The investment fund that owns 55% of BlueLinx Holdings disclosed today it failed to persuade enough of the other shareholders to let it buy the rest of the Atlanta-based distributor, even after it had sweetened its offer and won the recommendation of an independent committee of the BlueLinx board.
The offer by Cerberus ABP Investor LLC (CAI) and its parent Cerberus Capital Management LP expired at midnight Monday with Cerberus getting tenders for only 6.7 million of the 11.3 million shares that it needed in order for Cerberus to meet its requirement that it end up with at least 90% of all shares. With those 6.7 million shares, Cerberus owned only about 76% of the company.
The move ends--at least for now--a bid by Cerberus that began July 22 when the fund offered to pay $3.40 a share for the 14.6 million shares it didn't already own. (Story) That bid valued the rest of the distributor at $49.5 million. 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.
BlueLinx's board responded to Cerberus' offer by creating an independent committee to evaluate it. Meanwhile, a number of BlueLinx shareholders--often spurred by several law firms--began complaining that the bid was too low, even though that offer was 35% better than BlueLinx's share price the day before the offer was made.
A sort of standoff then ensued in which the independent committee refused to rule publicly on the proposal and Cerberus kept extending its offer deadline as well as declaring the deal was off unless the independent committee backed the idea. Eventually Cerberus raised its offer to $4 per share, pushing the deal's value to $58.4 million, and BlueLinx officials went on record backing the deal. (Story) Nevertheless, it now appears that not enough other shareholders regarded the offer as good enough to merit tendering their stock.