74 on October 9, 2023, the date of the initial meeting between Hibbett’s CEO, Mike Longo, and JD Sports’ CEO, Régis Schultz, at which JD Sports’ interest in an acquisition of Hibbett was first proposed;
approximately 85.1% over the closing stock price on October 24, 2023, the last trading day prior to the Board’s initial meeting at which the Board considered whether to allow the interested parties to move forward in initial due diligence to develop their expressed interest in an acquisition of Hibbett and see if more definitive proposals would result;
approximately 25.4% over the closing stock price on December 14, 2023, the last trading day prior to the bid deadline for initial proposals from the interested parties and JD Sports’ submission of its initial written proposal to acquire Hibbett; and
approximately 22.6% over the volume weighted average stock price of shares of Hibbett Common Stock during the 90-day period ended April 19, 2024, the last trading day prior to the date of the Board meeting on which the Merger Agreement was approved.
Valuation Multiple. The Board considered that the Transaction Consideration of $87.50 per share in cash, to be received by the holders of shares of Hibbett Common Stock in the Merger, represents a valuation of Hibbett at a multiple of approximately:
5.9x Hibbett’s fiscal 2024 EBITDA;
6.2x Hibbett’s last 12 months (“LTM”) EBITDA as adjusted to eliminate the effect of the 53rd week in Hibbett’s fiscal 2024 fiscal year and the effect of a non-recurring EBITDA benefit due to a change in Hibbett’s estimate of gift card breakage; and
5.7x Hibbett’s fiscal 2025 estimated EBITDA (as forecasted in the Revised Hibbett Projections);
all of which are considerably greater than Hibbett’s historical median trading multiples over the past one-, three- and five-year periods, as of April 19, 2024, of 3.4x, 3.6x and 3.8x LTM EBITDA, respectively.
Opinion of Solomon Partners. The financial analysis reviewed and discussed with the Board by representatives of Solomon Partners, and the oral opinion of Solomon Partners, subsequently confirmed in writing, dated April 22, 2024, to the Board to the effect that, as of that date and based upon and subject to the limitations, qualifications and assumptions described in Solomon Partners’ written opinion, the Transaction Consideration of $87.50 per share to be paid to the holders (other than the
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Excluded Holders) of shares of Hibbett Common Stock, pursuant to the Merger Agreement, was fair, from a financial point of view, to such holders, as more fully described below in the section entitled “Proposal 1: Adoption of the Merger Agreement—Opinion of Hibbett’s Financial Advisor” beginning on page 61 of this Proxy Statement.
Full Exploration of Inbound Interest. The Board considered that, following the nearly contemporaneous receipt by Hibbett during October 2023 of unsolicited expressions of interest in an acquisition of Hibbett from four highly capable parties (including JD Sports), all of which are within Hibbett’s industry, Hibbett, acting at the Board’s direction and with the assistance of Solomon Partners as its independent financial advisor, provided significant nonpublic financial and business information, availability of senior management, and opportunity to conduct due diligence in support of submitting an acquisition proposal to all four interested parties. Of these four parties, despite their equal access to this information, their extensive knowledge of and experience in Hibbett’s industry, and the presence of potential business synergies, all of the parties other than JD Sports declined to submit any formal proposal, with certain parties indicating in part their belief that they could not put forward a compelling proposal relative to the then-prevailing trading price of Hibbett based on their internal valuations. Further, the Board determined, with the assistance of Solomon Partners’ advice and knowledge of Hibbett’s industry, that these four parties represented the most logical potential buyers of Hibbett, based on their resources and ability to complete a transaction of this type and size, their potential strategic rationales, and the potential business synergies they could generate, and it was therefore unlikely that any other parties, whether strategic or financial, would be able to put forward a proposal that would generate greater value for Hibbett stockholders.
Loss of Opportunity. The Board considered the possibility that, if the Board declined to approve the Merger Agreement, there may not be another opportunity for Hibbett’s stockholders to receive a comparably priced offer with a comparable level of closing certainty.
Timing of Closing. The Board considered that the Merger is anticipated to be completed during the third quarter of the 2024 calendar year, a relatively expedient timeframe for closing that would mitigate the potential risks to the business during the interim operating period, including due to uncertainties experienced by Hibbett’s customers, merchandise vendor partners, employees and other stakeholders.
Arms-Length Negotiations. The Board considered that the Board and Hibbett’s senior management, in coordination with Hibbett’s independent legal and financial advisors, vigorously negotiated on an arms-length basis with JD Sports with respect to price and other terms and conditions of the Merger Agreement, including obtaining a per share price increase of $2.50 from the price of $85.00 per share proposed by JD Sports’ final indication of interest as reflected in its March 22 Proposal to a price of $87.50 per share pursuant to the Merger Agreement, and the Board’s belief that it had negotiated the best value and terms reasonably attainable from JD Sports.
Terms of the Merger Agreement. The Board considered that the terms of the Merger Agreement, including the respective representations, warranties, covenants and termination rights of the parties and the termination fees payable by Hibbett and Parent under certain circumstances, are reasonable and customary. The Board also believed that the terms of the Merger Agreement included the most favorable terms reasonably attainable from JD Sports.
Conditions to the Consummation of the Merger; Likelihood of Closing. The Board considered the likelihood of satisfaction of conditions to closing and the consummation of the transactions contemplated by the Merger Agreement in light of the conditions in the Merger Agreement to the obligations of Parent and Merger Sub.
Regulatory Approvals; Parent Termination Fee. The Board viewed the Merger Agreement as providing reasonable assurances as to the likelihood that the Merger will receive all necessary regulatory approvals. To that end, the Board further considered the potential length of the regulatory approval process and that the Merger Agreement provides that, subject to certain exceptions, it may not be terminated until January 23, 2025, which may be automatically extended by three (3) months on each
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of two occasions under specified circumstances, resulting in a potential final end date of July 23, 2025, together with the fact that Hibbett would be entitled to receive the Parent Termination Fee from Parent in certain circumstances in which regulatory approvals are not received and the Merger Agreement is terminated.
Financing; No Financing Condition; Full Specific Performance Remedy; Parent Guarantee. The Board considered the fact that Parent has committed to provide all of the financing necessary for the consummation of the Merger and that the Merger Agreement is not subject to a financing condition. Further, the Board considered Hibbett’s general entitlement to specifically enforce Parent’s obligation to pay the Transaction Consideration and cause the completion of the Merger, and the fact that JD Sports is guaranteeing the obligations of Parent and Merger Sub under the Merger Agreement.
Parent Termination Fee. The Board considered the ability of Hibbett to receive, under certain circumstances, the Parent Termination Fee, as described in the section entitled “Terms of the Merger Agreement—Termination Fees” beginning on page 103 of this Proxy Statement.
Ability to Respond to Certain Unsolicited Takeover Proposals. The Board considered that, while the Merger Agreement restricts Hibbett’s ability to solicit competing bids to acquire Hibbett, the Board has rights, under certain circumstances, to engage in discussions with, and provide information to, third parties submitting unsolicited takeover proposals and to terminate the Merger Agreement in order to enter into an alternative acquisition agreement that the Board determines to reflect a Company Superior Proposal (as defined in the section entitled “Terms of the Merger Agreement—Restrictions on Solicitations of Other Offers” beginning on page 90 of this Proxy Statement), subject to payment of the Company Termination Fee. The Board further considered that the timing of the Merger would provide ample opportunity for any third parties to submit proposals and that the terms of the Merger Agreement, including the size of the termination fee (which is consistent with or below fees in comparable transactions), would be unlikely to deter such third parties from submitting such proposals.
Change of Recommendation. The Board considered that it has the right to make a Company Adverse Recommendation Change (as defined in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement) to Hibbett’s stockholders in the event of a Company Superior Proposal or an Intervening Event (as defined in the section entitled “Terms of the Merger Agreement—Adverse Recommendation Changes” beginning on page 93 of this Proxy Statement) if the Board reasonably determines in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to do so would be reasonably expected to be inconsistent with the directors’ fiduciary duties under applicable law, subject to payment of the Company Termination Fee if Parent and Merger Sub terminate the Merger Agreement in response to such Company Adverse Recommendation Change.
Stockholder Approval. The Board considered that the consummation of the Merger is subject to the approval of Hibbett’s stockholders, who will have the opportunity to adopt or reject the Merger Agreement.
Appraisal Rights. The Board considered the availability of appraisal rights with respect to the Merger for Hibbett stockholders who properly exercise their rights under the DGCL, which would give these stockholders the ability to seek and be paid a judicially determined appraisal of the “fair value” of their shares at the completion of the Merger, as described in the section entitled “Appraisal Rights” beginning on page 111 of this Proxy Statement.
The Board also considered and balanced against the potentially positive factors a number of uncertainties, risks and other potentially negative factors in its deliberations concerning the Merger and the other transactions contemplated by the Merger Agreement, including, but not limited to, the following (which factors are not necessarily presented in order of relative importance):
No Stockholder Participation in Future Growth or Earnings. The Board considered that Hibbett’s stockholders will lose the opportunity to realize the potential long-term value that could occur if Hibbett continued as an independent public company and was able to successfully execute on its current strategy.
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Impact of Announcement on Hibbett. The Board considered that the announcement and pendency of the Merger, or the failure to consummate the Merger, may disrupt Hibbett’s business operations or divert employees’ attention away from Hibbett’s day-to-day operations, result in significant costs to Hibbett or harm Hibbett’s relationships with its employees and/or its merchandise vendor partners.
Tax Treatment. The Board considered that the all-cash transaction would be taxable to holders of Hibbett Common Stock for U.S. federal income tax purposes.
Closing Certainty and Potential Delays. The Board considered the risk that the Merger may not be completed despite the parties’ efforts or that completion of the Merger may be unduly delayed, even if the requisite approval is obtained from Hibbett stockholders, including the possibility that conditions to the parties’ obligations to complete the Merger may not be satisfied (including the possibility that applicable regulatory approvals may not be obtained), and the potential resulting disruptions to Hibbett’s business.
Pre-Closing Covenants. The Board considered the restrictions in the Merger Agreement on Hibbett’s conduct of business prior to completion of the Merger, which could delay or prevent Hibbett from undertaking business opportunities that may arise or taking other actions with respect to its operations during the pendency of the Merger without Parent’s consent and the prohibition on Hibbett paying dividends following the signing of the Merger Agreement and prior to completion of the Merger.
