What what would you do if you put your company up on the auction block, got the bidding started at $574 million, and couldn’t get a higher offer?
That’s the situation facing Wickes Cos. The Santa Monica-based company said Friday that it has failed so far in its 1 1/2-month effort to find a bidder willing to top a $574-million offer by the firm’s management. And to drum up more interest, the company’s board said Friday that it might be willing to sell pieces of the company separately.
The management offer is led by Wickes Chairman Sanford C. Sigoloff and the investment firm Drexel Burnham Lambert. The offer expires Oct. 20.
Investors are apparently skeptical that anyone will top Sigoloff’s bid, which amounts to $12 a share, says Gregory H. Kieselmann at L. H. Friend, a Century City brokerage firm.
Potential buyers have been put off by Wickes’ approximately $2 billion in debt and its poorly performing textile and apparel divisions, Kieselmann said.
It’s a shame no one has shown interest in the once-bankrupt Wickes, Kieselmann said. “They have done a good job of bringing this company out of bankruptcy, but nobody seems to care,” he said.
Earlier this week, it was reported that the Blackstone Group, a New York investment banking firm, was considering topping the Sigoloff offer with a bid ranging from about $620 million to $715.5 million. But the investment firm, according to sources, was having a difficult time overcoming tax and accounting problems connected with buying Wickes, which is also a major supplier of automobile upholstery, wallpaper and decorative fabrics.
After approaching about 200 potential buyers for the whole company, Wickes’ investment banker--Bear, Stearns & Co.--said in a statement that it had found “varying degrees of interest” in the firm or individual parts of it. But no solid offers had been made for the entire company.
As a result, Bear Stearns suggested trying to find a party “interested in making a substantial investment so as to facilitate a restructuring.” The investment firm said that the restructuring would most likely include a substantial injection of cash by a new investor, the sale of one or more of the company’s operations and the distribution of cash or securities to Wickes stockholders.
A committee of Wickes’ outside board of directors has instructed Bear Stearns to continue the search to find “a higher value for the company’s stockholders through any reasonable means,” including a possible restructuring.
Jeffrey Kahn, a dissident Wickes stockholder who has tried to play a role in company management, said the board turned down his offer to negotiate a higher bid from the Sigoloff group or find a higher bidder. Kahn, who will now seek a higher bid without the board’s blessing, said any additional money raised from a higher offer would be used to settle shareholders’ lawsuits against Wickes.
“The board by no means has ignored Mr. Kahn,” said Wickes spokesman Michael Sitrick. “A representative of the board spoke with him to see if he had any concrete proposals with respect to a higher offer. He did not. If by chance Mr. Kahn has any specific suggestions we would encourage him to contact Bear Stearns.”
On the New York Stock Exchange Friday, Wickes shares fell $1 to $11.50. The stock was fifth most-heavily traded, with 2.2 million shares changing hands.