Acrylic and fiberglass bathware producer Maax Inc. will be sold to a consortium of investment firms and managers.
Maax announced March 11 that the Poulin family, which holds 14.5 percent of the company's shares, the largest block, agreed to a purchase price of C$22.50 (US$17.05) per share. The price is a 22 percent premium over the previous day's closing price and a 29 percent premium over the 20-day weighted price prior to Maax's announcement last fall that it was for sale. The deal, including assumption of C$85 million (US$64.4 million) of debt, is worth about C$640 million (US$484.9 million).
One research analyst said the offer is too low. While the offer represents a multiple of 6.5 times earnings before interest, taxes, depreciation and amortization, a multiple of 7-7.5 is more realistic, according to Claude Proulx of Montreal brokerage firm BMO Nesbitt Burns Inc.
Proulx said he expected Maax rivals like Kohler Co. and American Standard Co. to make serious bids for Maax, rather than financial investors. Major competitors could use their well-known brand names to exploit Maax's penetration in the mass-merchandiser market, he said.
The purchasing group comprises Boston-based private equity firm J.W. Childs Associates LP, Toronto investment companies Borealis Private Equity LP and Borealis (QLP) Private Equity LP, Ontario Municipal Employees Retirement System and a management group led by continuing President Andre Heroux.
Shareholders will vote on the purchase plan May 7. Pending approvals, the deal could be finalized June 1.
Although the Poulin family agreed to tender its shares and Maax's board has approved the deal, Proulx does not think the majority of other shareholders automatically will tender their shares under the current offer.
Maax is the largest bathware producer in Canada and the third largest in North America since its 2002 acquisition of Aker Plastics Inc. of Plymouth, Ind.
St. Marie de Beauce, Quebec-based Maax has been for sale since September, when founder, chairman and major shareholder Placide Poulin announced he wanted to retire.
Maax runs 25 plants and distribution centers in North America and Europe, after a multiyear expansion spree.
The company reported profit of C$8.3 million (US$6.29 million) for its third quarter, ended Nov. 30, compared with profit of C$9.8 million (US$7.4 million) for the year-earlier period. Sales were C$160.2 million (US$121.4 million), up 4.7 percent.