O'Sullivan Accepts Management's $350M Buy-Out Bid
By TWICE staff -- TWICE, 5/24/1999
The board of directors of O'Sullivan Industries has voted to accept a $350 million cash, stock and debt-assumption buyout offer from a management-led investment group.
The newly disclosed terms call for holders to receive for each share held $17.50 in cash (or about $294.3 million based on the number of shares outstanding), plus one share of a preferred stock valued at $1.75 and accruing dividends at an annual rate of 12%. The cash payout represents a premium of 38.6% from the $12.63 O'Sullivan shares were trading at when the offer was originally made.
The 16.8 million preferred shares to be issued must be redeemed at par by 2011. While they are non-voting, they will be traded in the over-counter market, so O'Sullivan will still be considered a publicly held company and subject to SEC financial reporting requirements.
Pending regulatory and stockholder approvals, the transaction is slated for closing in the third quarter of this year.
The board's approval recommendation comes on the heels of O'Sullivan's report that it turned in a markedly strong fiscal third quarter.
For the three months to March 31 the RTA furniture maker posted a more-
than-doubled net of $7.7 million. The earnings are after a bad debt write-down of $330,000, following the Chapter 11 filing in March of a major customer, understood to be Service Merchandise. Sales were a record $108.5 million, up 17.6% from last year. For its first fiscal nine months O'Sullivan had a 49.2% jump in net to $16.2 million, as sales rose 15.3% to $294 million.
COO Richard Davidson said the company's cash flow was up 60% to $16.5 million for the quarter, and the company's overall financial performance affirms "that O'Sullivan is providing emerging value in fiscal 1999 and beyond."
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