No Solicitation. The Board considered the restrictions in the Merger Agreement on Hibbett’s ability to solicit competing bids to acquire Hibbett during the pendency of the Merger and that, subject to certain conditions set forth in the Merger Agreement, in the event of Hibbett’s receipt of a Company Superior Proposal, Hibbett is required to negotiate in good faith with Parent (if requested by Parent) regarding revisions to the Merger Agreement, which the Board must take into account in determining whether to enter into an alternative acquisition agreement with respect to such Company Superior Proposal.
Adverse Recommendation Change. The Board considered the restrictions in the Merger Agreement on the Board’s ability to make a Company Adverse Recommendation Change, and that, subject to certain conditions set forth in the Merger Agreement, in the event of a potential Company Adverse Recommendation Change by the Board, Hibbett is required to negotiate in good faith with Parent (if requested by Parent) regarding revisions to the Merger Agreement, which the Board must take into account in determining whether to make a Company Adverse Recommendation Change.
Termination Fee. The Board considered the Company Termination Fee that could become payable to Parent under specified circumstances, including upon the termination of the Merger Agreement in order to enter into an alternative acquisition agreement with respect to a Company Superior Proposal, which may discourage third parties that might otherwise have an interest in a business combination with, or acquisition of, Hibbett from making unsolicited proposals (although the Board concluded that the termination fee is reasonable in amount, consistent with or below fees in comparable transactions and will not unduly deter any other party that might be interested in acquiring Hibbett).
Loss of Key Personnel. The Board considered the risk that, despite retention efforts prior to consummation of the Merger, Hibbett may lose key personnel.
Litigation. The Board considered the risk of potential litigation relating to the Merger that could be instituted against Hibbett or its directors and officers, and the potential effects of any outcomes related thereto.
Expenses. The Board considered the risk that, if the Merger is not consummated, Hibbett will, with certain exceptions, be required to pay its own expenses associated with the Merger Agreement and the Merger.
Director and Officer Interests. The Board considered that Hibbett’s directors and officers may have interests in the Merger that are different from, or in addition to, those of Hibbett stockholders generally, as described in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “The Merger—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on pages 109 and 70 of this Proxy Statement, respectively.
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Forward-Looking Statements. The Board considered risks of the type and nature described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”, beginning on page 27 of this Proxy Statement.
After taking into account all of the factors set forth above, as well as others, the Board concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Merger were outweighed by the potential benefits of, and potentially positive factors associated with, the Merger to Hibbett’s stockholders.
The foregoing discussion of factors considered by the Board is not intended to be exhaustive, but summarizes the material factors considered by the Board. In light of the variety of factors considered in connection with their evaluation of the Merger Agreement and the Merger, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations and recommendations. Moreover, each member of the Board applied his or her own personal business judgment to the process and may have given different weight to different factors. The Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determinations. The Board based its recommendations on the totality of the information presented, including thorough discussions with, and questioning of, Hibbett’s senior management and the Board’s independent legal and financial advisors. This explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this Proxy Statement.
Opinion of Hibbett’s Financial Advisor
Solomon Partners provided its oral opinion to the Board, and subsequently delivered its written opinion to the Board that, as of April 22, 2024, and based upon and subject to the assumptions, qualifications, limitations and other matters set forth therein, the Transaction Consideration to be paid to the holders (other than the Excluded Holders) of shares of Hibbett Common Stock, pursuant to the Merger Agreement, was fair from a financial point of view to such holders.
The full text of the written opinion of Solomon Partners, dated April 22, 2024, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached to this Proxy Statement as Annex B. Solomon Partners provided its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The Solomon Partners opinion does not constitute a recommendation to any holder of shares of Hibbett Common Stock as to how any such holder should vote with respect to the Merger or act on any matter relating to the Merger or any other matter.
For purposes of its opinion, Solomon Partners:
reviewed certain publicly available financial statements and other information of Hibbett;
reviewed certain historical, internal financial statements and other financial and operating data for Hibbett prepared and provided to Solomon Partners by Hibbett’s management and approved for Solomon Partners’ use by Hibbett;
reviewed the Projections provided to Solomon Partners by Hibbett’s management and approved for Solomon Partners’ use by the Board, as more fully described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Projections Prepared by Hibbett’s Management” beginning on page 67 of this Proxy Statement;
discussed the past and current operations, financial condition and prospects of Hibbett with Hibbett’s management;
reviewed the reported prices and trading activity of the shares of Hibbett Common Stock;
compared the financial performance and condition of Hibbett and the reported prices and trading activity of the shares of Hibbett Common Stock with that of certain other publicly traded companies that Solomon Partners deemed relevant;
reviewed publicly available information regarding the financial terms of certain transactions that Solomon Partners deemed relevant, in whole or in part, to the Merger;
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participated in certain discussions among management and other representatives of each of Parent and Hibbett;
reviewed the Merger Agreement; and
performed such other analyses and reviewed such other material and information as Solomon Partners deemed appropriate.
Solomon Partners assumed and relied upon the accuracy and completeness of the information reviewed by it for the purposes of this opinion, and Solomon Partners did not assume any responsibility for independent verification of such information and relied on such information being complete and correct. Solomon Partners relied on assurances of Hibbett’s management that they are not aware of any facts or circumstances that would make such information inaccurate or misleading in any respect material to Solomon Partners’ analysis or opinion. With respect to the Projections, Solomon Partners assumed that they were reasonably prepared on bases reflecting the best currently available estimates and judgments of Hibbett’s management. Solomon Partners did not conduct a physical inspection of the facilities or property of Hibbett. Solomon Partners did not assume any responsibility for or perform any independent valuation or appraisal of the assets or liabilities of Hibbett, nor was Solomon Partners furnished with any such valuation or appraisal. Furthermore, Solomon Partners did not consider any tax, accounting, legal or regulatory effects of the Merger or the transaction structure on any person or entity.
Solomon Partners assumed that the Merger would be consummated in accordance with the terms of the Merger Agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary governmental, regulatory or third-party approvals, consents, waivers and releases for the Merger, no delay, limitation, restriction or condition would be imposed or occur that would have an adverse effect on Hibbett or the contemplated benefits of the Merger or that otherwise would be in any respect material to Solomon Partners’ analysis or opinion. Solomon Partners further assumed that all representations and warranties set forth in the Merger Agreement were and would be true and correct as of all the dates made or deemed made and that all parties to the Merger Agreement will comply with all covenants of such parties thereunder.
Solomon Partners’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and other information made available to Solomon Partners as of April 22, 2024. Although subsequent developments may affect its opinion, Solomon Partners has no obligation to update, revise or reaffirm its opinion. In particular, Solomon Partners did not express any opinion as to the prices at which the Hibbett Common Stock may trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Hibbett, Parent or the Merger, or as to impact of the Merger on the solvency or viability of Hibbett, Parent or Merger Sub or the ability of Hibbett, Parent or Merger Sub to pay their respective obligations when they come due. Furthermore, Solomon Partners’ opinion did not address Hibbett’s underlying business decision to undertake the Merger, and Solomon Partners’ opinion did not address the relative merits of the Merger as compared to any alternative transactions or business strategies that might be available to Hibbett. Prior to the delivery of its opinion, Solomon Partners was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, Hibbett or any other alternative transaction. Solomon Partners’ opinion was limited to the fairness, from a financial point of view, to the holders (other than the Excluded Holders) of shares of Hibbett Common Stock, as of the date of the opinion, of the Transaction Consideration to be paid to such holders pursuant to the Merger Agreement, and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding entered into in connection with the Merger. Solomon Partners expressed no view as to, and its opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Merger, or any class of such persons, relative to the Transaction Consideration to be paid to the holders (other than the Excluded Holders) of shares of Hibbett Common Stock pursuant to the Merger Agreement. The issuance of the opinion by Solomon Partners was authorized by Solomon Partners’ fairness opinion committee.
The following summarizes the significant financial analyses performed by Solomon Partners and provided to, and reviewed with, the Board in connection with the delivery of Solomon Partners’ opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Solomon Partners’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses.
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Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Solomon Partners’ financial analyses. The following summary, however, does not purport to be a complete description of the financial analyses performed by Solomon Partners, nor does the order of analyses described represent relative importance or weight given to those analyses by Solomon Partners. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 19, 2024, and is not necessarily indicative of current market conditions.
Selected Publicly Traded Companies Analysis
Solomon Partners reviewed and compared certain financial information for Hibbett to corresponding financial information for the following publicly traded corporations in the footwear retail industry (each of which have retail operations in which the majority of the products sold are non-store branded goods) (collectively, the “Selected Companies”):
Shoe Carnival, Inc.;
Caleres, Inc.;
Designer Brands Inc.;
Foot Locker, Inc.;
Genesco Inc.; and
JD Sports Fashion Plc.
Although none of the Selected Companies was directly comparable to Hibbett, the Selected Companies included were chosen by Solomon Partners because they were publicly traded companies which engage in a similar business as Hibbett and with operations that, for purposes of this analysis, may be considered similar to certain operations of Hibbett.
Solomon Partners calculated and compared various financial multiples for the Selected Companies and Hibbett based on historical financial data from publicly available sources and forecasts from Wall Street research available as of April 19, 2024, for the Selected Companies and Hibbett.
With respect to the Selected Companies, Solomon Partners calculated:
the enterprise value (which represents the equity value plus book values of total debt, including capitalized leases, preferred stock and minority interests, less cash and cash equivalents) (“EV”) as a multiple of earnings before interest, tax, depreciation, amortization, and adjusted to exclude non-recurring and extraordinary items (“Adjusted EBITDA”) for the last twelve months as of the end of the last quarter for which financial statements were publicly available (“LTM”); and
EV as a multiple of equity research analysts’ median consensus estimated EBITDA for the twelve-month period ended closest to January 31, 2025 (“CY24E EBITDA”).
The table below summarizes the results of these calculations:
 
