Just 21 months after going public, White Cap Industries Inc. said Thursday its founder and other investors will buy the company for about $240 million and take it private.
Founder and Chief Executive Greg Grosch, other managers and an investment group affiliate of Los Angeles-based Leonard Green & Partners will pay $16.50 a share for the Costa Mesa-based company, a 43% premium over Thursday's closing price.
The transaction, unanimously endorsed by a non-management committee of the board of directors, should be complete in the fourth quarter, the company said.
Grosch will remain chief executive of the company, which operates a chain of warehouse stores that sell construction supplies and tools to contractors.
The executives are bidding to acquire the company partly because the stock has been trading "below what we thought was fair value for the shareholders," said Chris Lane, chief financial officer.
White Cap, which was founded in 1976, made an impressive showing in its initial public offering in October 1997, a reflection of the promising prospects in the construction industry.
The company sold 4 million shares of stock priced at $18 a share. The shares moved up to $24.13 in the first day of trading on Nasdaq.
But the shares have lost about 40% of their value in the last year. The stock closed Thurday at $11.50, up 44 cents on Nasdaq.
Leonard Green & Partners is a private Los Angeles-based merchant banking firm that specializes in management buyouts, private transactions and recapitalizations of companies.