Contract analysis

I. Executive Summary The purpose of this memorandum is to assess the substantive antitrust risks associated with the proposed acquisition of Pennfield Holdings, Inc. ("Pennfield" or the "Target"), a publicly traded specialty retailer of outdoor lifestyle products, sporting goods, and adventure apparel, by Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Buyer"), a private equity fund managed by Harrowgate

II. Transaction Overview A. Parties Buyer. The acquiring entity is Harrowgate Private Equity Fund IV LP, a Delaware limited partnership formed in 2023 for the purpose of making private equity investments primarily in mid-market consumer and specialty retail businesses. HPE Fund IV's general partner is Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company. The investment manager and sponsor of HP

III. HSR Act Filing Requirements A. Size-of-Transaction Test Under the HSR Act and its implementing regulations, notification to the FTC and the DOJ is required before certain acquisitions that satisfy specified jurisdictional thresholds can be consummated. The primary jurisdictional threshold is the size-of-transaction test, which requires that, as a result of the transaction, the acquiring person will hold an aggre

IV. Relevant Market Analysis A critical step in any antitrust analysis of a proposed merger or acquisition is the definition of the relevant product market and relevant geographic market. Market definition serves as the framework within which the competitive effects of a transaction are assessed. The DOJ and the FTC define relevant markets using the "hypothetical monopolist" test, which asks whether a hypothetical mo

1. Overview of Pennfield's Business Pennfield operates as a specialty retailer of outdoor lifestyle products, sporting goods, and adventure apparel. The company's merchandise assortment spans a broad range of product categories catering to consumers who participate in outdoor recreation and active lifestyle pursuits. Pennfield's core product categories include: • Outdoor and camping equipment: Tents, sleeping bags, c

2. Proposed Product Market Definitions In our analysis, we have considered three plausible product market definitions, ranging from narrow to broad. The appropriate market definition depends on the analytical framework applied by the reviewing agency, but the competitive effects analysis yields the same conclusion — no competitive concern — under any of these definitions. Narrowest plausible market: Specialty outdoor

3. Key Competitors in Specialty Outdoor/Sporting Goods Retail The specialty outdoor and sporting goods retail market features a large number of competitors spanning multiple business models, including national specialty chains, general sporting goods retailers, regional and independent retailers, and online marketplaces and e-commerce platforms. The competitive landscape includes, but is not limited to, the following

1. National Market Pennfield operates across 34 states through its network of 209 physical retail locations and sells to consumers nationwide through its e-commerce platform. The company's competitors similarly operate on a national basis, with both physical store networks and online sales channels that serve customers throughout the United States. Major national competitors maintain store networks spanning dozens of

2. Local/Regional Market Considerations Although the primary relevant geographic market for this analysis is national, we have also considered whether the transaction could raise competitive concerns in local or regional geographic markets. In retail merger analysis, the agencies sometimes examine competition at the local level, particularly when the merging parties operate competing stores in overlapping trade areas

V. Competitive Effects Analysis Having defined the relevant product and geographic markets, we now turn to an assessment of the competitive effects of the proposed transaction. The analysis considers horizontal effects (including market concentration and overlap), vertical effects, potential competition and conglomerate effects, coordinated effects, and buyer-side market power. In each case, we conclude that the tran

VI. Assessment of Enforcement Risk A. DOJ/FTC Challenge Likelihood Based on the comprehensive analysis set forth in the preceding sections, we assess the risk of a substantive antitrust challenge to the proposed transaction as low. Specifically: • Estimated probability of a second request: Less than 5%. • Estimated probability of an enforcement action (including a complaint, consent decree, or requirement for divesti

VII. Non-U.S. Merger Control Filings We have conducted a jurisdictional analysis to determine whether the proposed transaction triggers mandatory merger control notification requirements in any jurisdiction outside the United States. The analysis examined the filing thresholds and jurisdictional requirements of all major non-U.S. merger control regimes, including, without limitation, the European Union (under the EU

VIII. Recommendations Based on the analysis set forth in this memorandum, we make the following recommendations to the deal team and the client. A. Filing Strategy We recommend that the parties proceed with HSR Act premerger notification filings on or about April 8, 2025, the day following the expected execution of the Merger Agreement on April 7, 2025. Prompt filing will ensure that the 30-day initial waiting period

IX. Conclusion The proposed acquisition of Pennfield Holdings, Inc. by Harrowgate Private Equity Fund IV LP presents low substantive antitrust risk. The specialty outdoor and sporting goods retail market in which Pennfield operates is highly fragmented, characterized by numerous national, regional, and online competitors, low concentration, and vigorous competition. Pennfield holds a modest estimated market share of

X. Contact Information Questions regarding this memorandum or the HSR filing process should be directed to: Elaine Forsythe Specialist Partner, Antitrust & Competition Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, NY 10006 Telephone: (212) 555-4820 Email: eforsythe@calderwoodharkness.com Elaine Forsythe is available to discuss this assessment with the deal team and the client at their convenience.