Selected Companies
 
 
 
Median
EV as a Multiple of:
 
 
 
LTM Adjusted EBITDA
Range:
4.2x - 6.4x
5.2x
CY24E EBITDA
Range:
4.0x - 6.3x
4.8x
Using the results of the above analysis:
Solomon Partners applied the 4.2x to 6.4x range of EV / LTM Adjusted EBITDA multiples to the LTM Adjusted EBITDA of Hibbett, as of April 19, 2024 (as derived from the Base 2024 Form 10-K), to derive a range of implied enterprise values for Hibbett. Solomon Partners then subtracted the net debt outstanding as of February 3, 2024 (as reflected in the Base 2024 Form 10-K) to derive a range of implied equity values for Hibbett. Solomon Partners then divided this range of implied equity values by
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the number of shares outstanding as of March 21, 2024 (as reflected in the Base 2024 Form 10-K, and including the dilutive effect (using the treasury stock method) of any exercisable Company Options outstanding as of February 3, 2024) to derive a range of implied values per share of Hibbett Common Stock of $63.20 to $98.42.
Solomon Partners applied the 4.0x to 6.3x range of EV / CY24E EBITDA multiples to the 2024 estimated EBITDA of Hibbett, using the Revised Hibbett Projections, to derive a range of implied enterprise values for Hibbett. Solomon Partners then subtracted the net debt outstanding as of February 3, 2024 (as reflected in the Base 2024 Form 10-K) to derive a range of implied equity values for Hibbett. Solomon Partners then divided this range of implied equity values by the number of shares outstanding as of March 21, 2024 (as reflected in the Base 2024 Form 10-K, and including the dilutive effect (using the treasury stock method) of any exercisable Company Options outstanding as of February 3, 2024) to derive a range of implied values per share of Hibbett Common Stock of $64.55 to $101.25.
Selected Precedent Transactions Analysis
Solomon Partners analyzed certain publicly available information relating to the following selected transactions in the retail industry for North America-based targets with the majority of sales conducted in physical retail stores and excluding retailers that primarily sell hardline goods since August 2015 (collectively, the “Selected Transactions”):
Target
Acquiror
Announcement Date
Chico’s FAS, Inc.
Sycamore Partners
Management, L.P.
September 2023
The Michael’s Companies, Inc.
Apollo Global
Management, LLC
March 2021
The Finish Line, Inc.
JD Sports Fashion Plc
March 2018
Belk, Inc.
Sycamore Partners
Management, L.P.
August 2015
Although none of the Selected Transactions is directly comparable to the Merger, the target companies in the Selected Transactions were North America-based companies in the retail industry that were acquired since August 2015 and therefore had operations that, for the purposes of analysis, may be considered similar to certain of Hibbett’s operations and profile, and as such, for purposes of analysis, the Selected Transactions may be considered similar to the Merger.
For each of the Selected Transactions, Solomon Partners calculated and compared the EV of the target company implied by the transaction as a multiple of the LTM Adjusted EBITDA (“LTM Adjusted EBITDA Multiple”) of the target company, based on amounts disclosed in public filings, company press releases and other public sources. The following table presents the results of this analysis:
 
