Cerberus Capital Management, owners of 55% of BlueLinx Holdings, filed a tender offer today to buy the rest of the company for today's opening price $3.40 a share--an offer worth $49.5 million. Bluelinx shares shot up on the news from Wednesday's closing price of $2.51 to $3.48 in today's afternoon trading to close at $3.66.
"We believe that our offer to acquire the shares of BlueLinx not owned by [Cerberus] represents a unique opportunity for BlueLinx's stockholders to realize the value of their shares at a significant premium to BlueLinx's current and recent stock price," officials for Cerberus unit Cerberus ABP Investor LLC (CAI) wrote in a letter sent to the BlueLinx board on Wednesday. "... In considering our tender offer, you should be aware that in our capacity as a stockholder we are interested only in acquiring the BlueLinx shares not already owned by us and that in our capacity as a stockholder we have no current interest in selling our stake in BlueLinx nor would we currently expect, in our capacity as a stockholder, to vote in favor of any alternative sale, merger or similar transaction involving BlueLinx other than the transaction outlined here."
BlueLinx president and CEO George R. Judd, in an SEC filing that appears to be taken from a memo to staff, indicated the company's board had yet to decide whether to form a special committee to consider the tender offer. "We will provide further information when the BlueLinx Board makes a determination about whether to form a special committee and any recommendation made by that committee or the full Board," he wrote. "There can be no assurance the proposal from Cerberus will be approved. For all employees, I expect no change for you, our customers and our vendors. It is important we stay focused on serving our customers better thananyone else in the industry. Everything will be business as usual. Please stay focused on our jobs, and doing our jobs safely."
Atlanta-based BlueLinx, which provides products from more than 750 suppliers to 11,500 customers nationwide, reported May 6 that its net loss shrank to $14.7 million in its fiscal first quarter ended April 3 from a $60.7 million net loss in the year-earlier period. Revenues rose 6% to $431.1 million--the first such year-over-year increase in four years--while overall unit volume increased by 1.4% from 2009's fiscal first quarter.
Cerberus said it will launch its tender offer within seven days. It said the offer will stand only if it ends up owning at least 90% of the outstanding BlueLinx common shares, and that any not acquired in that way "are expected to be acquired in a subsequent merger transaction at the same cash price per share."