BlueLinx Holdings Inc. today endorsed a bid by the 55% owner of the Atlanta-based distributor to buy the rest of the company's shares for $4 each and privatize BlueLinx for roughly $58.4 million.
The recommendation was made on behalf of BlueLinx by a special committee of the board of directors that had been convened to consider the offer from Cerberus ABP Investors LLC (CAI), a unit of Cerberus Capital Management. It came three days after Cerberus, in an SEC filing, increased its offer for BlueLinx to $4 per share from $3.40. Cerberus already owns just over 55% of the company.
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 occurred despite a 27.7% increase in revenues to $540.8 million.
CAI's offer to buy the 14.6 million in BlueLinx shares that it doesn't already own is good until midnight ET on Friday, Oct. 8.
Aside from increasing its offer price, Cerberus said in its SEC filing that it 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 reporting 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' original deadline, set when it made its offer on July 22, was to acquire all of BlueLinx was on Aug. 27. But in recent weeks it has 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.