Selected Transactions Range:
Transaction Enterprise Value as a Multiple of:
 
LTM Adjusted EBITDA
4.9x - 6.6x
Based on Solomon Partners’ professional judgment and after taking into consideration, among other things, the observed data described above, Solomon Partners applied the range of EV / LTM Adjusted EBITDA Multiples of 4.9x to 6.6x to the LTM Adjusted EBITDA of Hibbett, as of April 19, 2024 (as derived from the Base 2024 Form 10-K), to derive a range of implied enterprise values for Hibbett. Solomon Partners then subtracted the net debt outstanding as of February 3, 2024 (as reflected in the Base 2024 Form 10-K) to derive a range of implied equity values for Hibbett. Solomon Partners then divided the range of implied equity values by the number of fully diluted shares, including the dilutive effect (using the treasury stock method) of any exercisable Company Options, all Company RSU Awards, Company PSU Awards and Company DSU Awards outstanding as of April 19, 2024, and additional shares related to the ESPP that may be outstanding as of June 30, 2024, in each case, as provided by Hibbett’s management, to derive a range of implied equity values per share of Hibbett Common Stock of $71.57 to $97.06.
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Illustrative Discounted Cash Flow Analysis
Solomon Partners performed an illustrative discounted cash flow analysis on Hibbett using the Revised Hibbett Projections.
Using discount rates ranging from 14.5% to 17.5%, reflecting estimates of Hibbett’s weighted average cost of capital (derived by the application of the Capital Asset Pricing Model, which takes into account certain inputs, including the median of selected public companies’ capital structure, historical beta, cost of long-term debt, after-tax yield on permanent excess cash, if any, and Hibbett’s forecast tax rate, as well as certain financial metrics for the United States financial markets generally), Solomon Partners discounted to present value as of May 4, 2024, (i) the Unlevered Free Cash Flows (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement–Projections Prepared by Hibbett’s Management”), and (ii) a range of illustrative terminal values for Hibbett, which were calculated by applying an illustrative range of exit terminal year EBITDA multiples of 3.5x to 6.5x (which range was selected by Solomon Partners using its judgment after taking into account the historical LTM EBITDA trading multiples for Hibbett and the Selected Companies and the current LTM EBITDA multiples included in the Selected Publicly Traded Companies analysis) to projected terminal year EBITDA for Hibbett as reflected in the Revised Hibbett Projections. Solomon Partners then added the ranges of present values it derived above to derive a range of implied EVs for Hibbett. Solomon Partners then added Hibbett’s estimated net cash as of May 4, 2024, as reflected in the Revised Hibbett Projections, to the range of implied EVs to derive a range of implied equity values for Hibbett. Solomon Partners then divided the range of implied equity values by the number of fully diluted shares, including the dilutive effect (using the treasury stock method) of any exercisable Company Options, all Company RSU Awards, Company PSU Awards and Company DSU Awards as of April 19, 2024, and additional shares related to the ESPP that may be outstanding as of June 30, 2024, in each case, as provided by Hibbett’s management, to derive a range of implied equity values per share of Hibbett Common Stock of $76.66 to $126.33.
Other Factors
Solomon Partners noted for the Board certain additional factors solely for informational purposes, including among other things, the following:
Illustrative Present Value of Future Stock Price Analysis. Solomon Partners performed an illustrative analysis of the implied present value of the future price per share of Hibbett Common Stock, which is designed to provide an indication of the present value of a theoretical future value of a company’s share price as a function of such company’s estimated future EBITDA, net cash and its assumed EV / LTM EBITDA multiple in the future. For this analysis, Solomon Partners first calculated a range of implied enterprise values as of the last day of each of the fiscal years 2025 through 2029 by applying LTM EBITDA multiples of 3.6x (representing Hibbett’s 3-year median LTM EBITDA multiple) to 5.2x (representing the current median LTM EBITDA multiple for the Selected Companies) (which range was selected by Solomon Partners using its judgment after taking into account the historical LTM EBITDA trading multiples for Hibbett and the Selected Companies and current LTM EBITDA multiples included in the Selected Publicly Traded Companies analysis) to the estimated LTM EBITDA for Hibbett for each of the fiscal years 2025 through 2029, as reflected in the Revised Hibbett Projections. Solomon Partners then calculated future equity value by adding the projected net cash as of each respective projected fiscal year assuming annual share repurchases are completed on the first day of each respective fiscal year. Solomon Partners then divided the range of implied future equity values by the number of estimated future fully diluted shares from the Revised Hibbett Projections to derive a range of implied future equity values per share of Hibbett Common Stock. Solomon Partners then discounted those implied future equity values per share back to May 4, 2024, using an illustrative discount rate of 17.5%, reflecting an estimate of Hibbett’s cost of equity derived from certain inputs as described in Illustrative Discounted Cash Flow Analysis above. Solomon Partners then added to those discounted values the future projected quarterly dividends of $0.25 per common share outstanding, also discounted back to May 4, 2024, using the same illustrative discount rate of 17.5%. This analysis resulted in a range of implied present values of $58.45 to $99.10 per share of Hibbett Common Stock.
Historical Share Trading Analysis. Solomon Partners reviewed the historical trading prices for Hibbett Common Stock for the 52-week period ending April 19, 2024, which indicated a range of trading prices per share of $35.28 to $82.00.
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Analyst Price Target Analysis. Solomon Partners reviewed stock price targets for Hibbett Common Stock in recently published, publicly available Wall Street research analyst reports available as of April 19, 2024, which indicated low and high twelve-to-eighteen month (as described by each such research analyst) forward stock price targets for Hibbett ranging from $50.00 to $88.00 per share of Hibbett Common Stock.
Solomon Partners’ illustrative present value of future stock price, historical company share trading analysis and analyst price target analysis were not fundamental valuation methodologies and were not used by Solomon Partners as a basis for rendering its fairness opinion.
Miscellaneous
In arriving at its opinion, Solomon Partners performed a variety of financial analyses, the material portions of which are summarized above. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Solomon Partners’ opinion. In arriving at its fairness determination, Solomon Partners considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Solomon Partners made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Hibbett or the Merger.
Solomon Partners prepared these analyses to provide its opinion to the Board as to the fairness from a financial point of view to the holders (other than the Excluded Holders) of shares of Hibbett Common Stock of the Transaction Consideration to be paid to such holders pursuant to the Merger Agreement. These analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Hibbett, Parent, Solomon Partners or any other person assumes responsibility if future results are materially different from those forecasts.
The Transaction Consideration was determined through arm’s-length negotiations between the Board, JD Sports, and Parent and was approved by the Board. Solomon Partners provided advice to the Board during these negotiations. Solomon Partners did not, however, recommend any specific amount of consideration to Hibbett or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.
As described above, Solomon Partners’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger Agreement. For a discussion of the factors that the Board considered in determining to recommend the approval of the Merger Agreement, please see the section of this Proxy Statement entitled “Proposal 1: Adoption of the Merger Agreement—Recommendation of the Board and Reasons for the Merger” beginning on page 55 of this Proxy Statement. The foregoing summary does not purport to be a complete description of the analyses performed by Solomon Partners in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Solomon Partners attached as Annex B.
Natixis, S.A. (“Natixis”), the holder of a majority of Solomon Partners’ outstanding voting equity, is, together with its affiliates, engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management, insurance, and other financial and non-financial activities and services for various persons and entities. Natixis, its affiliates, employees, and funds, and other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Hibbett, Parent, JD Sports or any of their respective affiliates and third parties, or any currency or commodity that may be involved in the Merger.
