PROPOSED MERGER YOUR VOTE IS VERY IMPORTANT to The
Total Page:16
File Type:pdf, Size:1020Kb
PROPOSED MERGER YOUR VOTE IS VERY IMPORTANT To the Stockholders of Standard Diversified Inc.: Standard Diversified Inc., which we refer to as SDI, and Turning Point Brands, Inc., which we refer to as TPB, have entered into an Agreement and Plan of Merger and Reorganization, which we refer to as the merger agreement, pursuant to which SDI will merge with and into a wholly-owned subsidiary of TPB, which we refer to as the merger. Immediately prior to the effective time of the merger, which we refer to as the effective time, each share of Class A and Class B Common Stock, $0.01 par value, of SDI, which we refer to collectively as SDI Common Stock, will be converted into a portion of the Stock Merger Consideration (as defined below) equal to a fraction of a share of TPB Voting Common Stock, $0.01 par value, which we refer to as TPB Common Stock, equal to (i) the total number of shares of TPB Common Stock constituting the Stock Merger Consideration, divided by (ii) the total number of SDI Common Stock outstanding at such date, plus the number of shares of SDI Common Stock underlying all restricted stock awards and restricted stock unit awards that will vest in accordance with the merger, but only to the extent such shares were not outstanding prior to such vesting. Each SDI stockholder’s aggregate portion of merger consideration will be rounded up to the next whole share of TPB Common Stock. The ‘‘Stock Merger Consideration’’ means a total number of shares of TPB Common Stock equal to 97% of the total number of shares of TPB Common Stock owned by SDI as of the effective time of the merger. Immediately after the merger, assuming that SDI will own 9,978,918 shares of TPB Common Stock immediately prior to the closing of the merger, which is the number of shares of TPB Common Stock owned by SDI as of the date of this proxy statement/prospectus, SDI’s stockholders as of immediately prior to the effective time are expected to own approximately 50.48% of the outstanding capital stock of TPB and 50.48% of the voting power of TPB. These percentages do not reflect any sales of shares of TPB Common Stock SDI may make, including, without limitation, in order to generate amounts it may need to satisfy its net liabilities exceeding $25,000, as required by the merger agreement. Should SDI make any such sales, the percentage ownership of TPB Common Stock by, and voting power of, SDI’s stockholders after the merger would be reduced accordingly. Shares of TPB Common Stock are currently listed on the New York Stock Exchange under the symbol ‘‘TPB.’’ On June 8, 2020, the latest practicable trading day before the date of this proxy statement/prospectus, the closing sale price of the TPB Common Stock on the New York Stock Exchange was $25.65 per share. Shares of SDI Class A Common Stock are currently listed on the NYSE American under the symbol ‘‘SDI.’’ On June 8, 2020, the latest practicable trading day before the date of this proxy statement/prospectus, the closing sale price of the SDI Class A Common Stock on the NYSE American was $13.46 per share. SDI is holding a special meeting of its stockholders in order to obtain the stockholder approvals necessary to complete the merger and related matters. The SDI special meeting will be a virtual meeting via live webcast on the Internet. At the SDI special meeting, which will be held at 11:00 a.m., local time, on July 9, 2020, unless postponed or adjourned to a later date, SDI will ask its stockholders, among other things: 1. to approve the merger agreement, and the transactions contemplated thereby, including the merger; 2. to approve, on an advisory basis, certain compensation that may be paid or become payable to named executive officers of SDI in connection with the merger; 3. to consider and, if necessary, vote upon an adjournment of the SDI special meeting to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.; 4. to elect five directors of SDI to serve until SDI’s 2021 annual meeting of stockholders, and all until their respective successors are duly elected and qualified (provided that if Proposal No. 1 is approved and the merger is completed, SDI will be merged out of existence and will no longer have a board of directors, and there will be no SDI 2021 annual meeting of stockholders); 5. to approve, on an advisory basis, a resolution regarding named executive officer compensation for 2019; 6. to approve, on an advisory basis, a resolution regarding how frequently we will submit future advisory votes on executive officer compensation to our stockholders; and 7. to consider and act upon any other matters which may properly be brought before the meeting and at any adjournments or postponements thereof. As of June 8, 2020, SDI beneficially owns or controls an approximate 51.24% equity interest in TPB through ownership or control of 9,978,918 shares of TPB Common Stock, representing approximately 51.24% of the voting power of the TPB capital stock. On April 7, 2020, and based upon the recommendation of an independent special committee of the SDI board of directors, which we refer to as the SDI Board, the SDI Board unanimously (i) determined that the entry by SDI into the merger agreement, the merger and the other transactions contemplated by the merger agreement, are advisable and are fair to, and in the best interests of, SDI and its stockholders, (ii) approved and declared advisable the merger and the other transactions contemplated by the merger agreement, (iii) approved and authorized each of the transaction documents, including the merger agreement, and (iv) recommended that the stockholders of SDI approve the merger agreement and the other transactions contemplated thereby. The SDI Board accordingly recommends that SDI’s stockholders vote ‘‘FOR’’ Proposal Nos. 1, 2 and 3. The SDI Board also recommends that SDI’s stockholders vote ‘‘FOR’’ Proposal Nos. 4 and 5, and FOR the ‘‘One Year’’ option on Proposal No. 6. More information about TPB, SDI and the proposed transaction is contained in this proxy statement/prospectus. SDI urges you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER ‘‘RISK FACTORS’’ BEGINNING ON PAGE 15. SDI is excited about the opportunities the merger brings to SDI’s stockholders, and thank you for your consideration and continued support. Sincerely, Gregory H.A. Baxter Executive Chairman of the Board and Interim Chief Executive Officer Standard Diversified Inc. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense. The accompanying proxy statement/prospectus is dated June 17, 2020, and is first being mailed to SDI’s stockholders on or about June 17, 2020. STANDARD DIVERSIFIED INC. 767 5th Avenue, 12th Floor New York, NY 10153 (212) 922-3752 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 9, 2020 Dear Stockholders of Standard Diversified Inc.: On behalf of the board of directors of Standard Diversified Inc., a Delaware corporation, which we refer to as SDI, we are pleased to deliver this proxy statement/prospectus for the 2020 special meeting of stockholders of SDI, which will be held on July 9, 2020 at 11:00 a.m., local time, which we refer to as the SDI special meeting, for the following purposes: 1. to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger and Reorganization, dated as of April 7, 2020, which we refer to as the merger agreement, by and among Turning Point Brands, Inc., which we refer to as TPB, SDI, and Standard Merger Sub, LLC, a wholly-owned subsidiary of TPB, which we refer to as merger sub, pursuant to which SDI will merge with and into merger sub, which we refer to as the merger, a copy of which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby, including the merger, the issuance of shares of TPB Common Stock to SDI’s stockholders pursuant to the terms of the merger agreement; 2. to approve, on an advisory basis, certain compensation that may be paid or become payable to named executive officers of SDI in connection with the merger; 3. to consider and, if necessary, vote upon an adjournment of the SDI special meeting to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1; 4. to elect five directors of SDI to serve until SDI’s 2021 annual meeting of stockholders, and all until their respective successors are duly elected and qualified (provided that if Proposal No. 1 is approved and the merger is completed, SDI will be merged out of existence and will no longer have a board of directors, and there will be no SDI 2021 annual meeting of stockholders); 5. to approve, on an advisory basis, a resolution regarding named executive officer compensation for 2019; 6. to approve, on an advisory basis, a resolution regarding how frequently we will submit future advisory votes on executive officer compensation to our stockholders; and 7. to consider and act upon any other matters which may properly be brought before the meeting and at any adjournments or postponements thereof.