RSTO agrees to be acquired at $6.70 per share. The stock closed at $6.44 yesterday, up from Wednesday's close of $2.68.
Restoration Hardware, Inc. Signs Merger Agreement With Catterton Partners
Thursday November 8, 9:04 am ET
CORTE MADERA, Calif., Nov. 8 /PRNewswire-FirstCall/ -- Restoration Hardware, Inc. (Nasdaq: RSTO - News) today announced that it has entered into a definitive merger agreement with an affiliate of Catterton Partners. Gary Friedman, Restoration Hardware's Chairman, President and Chief Executive Officer, will participate with Catterton Partners in the transaction. In addition, several institutional stockholders of Restoration Hardware have agreed to invest in the transaction or exchange a portion of their Restoration Hardware common stock for equity of the purchaser or one of its affiliates.
Under the terms of the merger agreement, all of the outstanding shares of Restoration Hardware, other than those exchanged by the participating stockholders, will be acquired for a price per share equal to $6.70 in cash. The $6.70 per share cash consideration represents a 150% premium to the closing price of Restoration Hardware common stock on November 7, 2007, the last trading day prior to the announcement of the merger agreement. The total equity value of the transaction is approximately $267 million.
The merger agreement was negotiated on behalf of Restoration Hardware by a committee of the Board of Directors composed entirely of independent directors with the assistance of independent financial and legal advisors. The Board of Directors of Restoration Hardware, on the unanimous recommendation of the independent committee, has approved the merger agreement and recommends that Restoration Hardware's stockholders adopt the merger agreement.
"We are pleased to announce this transaction, which delivers significant value to our stockholders," said Mr. Friedman. "In addition, we are excited about the opportunity to work with Catterton Partners, which has a successful track record and significant experience in the consumer and retail industries. We believe this partnership will provide us with important resources to execute our operating and growth strategies over the long-term."
J. Michael Chu, Managing Partner of Catterton Partners, added, "We are pleased to enter into this partnership and look forward to building on the accomplishments of Gary and his team. Since joining the Company several years ago, they have established the Restoration Hardware brand as a leader in the premium home furnishings category. By combining our respective expertise, we believe we can continue to evolve and grow the brand and become a dynamic force in the marketplace."
In accordance with the merger agreement, the committee of independent directors, with the assistance of its advisors, will solicit proposals from third parties for a period of 35 days concluding December 13, 2007. The independent committee, with the assistance of its advisors, intends to actively solicit superior proposals during this period. There is no assurance that the solicitation of superior proposals will result in an alternative transaction.
The transaction is subject to (i) the approval of holders of two-thirds of the outstanding shares of Restoration Hardware common stock pursuant to the certificate of incorporation of Restoration Hardware, (ii) the approval of holders of a majority of the shares voting at the special meeting that are held by stockholders not participating in the transaction, and (iii) other closing conditions, including the receipt of regulatory approvals. The transaction is not subject to any financing condition (other than the performance of the investment and share contribution commitments made by the institutional stockholders and Mr. Friedman) and is expected to close in the first quarter of 2008.
UBS Securities is acting as financial advisor to the independent committee in connection with the proposed merger.
Gibson, Dunn & Crutcher LLP is acting as legal counsel to Catterton Partners.
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