The Board selected Solomon Partners as its financial advisor because it is a recognized financial advisory firm that has substantial experience in transactions similar to the Merger. Pursuant to an engagement letter, dated October 31, 2023, the Board engaged Solomon Partners to act as its financial advisor in connection with the
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Merger. The engagement letter provides for a transaction fee that is estimated, based on the information available as of the date of announcement of the Merger Agreement, to consist of (a) $2.5 million, which was payable upon the delivery by Solomon Partners of its opinion, dated as of April 22, 2024, to the Board; and (b) approximately $15.9 million, which is contingent upon the closing of the Merger. In addition, Hibbett has agreed to reimburse Solomon Partners’ expenses and indemnify Solomon Partners against certain liabilities arising out of Solomon Partners’ engagement. Solomon Partners has not, during the two years prior to the date of its opinion, provided any financial advisory services to Hibbett, Parent or JD Sports, for which Solomon Partners received payment. In the future, Solomon Partners, Natixis and their respective affiliates may provide financial advisory services to Hibbett, Parent, JD Sports and/or their respective affiliates, and may receive compensation for rendering such services.
Projections Prepared by Hibbett’s Management
In connection with the Board’s review of strategic alternatives in response to unsolicited expressions of interest in an acquisition of Hibbett from multiple parties, in November 2023, Hibbett’s management prepared unaudited forecasted financial information of Hibbett for the remainder of fiscal year 2024 through fiscal year 2029 (the “Initial Hibbett Projections”), which was used by the Board in connection with its evaluation of the December 15 Proposal made by JD Sports and the Board’s review of strategic alternatives in connection with that evaluation. The Initial Hibbett Projections were used by Solomon Partners for purposes of preparing its preliminary financial analyses provided to the Board on December 18, 2023, in connection with the Board’s consideration of the December 15 Proposal. In addition, the Initial Hibbett Projections (other than assumptions with respect to the projected change in net working capital, which was provided only to Solomon Partners for use in its analyses) were made available to potential counterparties to a strategic transaction, including JD Sports, in connection with their due diligence review of a potential strategic transaction. The Initial Hibbett Projections were prepared in a manner treating Hibbett on a stand-alone basis without giving effect to the Merger, including the impact of negotiating or executing the Merger Agreement, the expenses that may be incurred in connection with consummating the Merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed or the effect of any business or strategic decisions or actions which would likely have been taken if the Merger Agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger.
In February 2024, Hibbett’s management updated, and the Board approved, the Initial Hibbett Projections to reflect a downward revision to management’s forecast for each of the fiscal years 2025 through 2029 after considering, in management’s best judgment, (i) the probable impact of the challenging market environment on Hibbett’s business throughout the forecast period and (ii) Hibbett’s financial performance for the fiscal year ended February 3, 2024 (the “Revised Hibbett Projections,” together with the Initial Hibbett Projections, the “Projections”). The Revised Hibbett Projections were provided by Hibbett to Solomon Partners and were approved by the Board for Solomon Partners’ use and reliance in connection with its financial analyses and opinion provided to the Board on April 22, 2024, in connection with the Board’s consideration of the transactions contemplated by the Merger Agreement, as described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Opinion of Hibbett’s Financial Advisor” beginning on page 61 of this Proxy Statement. In addition, the Revised Hibbett Projections (other than assumptions with respect to the projected change in net working capital, which was provided only to Solomon Partners for use in its analyses) were made available to JD Sports, in connection with its due diligence review of a potential transaction. This Proxy Statement includes a summary of the Initial Hibbett Projections and the Revised Hibbett Projections in order to provide Hibbett’s stockholders with access to additional information that was previously made available to Solomon Partners.
The Projections were not prepared with a view toward public disclosure and the summary thereof is included in this Proxy Statement only because such information was made available to certain parties as described in the preceding two paragraphs. The summary of the Projections is not being included in this Proxy Statement to influence your decision whether to vote for the proposal to adopt the Merger Agreement. The Projections were not prepared with a view toward compliance with the published guidelines established by the SEC or the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information, or GAAP (and the Projections do not include footnote disclosures as may be required by GAAP). Neither Ernst & Young, nor any other audit firm has audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Projections and, accordingly, Ernst & Young has not expressed an opinion or any other form of assurance with respect thereto. The Ernst & Young report included in the 2024
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Form 10-K, which is incorporated by reference into this Proxy Statement, relates to Hibbett’s historical financial information and does not extend to the Projections and should not be read to do so.
The Projections are subject to estimates and assumptions in many respects and, as a result, are necessarily subject to interpretation. While presented with numerical specificity, the Projections are based upon a variety of estimates and assumptions that are inherently uncertain, though considered reasonable by Hibbett management as of the date of preparation of each set of such Projections. These estimates and assumptions may prove to be inaccurate for any number of reasons, including general economic conditions, competition and the risks discussed in this Proxy Statement under the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this Proxy Statement. The Projections also reflect assumptions as to certain business decisions that are subject to change. There can be no assurance that the forecasts contained in the Projections will be realized, and actual results may differ materially from those shown therein. Generally, the further out the period to which Projections relate, the more unreliable the information becomes.
The information in the Projections is not factual and should not be relied upon as being necessarily indicative of future results, and Hibbett’s stockholders are cautioned not to place undue reliance on the Projections. The Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Hibbett contained in Hibbett’s public filings with the SEC.
This Proxy Statement contains certain non-GAAP financial measures, such as Operating Profit / EBIT (which means earnings before interest and taxes) and EBITDA (which means earnings before interest, taxes, depreciation and amortization). Hibbett believes that its presentation of these non-GAAP measures provides useful supplemental information to investors and management regarding Hibbett’s financial condition and results of operations. Other firms may calculate non-GAAP measures differently than Hibbett, which limits comparability between companies. Non-GAAP measures are not prepared in accordance with, and should not be considered in isolation from or as a substitute for, measures prepared in accordance with GAAP. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the Merger if the disclosure is included in a document such as this Proxy Statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Solomon Partners for purposes of its opinion or by the Board in connection with the evaluation of the Merger. Accordingly, Hibbett has not provided a reconciliation of the financial measures included in the Projections to the relevant GAAP financial measures. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.
None of Hibbett, Solomon Partners or their respective affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from the Projections, and none of them undertakes any obligation to update, or otherwise revise or reconcile, the Projections to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Projections, as applicable, are shown to be in error. Since the date of the Projections, Hibbett has made publicly available its actual results of operations for the fiscal year ended February 3, 2024. You should review the 2024 Form 10-K for this information. Hibbett does not intend to make publicly available any update or other revision to the Projections, even in the event that any or all assumptions are shown to be in error. None of Hibbett, Solomon Partners or their respective affiliates, advisors, officers, directors or other representatives has made or makes any representation to any Hibbett stockholder or any other person regarding the Projections, Hibbett’s ultimate performance compared to the information contained in the Projections or that forecasted results will be achieved.
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The following table presents a summary of the Initial Hibbett Projections:
 
