White Cap Sued Over Buyout Proposal

White Cap Industries Inc., which sells tools and construction equipment to contractors in the western U.S., said Monday it was sued by a shareholder who contends that a $240-million cash buyout is too low.

Costa Mesa-based White Cap said last week it would be acquired by its management and investors affiliated with Los Angeles-based merchant banker Leonard Green & Partners LP for $16.50 per share in cash.

In a suit filed in Delaware Chancery Court in Wilmington, White Cap shareholder Anthony Casey charged that company directors have not fulfilled their obligation to get the best price for the stock and should solicit bids.

“On May 18, 1999, the company announced that it had achieved record revenues [but] the amount offered in the merger agreement is grossly inadequate and has been timed to take advantage of the company’s currently depressed stock price,” Casey said in the suit.

He asked a judge to grant the case class-action status on behalf of all shareholders and to award an unspecified amount in damages.

Company officials could not be reached to comment on the suit.

White Cap--which went public in 1997 at $18 a share--hit a 52-week high of $19.63 a year ago. But its shares skidded 40% before last week’s $16.50 a share offer, which represented a 43% premium over what White Cap’s shares were trading at the day before the deal was announced.

White Cap shares rose 6 cents Monday, to $15.31, in Nasdaq trading.

The company earned $10.2 million on sales of $292.3 million in the year ended March.