Thanks to an increase in its bidding price and other concessions, Cerberus, the investment firm that owns 55% of BlueLinx, persuaded a special board of directors panel to back its bid to buy the rest of the shares and take the distributor private.
In an SEC filing Sept. 23, Cerberus ABP Investor LLC (CAI), an affiliate of Cerberus Capital Management, said it now will pay $4 for each of the roughly 14.6 million shares in Atlanta-based BlueLinx that it doesn't own already. Its original offer, made July 22, was to pay $3.40 a share. The new offering price boosts the value of the transaction to $58.4 million from $49.6 million.
In addition, Cerberus agreed to enter into a stockholder agreement in case the investment firm ends up with less than 90% of all the outstanding shares. If that were to occur, Cerberus promised to make another offer that would last at least five business days. Cerberus would try to maintain the company's status as a public company or else voluntarily make SEC-style reports and maintain listings on a stock exchange. Cerberus would seek the approval or at least recommendation of a committee of independent directors to buy all remaining publicly traded shares.
Cerberus also extended to midnight Friday, Oct. 8, its deadline for shareholders to take the deal. Cerberus' original deadline was Aug. 27, but in recent weeks it extended that deadline several times in order to give a special committee set up by the board of directors more time to review the deal.
"The decision to increase the offer price and agreement to enter into the Stockholder Agreement follows discussions between CAI and Cerberus and the special committee of the board of directors of BlueLinx formed to consider the tender offer. CAI and Cerberus expect that the special committee will recommend that the stockholders of BlueLinx accept the tender offer and tender their shares pursuant to the offer," Cerberus said. On Sept. 27, the special committee did just that.
BlueLinx provides products from more than 750 suppliers to 11,500 customers nationwide. It reported on Aug. 5 a net loss of $3.4 million for the second quarter, swinging from a year-earlier profit of $600,000. That loss came despite a 27.7% increase in revenues to $540.8 million.