Initial Hibbett Projections
 
2024E(1)
2025E
2026E
2027E
2028E
2029E
 
(dollars in millions)
Net Sales
$1,760
$1,816
$1,952
$2,124
$2,303
$2,504
Operating Profit / EBIT(2)
$147
$146
$168
$194
$217
$249
EBITDA(3)
$196
$200
$228
$264
$295
$332
Capital Expenditures
$68
$75
$81
$89
$100
$105
Change in Net Working Capital(4)
($32)
($5)
($20)
($25)
($26)
($30)
(1)
Fiscal 2024 was a 53-week year. Adjusted to eliminate the effect of the 53rd week, Hibbett’s projected net sales were $1,740, projected Operating Profit / EBIT was $144, and projected EBITDA was $193 (dollars in millions). Other fiscal years presented are 52-week years.
(2)
Operating Profit / EBIT defined as earnings before interest and taxes.
(3)
EBITDA defined as earnings before interest, taxes, depreciation and amortization.
(4)
Assumes inventory and accounts payable grow at the rate of cost of goods sold for fiscal 2025 – fiscal 2029. All other net working capital accounts grow at the rate of net sales for fiscal 2025 – fiscal 2029.
The following table presents a summary of the Revised Hibbett Projections:
 
Revised Hibbett Projections
 
2024A(1)
2025E
2026E
2027E
2028E
2029E
 
(dollars in millions)
Net Sales
$1,729
$1,814
$1,957
$2,135
$2,311
$2,510
Operating Profit / EBIT(2)
$137
$139
$160
$189
$212
$246
EBITDA(3)
$186
$195
$223
$261
$293
$331
Capital Expenditures
$58
$72
$81
$89
$100
$105
Change in Net Working Capital(4)
($42)
$35
($15)
($18)
($18)
($20)
(1)
Fiscal 2024 was a 53-week fiscal year. Adjusted to eliminate the effect of the 53rd week and non-recurring benefit due to a change of Hibbett’s estimate of gift card breakage that occurred in Q4 fiscal 2024, Hibbett’s net sales were $1,702, Operating Profit / EBIT was $130, and EBITDA was $179 (dollars in millions). Other fiscal years presented are 52-week years.
(2)
Operating Profit / EBIT defined as earnings before interest and taxes.
(3)
EBITDA defined as earnings before interest, taxes, depreciation and amortization.
(4)
Assumes (i) inventory and accounts payable grow at the rate of cost of goods sold for fiscal 2026 – fiscal 2029; (ii) accounts receivable grow at 2.5% annually for fiscal 2026 – 2029; (iii) prepaid expenses and other current assets grow at 1.0% annually for fiscal 2026 – fiscal 2029; and (iv) all other net working capital accounts grow at the rate of net sales for fiscal 2026 – fiscal 2029.
In addition, at the direction of Hibbett’s management, Solomon Partners calculated, using certain inputs provided by Hibbett’s management and which inputs were approved by the Board for Solomon Partners’ use and reliance in connection with its financial analyses and opinion provided to the Board on April 22, 2024, in connection with the Board’s consideration of the transactions contemplated by the Merger Agreement, as described in the section entitled “Proposal 1: Adoption of the Merger Agreement—Opinion of Hibbett’s Financial Advisor” beginning on page 61 of this Proxy Statement, the unlevered free cash flows for the remainder of fiscal year 2024 through fiscal year 2029 (the “Unlevered Free Cash Flows”) as set forth below.
 
