WOONSOCKET – Several shareholders of Summer Infant Inc., a maker of infant and juvenile products, are suing to stop the Rhode Island company from being acquired by Kids2 Inc., a Georgia manufacturer that owns the well-known Baby Einstein brand.
In a filing with the Securities and Exchange Commission on May 6, Summer Infant, which is headquartered in Woonsocket and does business as SUMR Brands Inc., disclosed that federal lawsuits have been filed separately in New York and Pennsylvania by three shareholders, alleging that Summer Infant executives omitted information when notifying all company shareholders of the tentative agreement to sell the company to Kids2.
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In March, Summer Infant and Kids2 announced that the companies had reached an agreement that would have Kids2 pay $12 per share for the Summer Infant – at the time about 40% more than what it was trading for on the Nasdaq Stock Market. At that price, the deal is valued at about $25.9 million.
The proposed transaction was approved by Summer Infant’s board of directors and several “significant shareholders,” the company said. Other stockholders must still vote on the transaction, and it’s unclear when that will take place. Summer Infant and Kids2 have said they expect the deal to close in the second quarter.
In the meantime, Summer Infant continues to feel the effects of the COVID-19 pandemic and supply chain problems it has caused.
The company, which opened in 1985, reported a net loss of $4.8 million, or $2.20 per share, for the fourth quarter of 2021.
“The fourth quarter of 2021 continued to be challenging across a number of fronts, with supply chain constraints and higher material costs negatively impacting our ability to meet demand and maintain margins,” Summer Infant CEO Stuart Noyes said in a statement in March. “In general, things did not improve as we had hoped, and such conditions have remained as we begin fiscal 2022. Elevated container rates, demurrage, and related logistics expense, along with air freight – to better serve customers – have been constant headwinds against our efforts to efficiently manage supply. Working capital has also been under pressure due to the need for increased inventory and elongated transit times.”
That earnings report was accompanied by the announcement of the tentative acquisition by Kids2, which owns the well-known Ingenuity and Bright Starts brands, in addition to Baby Einstein.
“We are pleased with the value creation this transaction brings to SUMR’s shareholders and believe it is beneficial to all stakeholders, as it ensures our leading brands are available and supported by a larger, broad-based global organization,” Noyes said. “We look forward to continuing to serve our customers through exceptional products and industry-leading innovation.”
