M&A Roundup -Salton Swaps Shares for Use of Foreman Name

Small-appliance maker Salton Inc. has locked in the rights to use the name and likeness of former heavyweight boxing champion George Foreman in selling food-preparation equipment by borrowing a deal structure from m&a. Foreman, who hawks a hot-selling line of grills, will be paid $113,750,000 in cash, payable in five installments, plus 779,191 shares of Salton stock. Authorities in the field said it was unusual to compensate celebrities with stock in these types of endorsement/ development arrangements but that it could become a more frequent payment mechanism in the future. Under the agreement, Salton obtains the rights to the “George Foreman” name on a royalty-free basis in perpetuity and can use it on various types of food-preparation equipment. The two-ply arrangement provides the Foreman interests with cash up front and a bet on future benefits that can result from a rise in Salton shares. Unlike stock received in an m&a deal, the stock allocated in Foreman-type transactions is not automatically tax-free. However, legal experts said it is possible for Foreman to make an election under the tax laws that would allow him to defer taxes until the shares are sold. At that time, a tax would apply only to the difference between the value of the shares when they are received and their value when they are sold, assuming that the stock has climbed in price. r