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GS Capital Partners seeks extension; stock drops 30%
By Jim Mackinnon
Beacon Journal business writer
Published on Tuesday, Dec 11, 2007
Myers Industries Inc. shares plunged more than 30 percent Monday after the company announced a second delay in its proposed $1 billion buyout by the private-equity arm of the investment firm Goldman Sachs.
Shares dropped $6.58, or 30.5 percent, to close at $14.98. It was the biggest one-day drop in 18 years for the company. Shares are down 3.6 percent since Jan. 1, including reinvested dividends, and are down 8.9 percent from a year ago. Shares have traded from a low of $14.93 on Jan. 8 to a high of $22.73 on April 25.
Myers Industries will get $35 million as part of a new agreement between the Akron company, which makes plastic and rubber items and distributes tools, and private-equity fund GS Capital Partners to extend the closing date of the leveraged buyout of the company to the end of April.
Myers Industries said GS Capital Partners asked for another extension on Friday evening. Myers' directors agreed, saying it was in the best interest of shareholders ''to preserve this opportunity,'' according to a news release.
Myers and GS Capital, the private-equity fund owned by financial giant Goldman Sachs, originally agreed in late April to close on the deal by Sept. 30; they later revised the closing to no later than Dec. 15.
Myers took the unusual step in late November of stating that the proposed merger was still going to take place by Dec. 15.
The new buyout date is now by the end of April 30.
In addition, Myers will be able to negotiate other potential buyout proposals.
GS Capital proposed buying out Myers
shareholders at a price of $22.50 a share, or $794 million, plus the assumption of $276 million of debt, in a deal valued at $1.07 billion.
Shares rose to a 52-week high of $22.73 on April 25, when the deal was announced.
But in recent months, the stock price had fallen below the $22.50 mark, signaling that investors were not sure that the deal was going to close as initially agreed upon by the company and investment fund.
''There's pessimism with the completion of deals in general in this market,'' Samuel Nicholls, an analyst who covers Myers Industries for New York-based W. Quillen Securities, said in an interview with Bloomberg News.
''(GS Capital Partners) has acknowledged that there has been no material adverse change in Myers' business, and that GSCP's deadline extension request resulted from its desire to further evaluate conditions in certain industries in which Myers operates,'' the company said.
Under the new extension, GS Capital agreed to pay Myers Industries a one-time, nonrefundable $35 million.
GS Capital will also invest $30 million of equity in the takeover as part of an agreement with lenders KeyBank and Goldman Sachs Credit Partners.
Special dividend
Myers' board of directors declared a special dividend of 28 cents a share payable Jan. 2.
That works out to a payout of about $9.85 million, based on nearly 35.2 million shares outstanding as of Oct. 31.
Directors also increased Myers' regular quarterly dividend from 5.25 cents to 6 cents a share.
The special one-time dividend and the dividend increase are for shareholders of record as of Dec. 20.
Myers Industries has 247 employees in Akron, 138 at its Akro-Mils factory in Wadsworth and about 3,700 worldwide.
The company traces its Akron roots to 1933.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Myers Industries Inc. shares plunged more than 30 percent Monday after the company announced a second delay in its proposed $1 billion buyout by the private-equity arm of the investment firm Goldman Sachs.
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