8-K: Horizon Kinetics Completes Merger with Scotts Liquid Gold, Shares to Trade on Pre-Split Basis Temporarily

Horizon Kinetics has finalized its merger with Scotts Liquid Gold, now named Horizon Kinetics Holding Corporation, but trading will continue on a pre-reverse split basis due to delays.

Summary

• Horizon Kinetics LLC has completed its merger with Scotts Liquid Gold-Inc., which is now named Horizon Kinetics Holding Corporation.
• The company has reincorporated in Delaware.
• Due to unexpected delays with FINRA and the DTC, the company's shares will continue to trade under the ticker symbol SLGD on a pre-reverse split basis.
• The number of shares in shareholder accounts will remain the same until trading begins under the post-reverse split CUSIP (439913104).
• Approximately 18 million shares were issued to Horizon Kinetics members as merger consideration on a post-reverse split basis, and these shares are not currently eligible for trading.
• Legacy shareholders of Scotts Liquid Gold now own approximately 3.5% of the combined company on a post-reverse split basis.
• The final consideration was based on Horizon Kinetics having approximately $7.9 billion in Assets Under Management (AUM) and approximately $250 million in Net Tangible Assets.
• The company will continue to execute on various strategic initiatives to take advantage of structural inefficiencies.

Sentiment

Score: 6

Explanation: The merger is a positive development, but the unexpected delays and temporary trading on a pre-split basis temper the overall sentiment.

Positives

• The merger between Horizon Kinetics and Scotts Liquid Gold has been successfully completed.
• The company is committed to preserving its owner-operated culture and long-term, fundamental value, contrarian investment practice.
• The merger allows for a seamless transition to the next chapter of the company's development.
• The company will continue to execute on various strategic initiatives to take advantage of structural inefficiencies.

Negatives

• There have been unexpected delays in reflecting the reverse split and changing the ticker symbol due to issues with FINRA and the DTC.
• Shares will continue to trade on a pre-reverse split basis, which may cause confusion for shareholders.
• The 18 million shares issued to Horizon Kinetics members are not currently eligible for trading.

Risks

• The trading of the company's stock on a post-reverse-split basis under a new ticker symbol may not occur when or as expected.
• Anticipated benefits from the merger may not be realized, or may not be realized within the expected time period.
• Disruption from the merger may make it more difficult to maintain business and operational relationships.

Future Outlook

The company will continue to execute on various strategic initiatives to take advantage of structural inefficiencies and is committed to preserving its owner-operated culture.

Management Comments

• Dan Roller thanked SLGD shareholders, employees, and board for their trust and support.
• Rimmy Malhotra expressed enthusiasm about the next chapter for the company.
• Murray Stahl welcomed SLGD shareholders and stated the merger permits a seamless transition to the next chapter of their development.

Industry Context

This merger represents a significant strategic move for Horizon Kinetics, expanding its reach into the public markets and combining its investment advisory services with a portfolio of consumer products. This is a trend of private investment firms seeking public listings.

Comparison to Industry Standards

• The merger of a private investment firm with a publicly traded company is not uncommon, but the specific structure and the temporary delay in the reverse split are unusual.
• Other firms such as Blackstone and KKR have also expanded into different sectors, but this merger is unique in its combination of investment advisory and consumer products.
• The AUM of $7.9 billion places Horizon Kinetics in the mid-tier range of investment advisory firms, while the $250 million in Net Tangible Assets is a key factor in the merger valuation.

Management Changes

Stakeholder Impact

• Shareholders of Scotts Liquid Gold now own a smaller percentage of the combined company.
• Shareholders may experience confusion due to the temporary trading on a pre-reverse split basis.
• Employees of both companies will be integrated into the new entity.

Next Steps

• The company will work to resolve the issues with FINRA and the DTC to enable trading on a post-reverse split basis under the new ticker symbol.
• The company will continue to execute on various strategic initiatives.

Key Dates

Keywords

merger, Horizon Kinetics, Scotts Liquid Gold, reverse stock split, ticker symbol, AUM, Net Tangible Assets, investment advisory, FINRA, DTC