DSW Inc. filed a Form S-4 on March 7 to register equal numbers of Class A common and Class B common shares to be issued in the proposed reverse merger with its majority owner, Retail Ventures, Inc. (SEC file no. 333-172631). The common control transaction would be accounted for as an equity transaction whereby accounting acquirer Retail Ventures acquires a noncontrolling interest in acquiree DSW, and will not require purchase accounting. The proposed maximum aggregate offering price is $905M.
In the merger, each outstanding Retail Ventures common share will be converted into the right to receive 0.435 DSW Class A common shares, unless the holder elects to receive an equal number of DSW Class B common shares instead. The DSW Class A common have one vote per share while the Class B common have eight votes per share. It is a condition to the merger that all DSW Class A common shares, including those received in exchange for Retail Ventures common shares at the time of closing, will continue to trade on the NYSE under the symbol “DSW.” DSW does not plan to list the DSW Class B common shares on the NYSE or any other securities exchange and therefore does not expect there to be a liquid trading market for such shares. Holders of DSW Class B common shares will have the right to convert such shares into DSW Class A common shares at any time on a one-for-one basis.
Goldman, Sachs & Co. provided the opinion to the DSW special committee as to the fairness from a financial point of view to DSW of the merger exchange ratio, and Houlihan Lokey Capital, Inc. provided the opinion to the Retail Ventures board of directors regarding the fairness to unaffiliated shareholders. For DSW, the proposed merger would simplify the company's corporate structure and enhance the trading liquidity of DSW Class A common shares. The Retail Ventures board also has determined that the merger is in the best interests of shareholders and unanimously recommends approval of the merger agreement.
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