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Big Flower gets big buyout
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June 29, 1999: 5:52 p.m. ET
Investment firms agree to $1.9 billion recapitalization; new company formed
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NEW YORK (CNNfn) - The board of Big Flower Holding Inc. agreed Tuesday to a $1.9 billion cash and stock buyout offer from two investment firms, ending a three-month effort to find new strategic partners.
The New York-based advertising and marketing company's board accepted a tender offer from Boston-based Thomas H. Lee Co. and New York-based Evercore Capital Partners to merge the firm into a newly created private investment firm to be controlled, in part, by current Big Flower management.
Terms of the deal call for Big Flower shareholders to receive $30 per share in cash and 0.21 shares of a payment-in-kind preferred stock with a liquidation preference of $25 per share, or $5.25 per share of Big Flower common stock. Current shareholders will also receive warrants to purchase common shares in the new company.
Big Flower founder and Chairman Theodore Ammon and other company managers would retain a portion of their equity stake in the new firm, which will represent "a significant equity interest in the re-capitalized company," according to a written release.
The deal follows the company's April 20 announcement that it was exploring several strategic alternatives, including selling all or part of its franchise.
The day before that announcement, Big Flower's (BGF) stock closed at 27-7/8. The stock ended down 3-15/16 at 31-9/16 Tuesday following the buyout announcement.
The company's stockholders will vote on the proposal at a special shareholder meeting, tentatively planned for late third quarter or early fourth quarter. Big Flower's regular shareholder's meeting, originally scheduled for Tuesday morning, was canceled after the buyout deal was announced.
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