Rapala VMC Corporation (HLSE:RAP1V) entered into definitive agreements to acquire 49% stake in DQC International Corp from James Coble, Phil Feigh Chu and Yu-Wei Chang for $8.9 million on July 9, 2019. As reported, the total consideration for the acquisition is $3.1 million in cash and 0.23 million treasury shares of Rapala VMC Corporation which will be issued to James Coble, which are all payable at closing. Furthermore, the parties have agreed on an additional earn-out in cash to the sellers based on 13 Fishing’s cumulative EBITDA in 2020-2021. The earn-out could result in a maximum payment of approximately $5 million. Rapala VMC and the remaining 51% shareholder James Coble have both agreed to inject more capital into 13 Fishing and Rapala has agreed to lend funds to recapitalize 13 Fishing. It has also been agreed that Rapala will provide $10 million of additional funding to 13 Fishing in the form of share capital and loans. 13 Fishing’s products will be incorporated into Rapala’s global distribution network outside of the USA. In the USA Rapala’s and 13 Fishing’s operations will remain separate and independent. For the financial year ending on December 31, 2018, DQC International Corp reported gross sales of $25.1 million, EBITDA of $0.8 million, and operating profit of $0.7 million. The total assets and negative total equity of DQC International Corp amounted to $10 million and $2.7 million, respectively as at December 31, 2018. Simultaneously Rapala has concluded a perpetual license agreement with 13 Fishing under which Rapala will secure exclusive distribution rights to 13 Fishing’s products and distribute all 13 Fishing’s existing and new products outside the USA. According to the agreement, Rapala has the perpetual right to use all intellectual property rights of 13 Fishing outside the USA, while DQC International Corp remains the ultimate brand owner. The transaction is subject to fulfilling customary closing conditions and is expected to close by the end of third quarter 2019. The acquisition has no effect on Rapala’s short-term outlook or 2019 full year guidance. Robert W. Baird & Co. acted as financial advisor and Dorsey & Whitney LLP acted as legal advsior to Rapala VMC Corporatio.