The investment firm that owns 55% of BlueLinx increased its bidding price to take over and privatize the distributor. It also said it now expects the special board of directors panel set up to review the offer will recommend shareholders take the deal.
In an SEC filing today, Cerberus ABP Investor LLC, 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 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 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 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. "The decision to increase the offer price and agreement to enter into the Stockholder Agreement follows discussions between CAI and Cerberusand the special committee of the board of directors of BlueLinx formed to consider the tender offer. CAI and Cerberus expect that the special committeewill recommend that the stockholders of BlueLinx accept the tender offer and tender their shares pursuant to the offer," Cerberus said in a news release.
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.