Rawlings Sporting Goods in acquisition controversy

ST. LOUIS (AP) -- Outdoor equipment maker K2 Inc. plans to acquire Rawlings Sporting Goods Co. Inc. in a stock-swap deal worth at least $73 million. A rival bidder for the baseball equipment maker, meanwhile, increased his own offer and said he would challenge K2's proposed acquisition. Michigan businessman Daniel Gilbert, who holds a nearly 15 percent stake in Rawlings, said the deal announced Monday contains "tons of inherent risks" for Rawlings' shareholders.
Under a signed definitive agreement, Rawlings by next spring would become a unit of Los Angeles-based K2, melding Rawlings' product lineup of baseballs, gloves and uniforms with K2's line of equipment for such sports as skiing, fishing, snowboarding, inline skating and mountain biking.
The companies said that based on the average closing price of K2 shares for the 15 trading days ending Dec. 13, the transaction's value is $84 million, plus unspecified liabilities. Gilbert said the Rawlings-K2 deal was worth about $73 million.
Shares of 115-year-old Rawlings, based in the St. Louis suburb of Fenton, jumped 75 cents, or 9 percent, to close at $8.93 on the Nasdaq Stock Market on Monday. K2's shares fell 39 cents to $9.48 on the New York Stock Exchange.
Announcement of the deal, pending shareholder and regulatory approval, came a day after Gilbert upped his cash offer to $8.50 per share, from $8 per share, for the roughly 85 percent of Rawlings he doesn't own. Gilbert's sweetened bid values Rawlings at about $69 million, $4 million above his previous offer.