Interco Plans Restructuring, Puts Ethan Allen Up for Sale
Interco Inc.’s board rejected a revised $2.66-billion takeover offer Tuesday and said it would instead pursue a major restructuring and recapitalization program.
The furniture and apparel maker also said it had decided to sell its Ethan Allen furniture subsidiary as part of the restructuring. The company had said previously that it was considering such a sale.
The board also declared a special dividend of $25 a share in cash and securities but suspended the regular quarterly dividend pending completion of the restructuring.
On the New York Stock Exchange, Interco stock fell $1.125 a share to $69.25.
Interco said the board had been told by its financial adviser, Wasserstein, Perella & Co., that Cardinal Acquisition Corp.’s revised $72-a-share offer was inadequate to shareholders. Cardinal Acquisition is an investment group headed by brothers Steven and Mitchell Rales of Washington.
“Recognizing the bright prospects for Interco’s leading consumer brands, we believe it is not an opportune time to sell the company,” Interco Chairman Harvey Saligman said in a news release. “Consistent with this belief, we have adopted a plan of recapitalization and restructuring that will deliver significant immediate value to our shareholders.”
Interco has rejected the Rales’ overtures since their first offer of $64 for each of the 37 million shares outstanding. The Rales own about 8.7% of Interco’s shares.
On Monday, the Rales made public a letter that had been sent to Interco warning against an anti-takeover restructuring. The response was to an Interco filing with the Securities and Exchange Commission last week in which the company disclosed the possibility of a defensive restructuring.
Interco said in its filing that it had retained a group of bankers to explore how to finance the restructuring and said that could include the sale of assets such as the Ethan Allen operation. The firm said Tuesday that it had decided to go ahead with the sale and instructed Wasserstein Perella to seek bidders.
