Link This | Email this | Blog This | Comments (0)

Sun Capital Seeks Furniture Brands
February 24, 2008

I’m guessing that there were some panicked traders last week when Sun Capital, who owns 9.4% of Furniture Brands Intl., decided the time was right to offer to buy the rest of the company, Wednesday, at a substantial premium to the Tuesday closing price of $10.34



Furniture Brands Intl. (FBN) is one of the nation’s leading designers, manufacturers and retailers of home furnishings. With annual sales in excess of $2 billion, Furniture Brands Intl. produces, sources, and markets products under six well-known brand names: Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland-Smith.

At $10.34, the shares were selling at a 60% discount to book value and 30% of sales.  Sun Capital probably thought it doesn’t get much worse for the industry.  They may have thought that with a couple other interested buyers lurking in the weeds, now was the time to make their own intentions known.   Tom Taulli at Blogging Stocks thinks ”that – given the tough macroeconomic environment – the company needs to take aggressive action on cost cutting.”  

“Earlier this year, the FBN closed eight of its company stores, divested itself of its business furniture operation and saw the resignation of its Chief Financial Officer.” A private company, say experts, can think long term.  As a result of the offer, panicked traders, who had sold short over 28% of FBN’s total shares outstanding, which is a lot, rushed to cover on the opening Wednesday.  FBN jumped a dollar on the opening and traded as high as $13.64.

Thursday FBN rejected the unsolicited bid.  "We are executing a strong strategic transformation that is already creating value for Furniture Brands shareholders," said Ralph P. Scozzafava, vice chairman and chief executive, in a release. "We're on track with our own aggressive timetable to transform this company, and we're already seeing the positive results of our efforts.

"Earlier his month, Sun Capital bought another St. Louis-area firm -- clothing maker Kellwood Co. Like Furniture Brands, Kellwood initially fought Sun Capital's offer, saying executives had their own plan to boost its stock price."

Sun Capital already owns Berkline Benchcraft Holdings, LLC, Catalina Lighting, Eljer, Interface Fabric, Lexington Home Brands, Pamida, Performance Fibers, Rowe Furniture and many more consumer oriented companies.  Don’t forget Lillian Vernon, Nationwide Mattress and Furniture Warehouse, and Wickes Furniture, all bankrupt.  

I'm only guessing, but I would think FBN's days of public ownership are numbered.

Thoughts??? Email them to me at landfair3554@comcast.net.

Posted by Mike Landfair on February 24, 2008 | Comments (0)