Frozen Food Express (FFEX) to Go Private for $2.10/Share
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Frozen Food Express Industries (NASDAQ: FFEX) and Duff Brothers Capital Corporation today announced they have entered into a definitive agreement pursuant to which Duff Brothers Capital Corporation will offer to acquire all of the outstanding shares of common stock of FFE (except shares owned by its affiliates) for $2.10 in cash per share of common stock. Duff Brothers Capital Corporation is wholly owned by Thomas and James Duff, who also indirectly own KLLM Transport Services, LLC. The transaction, which values FFE at approximately $38.2 million in equity value, was unanimously approved by the FFE Board of Directors.
On behalf of James and Thomas Duff, Mr. Thomas Duff stated that, "We are excited about the opportunity to add another leader in the temperature controlled trucking industry to our family group of businesses. With the synergies and increased capacity that we can gain from the ownership of both FFE and KLLM, we know that we will be able to enhance the quality service that both companies have been providing to their customers. With our resources, we will be able to bring to FFE the financial strength that is needed to preserve and expand its operations for its valued employees for years to come. Overall, we see great things ahead for both of the companies."
Under the terms of the merger agreement, FFE's stockholders will receive $2.10 in cash for each outstanding share of FFE common stock they own, representing a 23.5% premium over the closing price on July 12, 2013, the last full trading day before today's announcement, a 26.5% premium over the closing price on March 1, 2013, the last full trading day before the announcement that the Duffs had acquired approximately 5.84% of the outstanding shares of common stock of FFE and expressed an intent to discuss with FFE a negotiated acquisition and a 144.2% premium over the closing price on December 18, 2012, the last full trading day before the Duffs began open market purchases of FFE shares with a view towards accumulating a significant position.
The transaction is expected to close by late August or early September 2013.
In accordance with the terms of the merger agreement, Duff Brothers Capital Corporation will commence a tender offer for all of the outstanding shares of common stock of FEE not already owned by the Duffs or their affiliates. FFE's Board of Directors has unanimously recommended that the FFE shareholders tender their shares into the offer. Under the terms of the agreement, the transaction is conditioned upon satisfaction of the minimum tender condition of greater than two-thirds of the outstanding shares of FFE common stock when added to the shares then beneficially owned by Duff Brothers Capital Corporation and its affiliates and other customary closing conditions. Consummation of the transactions contemplated by the merger agreement is not subject to a financing condition and Duff Brothers Capital Corporation will pay the offer price from cash resources on hand.
Concurrent with the execution and delivery of the merger agreement, Stoney M. Stubbs, Jr., FFE's Chairman of the Board, Russell Stubbs, FFE's President and CEO, and John Hickerson, FFE's Executive Vice President and Chief Operating Officer, representing in the aggregate approximately 12.8% of the outstanding shares of FFE common stock have each entered into separate agreements with Duff Brothers Capital Corporation and Duff Brothers Subsidiary, Inc. pursuant to which each has agreed to tender the shares of common stock beneficially owned by them into the tender offer, as well as providing certain covenants and releases related to the transactions contemplated by the merger agreement.
Stephens Inc. is acting as exclusive financial advisor to the FFE Board of Directors and provided a fairness opinion to the FFE Board of Directors. Baker & McKenzie LLP is acting as legal counsel to the FFE Board of Directors. Krage & Janvey, L.L.P. is acting as legal counsel to Duff Brothers Capital Corporation.
On behalf of James and Thomas Duff, Mr. Thomas Duff stated that, "We are excited about the opportunity to add another leader in the temperature controlled trucking industry to our family group of businesses. With the synergies and increased capacity that we can gain from the ownership of both FFE and KLLM, we know that we will be able to enhance the quality service that both companies have been providing to their customers. With our resources, we will be able to bring to FFE the financial strength that is needed to preserve and expand its operations for its valued employees for years to come. Overall, we see great things ahead for both of the companies."
Under the terms of the merger agreement, FFE's stockholders will receive $2.10 in cash for each outstanding share of FFE common stock they own, representing a 23.5% premium over the closing price on July 12, 2013, the last full trading day before today's announcement, a 26.5% premium over the closing price on March 1, 2013, the last full trading day before the announcement that the Duffs had acquired approximately 5.84% of the outstanding shares of common stock of FFE and expressed an intent to discuss with FFE a negotiated acquisition and a 144.2% premium over the closing price on December 18, 2012, the last full trading day before the Duffs began open market purchases of FFE shares with a view towards accumulating a significant position.
The transaction is expected to close by late August or early September 2013.
In accordance with the terms of the merger agreement, Duff Brothers Capital Corporation will commence a tender offer for all of the outstanding shares of common stock of FEE not already owned by the Duffs or their affiliates. FFE's Board of Directors has unanimously recommended that the FFE shareholders tender their shares into the offer. Under the terms of the agreement, the transaction is conditioned upon satisfaction of the minimum tender condition of greater than two-thirds of the outstanding shares of FFE common stock when added to the shares then beneficially owned by Duff Brothers Capital Corporation and its affiliates and other customary closing conditions. Consummation of the transactions contemplated by the merger agreement is not subject to a financing condition and Duff Brothers Capital Corporation will pay the offer price from cash resources on hand.
Concurrent with the execution and delivery of the merger agreement, Stoney M. Stubbs, Jr., FFE's Chairman of the Board, Russell Stubbs, FFE's President and CEO, and John Hickerson, FFE's Executive Vice President and Chief Operating Officer, representing in the aggregate approximately 12.8% of the outstanding shares of FFE common stock have each entered into separate agreements with Duff Brothers Capital Corporation and Duff Brothers Subsidiary, Inc. pursuant to which each has agreed to tender the shares of common stock beneficially owned by them into the tender offer, as well as providing certain covenants and releases related to the transactions contemplated by the merger agreement.
Stephens Inc. is acting as exclusive financial advisor to the FFE Board of Directors and provided a fairness opinion to the FFE Board of Directors. Baker & McKenzie LLP is acting as legal counsel to the FFE Board of Directors. Krage & Janvey, L.L.P. is acting as legal counsel to Duff Brothers Capital Corporation.
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