Stub-
2025E(1)
2026E
2027E
2028E
2029E
 
(dollars in millions)
Tax-effected EBIT(2)
$70
$123
$145
$163
$189
Depreciation and Amortization
$42
$63
$72
$81
$84
Stock Option Expense
$4
$7
$7
$7
$7
Capital Expenditures
($59)
($81)
($89)
($100)
($105)
Changes in Net Working Capital
$22
($15)
($18)
($18)
($20)
Unlevered Free Cash Flow
$80
$97
$117
$132
$155
(1)
Stub-2025E financials reflects the period from May 2024 to February 2025.
(2)
Calculated as earnings before interest and taxes using a 23.3% effective tax rate.
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Important Additional Information About the Projections
Although presented with numerical specificity, the Projections are based on numerous variables, assumptions and estimates as to future events made by Hibbett’s management that Hibbett’s management believed were reasonable at the time the Projections were prepared. These variables, assumptions and estimates are inherently uncertain and many are beyond the control of Hibbett. Important factors that may affect actual results and cause these internal financial Projections to not be achieved include, but are not limited to, risks and uncertainties relating to Hibbett’s business (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the health of Hibbett’s consumer base, the regulatory and competitive environment, changes in technology, general business and economic conditions and other risk factors referenced in the section of this Proxy Statement entitled “Cautionary Statement Regarding Forward-Looking Statements.” As such, the Projections, and the assumptions upon which they are based, (i) are not guarantees of future results; (ii) are inherently speculative; and (iii) are subject to a number of risks and uncertainties. As a result, actual results may differ materially from those contained in the Projections. Accordingly, there can be no assurance that the Projections will be realized.
Interests of the Directors and Executive Officers of Hibbett in the Merger
In considering the recommendation of the Board that holders of Hibbett Common Stock vote to approve the adoption of the Merger Agreement, our stockholders should be aware that certain of Hibbett’s executive officers and non-employee directors have interests in the Merger that may be different from, or in addition to, those of Hibbett’s stockholders generally. The Board was aware of and considered these interests, among other matters, in approving the Merger Agreement and the Merger, and in recommending that Hibbett stockholders approve the adoption of the Merger Agreement. For purposes of the discussion below, Hibbett’s executive officers are Michael E. Longo (President and Chief Executive Officer), Robert J. Volke (Senior Vice President and Chief Financial Officer), Jared S. Briskin (Executive Vice President, Merchandising), William G. Quinn (Senior Vice President, Marketing and Digital), Benjamin A. Knighten (Senior Vice President, Store Operations), David M. Benck (Senior Vice President, General Counsel), Ronald P. Blahnik (Senior Vice President, Chief Information Officer), Mark A. Gunn (Senior Vice President, Chief Human Resources Officer), Michael C. McAbee (Senior Vice President, Supply Chain and Store Development), and J. Stephani Smith (Senior Vice President, Merchandising). These interests are described below.
Certain Assumptions
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:
The Effective Time is June 3, 2024, which is the assumed Closing Date solely for purposes of the disclosure in this section (the “Change in Control Date”);
The employment of each executive officer of Hibbett is assumed to be terminated by Hibbett without “Cause” or due to the executive officer’s resignation for “Good Reason” (as such terms are defined in the relevant plans and agreements), in either case immediately following the Change in Control Date;
The potential payments and benefits described in this section are not at a level subject to a “cutback” to avoid the “golden parachute” excise tax that may be imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”); and
A price per share of Hibbett Common Stock of $87.50, which is equal to the Transaction Consideration payable in the Merger.
As the amounts provided below are estimates based on multiple assumptions that may or may not actually occur or be accurate as of the date referenced, the actual amounts, if any, that may be paid or become payable may materially differ from the amounts set forth below.
Treatment and Quantification of Hibbett Equity Awards
Treatment of Company Options
At the Effective Time, each Company Option that is outstanding as of immediately prior to the Effective Time, whether vested or unvested, will be cancelled by virtue of the Merger without any action on the part of the holder thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following
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the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock subject to such Company Option as of immediately prior to the Effective Time and (2) the excess, if any, of the Transaction Consideration over the exercise price per share of Hibbett Common Stock subject to such Company Option as of immediately prior to the Effective Time. Any Company Option with an exercise price per share of Hibbett Common Stock equal to or in excess of the Transaction Consideration will be cancelled and have no further force or effect by virtue of the Merger without any action on the part of the holder thereof and without any payment to the holder thereof.
Treatment of Company PSU Awards
At the Effective Time, each Specified Company PSU Award that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Specified Company PSU Award, assuming that any performance based vesting conditions applicable to such Specified Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company PSU Award with Parent and its affiliates (including the Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company PSU Award (as provided for in the 2015 Equity Incentive Plan) and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing with respect to such Specified Company PSU Award), except for any performance-vesting conditions and as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s).
At the Effective Time, each Cashed-Out Company PSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock that would have vested pursuant to the terms of such Cashed-Out Company PSU Award, assuming that any performance based vesting conditions applicable to such Cashed-Out Company PSU Award for any performance period that has not been completed as of the Effective Time are achieved at target performance levels, and (2) the Transaction Consideration.
Notwithstanding the above, to the extent that any Company PSU Award constitutes nonqualified deferred compensation subject to Section 409A of the Code, such cash payment will be paid in accordance with the applicable award’s terms (including any deferral elections) and at the earliest time permitted under the terms of such award that will not result in the application of a tax or penalty under Section 409A of the Code, including payment in accordance with any applicable exception or permitted payment event under Section 409A of the Code and Section 1.409A-3(j) of the Treasury Regulations (as defined in the section entitled “Proposal 1: Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page 76 of this Proxy Statement).
Treatment of Company RSU Awards
At the Effective Time, each Specified Company RSU Award that is outstanding as of immediately prior to the Effective Time will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive an unvested amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Specified Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration, vesting, subject to the continued service of the former holder of such Specified Company RSU Award with Parent and its affiliates (including the
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Surviving Corporation), on the same time-based vesting schedule and otherwise on substantially the same terms as the corresponding Specified Company RSU Award (as provided for in the 2015 Equity Incentive Plan and the underlying award agreements, in each case as in effect as of April 23, 2024, the terms of which will survive the closing with respect to such Specified Company RSU Award), except as otherwise provided for in the Merger Agreement. Each portion of such cash amount that vests will be payable on or before the later of (A) five (5) business days following such vesting date and (B) the Surviving Corporation’s first payroll date following such vesting date(s).
At the Effective Time, each Cashed-Out Company RSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Cashed-Out Company RSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration.
Notwithstanding the above, to the extent that any Company RSU Award constitutes nonqualified deferred compensation subject to Section 409A of the Code, such cash payment will be paid in accordance with the applicable award’s terms (including any deferral elections) and at the earliest time permitted under the terms of such award that will not result in the application of a tax or penalty under Section 409A of the Code, including payment in accordance with any applicable exception or permitted payment event under Section 409A of the Code and Section 1.409A-3(j) of the Treasury Regulations.
Treatment of Company DSU Awards
At the Effective Time, each Company DSU Award that is outstanding as of immediately prior to the Effective Time will automatically become fully vested (if not already fully vested) and will be cancelled by virtue of the Merger without any action on the part of any holder or beneficiary thereof and will entitle the holder to receive, on or before the later of (A) five (5) business days following the Effective Time and (B) the Surviving Corporation’s first payroll date after the Effective Time, an amount in cash, without interest and subject to applicable withholding taxes, from the Surviving Corporation with respect thereto equal to the product of (1) the number of shares of Hibbett Common Stock then underlying such Company DSU Award as of immediately prior to the Effective Time and (2) the Transaction Consideration.
Notwithstanding the above, to the extent that any Company DSU Award constitutes nonqualified deferred compensation subject to Section 409A of the Code, such cash payment will be paid in accordance with the applicable award’s terms (including any deferral elections) and at the earliest time permitted under the terms of such award that will not result in the application of a tax or penalty under Section 409A of the Code, including payment in accordance with any applicable exception or permitted payment event under Section 409A of the Code and Section 1.409A-3(j) of the Treasury Regulations.
Quantification of Hibbett Equity Awards
The following table sets forth the estimated amounts that would become payable (on a pre-tax basis) to Hibbett’s executive officers in respect of their unvested Hibbett equity awards based on the assumptions described above under “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger—Certain Assumptions” beginning on page 70 this Proxy Statement.
