Pool Supply Chain Gets Buyout Offer
Leslie’s Poolmart, the Chatsworth swimming pool supply retailer that has had trouble keeping its stock price afloat, said Tuesday that it has received a management-led buyout offer worth up to $109 million.
Hancock Park Associates II, a partnership led by Leslie’s chairman, Michael J. Fourticq, and Chief Executive Brian P. McDermott, has proposed taking the company private by acquiring its outstanding shares for $14.50 apiece. McDermott was part of an investor group that acquired Leslie’s in 1988 for $17.5 million.
The all-cash offer is conditional upon Hancock Park receiving financing, approval by Leslie’s board and an opinion by an independent investment banking firm that the price is fair.
Leslie’s, which has been considering ways to boost its stock price, said it has also received “preliminary indications of interest” from two other, unnamed parties that might also include some company managers. No other details were released.
“It’s fair to say the motivation behind this whole process has been to increase the value to the shareholders,” McDermott said.
In June, during Leslie’s peak season, its stock hit a 52-week high of $19.50 a share, but the shares soon fell to $10.50, their lowest level in about two years. The company’s stock closed up $2.25 on Tuesday, at $13.75 a share on Nasdaq.
Leslie’s has long sought to become the Home Depot of pool gear. Its 259 stores, which are concentrated in California, Texas and New Jersey, carry thousands of pool-related items, from chlorine and filter systems to snorkels and toys. The 33-year-old company, which operates in 27 states, has established itself as the low-cost competitor in what is primarily a mom-and-pop industry.
Leslie’s is a “real well-run operation,” said William Gibson, an analyst at Cruttenden Roth, an Irvine-based investment banking firm.
Nonetheless, the company’s prospects have been dampened by seasonal fluctuations inherent in the swimming pool supply business.
In 1995, Leslie’s net income fell 26%, to $3.41 million, despite a 15% gain in sales to $162.5 million. In the third quarter ended Sept. 28, profit slipped 13%, to $4.2 million, while sales rose 12% to $63.7 million.
Despite adding about 40 stores this year and plans to open another 30 in 1997, Leslie’s has received a cool reception from investors.
“You’ve got knowledgeable insiders who think it’s worth more than Wall Street is willing to pay for it,” Gibson said.
