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Another Bidder Goes After Skullcandy Headphones

The propsed buyout of headphone maker Skullcandy has taken an unexpected turn with a new bidder sticking their hand up to buy out the Company.

Overnight a private-equity firm purchased 10% stake in the company and made an unsolicited buyout offer, potentially disrupting the headphones maker’s deal to be acquired by consumer-technology provider Incipio who make the Braven sound gear sold at JB Hi Fi.

According to the Wall Street Journal Mill Road Capital Management said it had acquired a 9.8% stake in Skullcandy in recent weeks and offered $6.05 a share for the remainder, valuing the company at $173.2 million.

Skullcandy shares, which had risen 19% since the company’s founder reported takeover talks June 7, rose 23% to $5.76 Friday and rose to $6.01 in premarket trading last night. Mill Road’s offer values Skullcandy at a 29% premium over Thursday’s closing price of $4.68

Skullcandy, which on Friday said it had agreed to be acquired by Incipio for $5.75 a share, said it would “carefully review and consider” Mill Road’s offer. The Incipio deal includes a one month “go-shop” period to look for higher offers and a termination fee of $6.2 million that Skullcandy could pay to Incipio.

Skullcandy makes headphones and videogame accessories aimed at the intersection of music, sports and technology.

Since pricing its initial public offering at $20 in 2011, Skullcandy has seen its shares fall as revenue growth has slowed in recent years. The stronger dollar, among other things, has weighed on the company, as a large chunk of its sales come from outside the U.S.

In Australia the brand has struggled up against the likes of Sennheiser, Beats, Sony and Sol Republic. This is primarily due to a lack of investment in marketing by Byron Bay based distributor Seabreeze Oz.

Earlier this month, the investment firm of Skullcandy founder and former Chief Executive Rick Alden said it was exploring whether to pursue taking the headphone maker private.

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