Name
Number of Shares
Subject to
Company PSU
Awards
(#)
Number of Shares
Subject to
Company RSU
Awards
(#)
Total
($)
David M. Benck
9,349
6,234
1,363,513
Ronald P. Blahnik
9,349
6,234
1,363,513
Jared S. Briskin
14,025
9,351
2,045,400
Mark A. Gunn
2,372
4,972
642,600
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Name
Number of Shares
Subject to
Company PSU
Awards
(#)
Number of Shares
Subject to
Company RSU
Awards
(#)
Total
($)
Benjamin A. Knighten
10,909
7,274
1,591,013
Michael E. Longo
37,400
24,933
5,454,138
Michael C. McAbee
9,349
6,234
1,363,513
William G. Quinn
10,909
7,274
1,591,013
J. Stephani Smith
9,745
6,498
1,421,263
Robert J. Volke
9,349
6,234
1,363,513
Based on the assumptions described above under “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger—Certain Assumptions” beginning on page 70 of this Proxy Statement, the estimated aggregate amounts that would become payable (on a pre-tax basis) to Hibbett’s non-employee directors in respect of their unvested Hibbett equity awards is $7,354,474.
Agreements with Hibbett Executive Officers
Mr. Longo is currently employed pursuant to written employment agreement with Hibbett Sporting Goods, Inc. (a subsidiary of Hibbett), dated as of December 16, 2019 (the “Longo Employment Agreement”). The Longo Employment Agreement provides that if Mr. Longo’s employment is terminated by Hibbett without “Cause” or if he resigns for “Good Reason” (each as defined in the Longo Employment Agreement) then he will be entitled to severance payments equal to (i) his then-current base salary plus (ii) his estimated earned annual bonus, prorated as of the date of his termination.
Mr. Longo is also party to separate restrictive covenant and nondisclosure agreements with Hibbett, which subject him to restrictions relating to the use of confidential information, competing against Hibbett and soliciting any customers or employees of Hibbett during the term of employment and for a period of up to twelve (12) months thereafter.
Each Hibbett executive officer is party to a Change in Control Severance Agreement with Hibbett, effective as of the following dates (collectively, the “Change in Control Agreements”):
Mr. Longo – December 16, 2019
Mr. Benck – April 7, 2020
Mr. Blahnik – April 7, 2020
Mr. Briskin – April 7, 2020
Mr. Quinn – April 7, 2020
Mr. Knighten – April 7, 2020
Mr. Volke – April 24, 2020
Mr. Gunn – August 14, 2023
Mr. McAbee – August 14, 2023
Ms. Smith – August 14, 2023
The Change in Control Agreements each provide that if the employment of the executive officer is terminated by Hibbett without “Cause” or if the executive officer resigns for “Good Reason” (each, as defined in the Change in Control Agreements) during the period beginning six months prior to the consummation of a change in control (which would include the Merger) and ending on the second anniversary of the consummation of a change in control, then the executive officer would be entitled to one and one-half (1.5) times the sum of the executive officer’s (i) highest annual rate of base salary paid to the executive officer by Hibbett prior to the termination of the executive officer’s employment or resignation from Hibbett, as applicable, and (ii) the average of the actual cash bonuses paid to the executive officer for the five (5) years prior to the year of the executive officer’s
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employment termination from Hibbett (but in no event greater than the target bonus for the year in which the termination or resignation of employment occurs). Mr. Longo’s severance benefits under his Change in Control Agreement are paid to him net of any severance benefits payable under the Longo Employment Agreement.
Under the Change in Control Agreements, each executive officer is subject to restrictions relating to the use of confidential information, and soliciting or hiring any suppliers, officers, directors, independent contractors, customers or employees of Hibbett during the term of employment and for a period up to twelve (12) months thereafter.
Compensation Arrangements with JD Sports
Following discussions between Mr. Longo, Mr. Briskin and JD Sports that commenced on April 18, 2024, after the parties had reached an agreement-in-principle on the material business terms of the Merger, including the amount of the Transaction Consideration, and with the prior consent of the Board, on April 23, 2024, Mr. Longo and Mr. Briskin each entered into a retention agreement with JD Sports (respectively, the “Longo Retention Agreement” and the “Briskin Retention Agreement”) where they acknowledged that they will not have the right to resign their employment for “Good Reason” (as defined in the relevant plans and agreements) as a result of any changes to their duties, responsibilities, or reporting structures that occur strictly as a direct result of the Merger.
Pursuant to the Longo Retention Agreement, Mr. Longo will remain in the position of Chief Executive Officer of Hibbett following the closing of the Merger under the terms of the Longo Employment Agreement (except as modified in the Longo Retention Agreement). Pursuant to the Longo Retention Agreement, for fiscal year 2025, Mr. Longo’s annual base salary will remain at $945,000 and Mr. Longo’s annual cash target bonus will remain at 120% of Mr. Longo’s annual base salary (with a maximum payout of 200% of the target bonus). Mr. Longo will also be eligible to receive annual grants of long-term incentive awards from JD Sports and its affiliates valued up to 200% of Mr. Longo’s base salary, which will vest over three years. Of such long-term incentive awards, 25% will be time-based and 75% will be subject to performance conditions to be determined at the time of grant. The Longo Employment Agreement and Mr. Longo’s Change in Control Agreement will each remain in effect, except as modified by the Longo Retention Agreement.
Pursuant to the Briskin Retention Agreement, Mr. Briskin will be employed in the position of Chief Operating Officer of Hibbett following the closing. Pursuant to the Briskin Retention Agreement, for fiscal year 2025, Mr. Briskin’s annual base salary will be increased from $600,000 to $700,000 and Mr. Briskin’s annual cash target bonus will be increased from 85% of Mr. Briskin’s annual base salary to 100% of Mr. Briskin’s annual base salary (with a maximum payout of 200% of the target bonus). Mr. Briskin will also be eligible to receive annual grants of long-term incentive awards from JD Sports and its affiliates valued up to 100% of Mr. Briskin’s base salary, which will vest over three years. Of such long-term incentive awards, 25% will be time-based and 75% will be subject to performance conditions to be determined at the time of grant. Mr. Briskin’s Change in Control Agreement will remain in effect, except as modified by the Briskin Retention Agreement.
As of the date of this Proxy Statement, no other Hibbett executive officers or non-employee directors have discussed or entered into any agreement with JD Sports, Parent or any of their affiliates regarding employment with, or the right to purchase or participate in the equity plans or arrangements of, JD Sports, Parent, the Surviving Corporation or any of their affiliates. Prior to or following the closing of the Merger, however, some or all of Hibbett’s executive officers and non-employee directors may discuss or enter into agreements with Parent regarding employment with, or the right to purchase or participate in the equity of, JD Sports, Parent or one or more of their affiliates (including the Surviving Corporation).
Quantification of Payments and Benefits
In accordance with Item 402(t) of Regulation S-K under the Securities Act, the table below sets forth the compensation that is based on, or otherwise relates to, the Merger that will or may become payable to each named executive officer of Hibbett in connection with the Merger. For additional details regarding the terms of the payments and benefits described below, see the discussion under “Proposal 1: Adoption of the Merger Agreement—Interests of the Directors and Executive Officers of Hibbett in the Merger” beginning on page 70 of this Proxy Statement, which is incorporated herein.
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The amounts shown in the table below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur prior to completion of the Merger, including any equity award grants that may be made after the assumed Effective Time of June 3, 2024. For purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:
The Effective Time is June 3, 2024, which is the assumed Closing Date solely for purposes of the disclosure in this section (the “Change in Control Date”);
The employment of each executive officer of Hibbett is assumed to be terminated by Hibbett without “Cause” or due to the executive officer’s resignation for “Good Reason” (as such terms are defined in the relevant plans and agreements), in either case immediately following the Change in Control Date;
The potential payments and benefits described in this section are not at a level subject to a “cutback” to avoid the “golden parachute” excise tax that may be imposed under the Code; and
A price per share of Hibbett Common Stock of $87.50, which is equal to the Transaction Consideration payable in the Merger.
For purposes of this disclosure, Hibbett’s named executive officers are: (i) Michael E. Longo (President and Chief Executive Officer), (ii) Robert J. Volke (Senior Vice President and Chief Financial Officer), (iii) Jared S. Briskin (Executive Vice President, Merchandising), (iv) William G. Quinn (Senior Vice President, Marketing and Digital), and (v) Benjamin A. Knighten (Senior Vice President, Store Operations) (each, an “NEO”). The amounts in the table below assume each NEO has executed and not revoked a full release of claims in favor of Hibbett.
Named Executive Officer
Cash
($)(1)
Equity
($)(2)
Total(3)
Michael E. Longo
$2,175,218
$5,454,138
$7,629,355
Robert J. Volke
$1,018,613
$1,363,513
$2,382,125
Jared S. Briskin
$1,453,610
$2,045,400
$3,499,010
William G. Quinn
$1,088,663
$1,591,013
$2,679,675
Benjamin A. Knighten
$809,991
$1,591,013
$2,401,004
(1)
Cash. Represents severance payable to each NEO upon a termination of employment by Hibbett without Cause or by the NEO for Good Reason, in each case, pursuant to the NEO’s Change in Control Agreement, and consisting of one and one-half (1.5) times the sum of the NEO’s (i) highest annual rate of base salary paid to the NEO by Hibbett prior to the termination of the NEO’s employment or resignation from Hibbett, as applicable, and (ii) the average of the actual cash bonuses paid to the NEO for the five (5) years prior to the year of the NEO’s employment termination from Hibbett. The estimated amount of each such payment is shown in the following table:
Named Executive Officer
Highest Rate of
Base Salary
($)
Average Cash
Bonus
($)
Multiplier
Total
Cash
($)
Michael E. Longo
$945,000
$505,145
1.5x
$2,175,218
Robert J. Volke
$427,450
$251,625
1.5x
$1,018,613
Jared S. Briskin
$600,000
$357,073
1.5x
$1,453,610
William G. Quinn
$427,450
$298,325