Wickes Agrees to $598-Million Offer From Management
Putting itself on the auction block, Wickes Cos. said late Sunday that it has agreed to be acquired in a $598-million offer led by Chairman Sanford C. Sigoloff. But the company openly solicited higher offers.
The Santa Monica manufacturing and retailing concern said it has agreed to a $12-per-share tender offer from WII Holdings Corp., a firm formed by Sigoloff and other company managers.
However, Sigoloff--who brought the company out of bankruptcy proceedings three years ago--said he has agreed not to purchase Wickes shares for the next 60 days. He said the move, which essentially serves notice that Wickes is up for sale to the highest bidder, gives the company time to entertain other offers.
Sigoloff’s $12 offering price was immediately criticized by one dissident shareholder as “an absolute travesty,” especially since the company placed its per-share value at nearly $25 in its 1987 annual report.
“It’s a rape of the shareholders,” said Jeffrey Kahn, a Malibu businessman who owns 12,000 Wickes shares. “The company has been deliberately managed (so) management can buy it cheaply.”
Sigoloff called Kahn’s charges an “absolute absurdity.”
The announcement came as little surprise to analysts. Rumors of a management takeover or outside purchase have been swirling around the company for months as its stock price has languished at levels below what it was even trading at during its three-year stretch reorganizing under Chapter 11 of the federal bankruptcy code.
The takeover bid was announced at the same time the company revealed that it lost $12.4 million in the second quarter ended July 30, compared to profits of $19 million in the same period last year. For the first half of the fiscal year, losses totaled $15 million, compared to a gain of $139 million a year ago.
The company blamed the disappointing results on a poor performance by its hosiery and apparel units, delays in its planned sale of those units and sagging business in its automotive and textile operations.
Predicts Resell of Firm
Sigoloff cited the results as a factor in his takeover bid, noting that the losses “make it unlikely . . . that our shareholders would see short- or intermediate-term appreciation in their share price.”
Wickes shares closed Friday at $9.375 on the New York Stock Exchange. Over the last 52 weeks, its shares have ranged in price from $7.25 to $21.125.
Dissident shareholder Kahn said he has argued for months that Wickes is worth about $20 per share and suggested that if Sigoloff’s offer is allowed to stand, it would allow the management group to reap enormous future profits.
“They’ll take it private, clean up its problems and then resell it to the public for a huge profit,” Kahn said. “It’s terrible for the current shareholders.”
However, Sigoloff said his agreement to stand still for 60 days and the price of the initial offer opens the door to additional bids.
“While we believe that our offer is fair, both management and the board want to ensure that the company’s shareholders obtain the best price for their shares,” Sigoloff said in a prepared statement. “We have agreed not to purchase shares in the tender offer for 60 days from the date of this announcement in order to ensure that ample opportunity is afforded to determine whether it is possible to achieve a higher price.”
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A Wickes insider said, “Sandy is trying to do for the shareholders what he did for the company’s creditors when it was in bankruptcy. He wants to get them maximum value.”
Before receiving board approval, Sigoloff’s offer was reviewed by a special independent committee of Wickes’ directors. The committee was advised by the investment banking firm of Bear, Stearns & Co., and neither Sigoloff nor another board member involved in the buyout group participated in the final vote on the proposal, the company said.
Sigoloff’s group said it has received assurances from its investment bankers, Drexel Burnham Lambert Inc., that sufficient financing can be arranged for the takeover.
Sigoloff has become a familiar face to Southern Californians for his “We got the message, Mr. Sigoloff” television advertisements on behalf of Builders Emporium, one of Wickes’ better-performing businesses.
But Sigoloff, 57, was no stranger to the business community before rescuing Wickes from near financial ruin in 1982. Over the next three years, the long-time Los Angeles resident turned Wickes from a far-flung manufacturing, lumber and retailing conglomerate into a more tightly focused maker and supplier of automotive, textile and home improvement products.
In the process, insiders say, he lived up to his nickname, “Ming the Merciless,” a moniker he acquired more than a decade ago for his tough, demanding and workaholic habits. Over the course of Wickes’ stay in bankruptcy reorganization, Sigoloff sold several divisions and reduced the company’s employment by one third.
