Looks like there might be some trouble with the USANA buy out offer. Apparently the cause of the melt down is a low ball offer.
A special committee selected by the board, had been evaluating the offer made by USANA founder, CEO and chairman of the board, Myron Wentz, for several weeks now and have recommended that the remaining shareholders reject the $26 a share offer.
The offer was made a month ago by Wentz, family members and other stockholders who together control 68% percent of the stock. The committee felt that the offer was not in the best interest of the remaining shareholders and greatly undervalued the shares. The committee also felt that the offer did not represent the values and the future goals of the company.
The committee released a statement via filing with the SEC saying, “The special committee unanimously determined that the offer is inadequate and not in the best interests of the shareholders of the company [other than the offer participants],”
The committee met with the Wentz group after it unanimously voted to reject the offer and according the SEC documents, the Wentz group was not willing to increase the offer price.
Wentz and his group were hoping to take the nutritional products company private so that the company could focus on business and not on legal and regulatory issues that public company’s are subjected to. The group had planned on borrowing up to $215 million to help finance the deal.
USANA stock closed at $28.34 on Friday. The buyout price of $26 a share is almost a 50% discount to the high trading price for the 52 week period ending June 18th. There is no question the offer price is going to have to be much closer to $35 a share to make this remotely possible. The problem that USANA is going to have (and may be dealing with today) is that the Private Equity money is being tightly held and deals like this are becoming harder and harder to finance.
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