Two years after failing to secure a deal, Big Lots Inc. is once again a potential target of private equity firms as its chief executive officer retires.
Big Lots, which explored a sale in 2011, lost more than a third of its market value in the last 10 months as the company cut forecasts and said CEO Steven Fishman will retire amid a probe over his stock trades. The seller of discontinued and overproduced goods is valued at 5.3 times its estimated fiscal 2014 earnings before interest, taxes, depreciation and amortization. That’s the cheapest among similar-sized discount retailers, according to data compiled by Bloomberg.
With the $1.8 billion company throwing off more cash relative to its share price than any of its U.S. rivals, Wedbush Inc. said Big Lots still could tempt private equity firms, given its low valuation. The stock-sale investigation also could make investors in Columbus-based Big Lots more open to a bid of at least $40 a share, a 28 percent premium, said shareholder Centaur Capital Partners LP.
“If someone wanted to make a play for it, now would be the time,” said Zeke Ashton, managing partner at Centaur Capital. “The stock is cheap, there’s a CEO transition going on and there is probably some shareholder attitude of openness to getting a fair price because what we have now is a lot of scrutiny regarding the CEO’s stock purchases.”
