LL Flooring Founder and former CEO Tom Sullivan’s private equity, F9 Investments, has made another bid to acquire LL Flooring, this time for $3.00 per share—$2.76 less than its previous proposal.
Back in May, F9 Investments, which currently owns approximately 8.8% of LL Flooring common stock, made an unsolicited bid to buy the company for $5.76 per share. That offer was rejected by the LL Flooring Board, which said the bid undervalued the company. Sullivan subsequently revoked F9’s offer.
Sullivan’s latest bid, made in a letter dated Nov. 14, pointed to continued losses at the company, which recently reported a “disappointing” third quarter net loss of $36 million.
“As current shareholders, we are dismayed to see third quarter results continue the pattern of declining sales, transaction volume and earnings, concurrent with significant negative free cash flow and a nearly 100% increase in leverage,” Sullivan stated.
In August, LL Flooring announced it had begun exploring “strategic alternatives,” including a possible sale or merger. Sullivan accused the company of refusing to “meaningfully engage” with him since then.
“We believe our offer represents a compelling opportunity that your shareholders will find attractive, especially in light of the Company’s deteriorating financial condition and declining stock price which, we believe, reflects the market’s lack of confidence in the current Board’s strategy,” Sullivan stated.
Sullivan has had an often-acrimonious relationship with the company he founded since his ouster as an employee in 2017. In 2019, Sullivan’s company, Cabinets To Go, settled a lawsuit with LL Flooring over a dispute regarding a non-compete clause. Sullivan first spoke about a possible merger with his former company in 2019, causing its stock to soar nearly 9% before backing out and selling 80% of what he owned for a $5 million profit.
In October, LL Flooring received a non-binding proposal from a diversified holding company to buy all outstanding shares for $5.85 per share.
