All-Cash Offer Represents 106% Premium to
Company’s Closing Price as of October 6, 2023 and Provides
Shareholders with Certainty, Full and Fair Value and Immediate
Liquidity
Live Ventures’ Experience in the Retail and
Flooring Industries and Successful Track Record of Shareholder
Value Creation Make it the Ideal Partner for LL Flooring
Live Ventures Incorporated (Nasdaq: LIVE), a diversified holding
company specializing in the retail and flooring industries, today
released the below correspondence sent to LL Flooring Holdings,
Inc. (NYSE: LL), which details Live Ventures Incorporated’s $5.85
per share all-cash acquisition proposal.
***
October 11, 2023
Board of Directors (the “Board”) LL Flooring Holdings, Inc. 4901
Bakers Mill Lane Richmond, Virginia 23230 Attn: Nancy M. Taylor,
Chairperson of the Board
Members of the Board,
Live Ventures Incorporated (“Live Ventures” or “we”) is pleased
to present a non-binding offer for a transaction between Live
Ventures and LL Flooring Holdings, Inc. (“LL Flooring” or the
“Company”). Our goal is to facilitate constructive discussions with
the Board and enter into a mutually agreeable transaction that is
in the best interests of all LL Flooring shareholders. We would
also like to disclose that the Isaac Capital Group, an investment
firm I personally control and manage, has made a significant
investment in LL Flooring and is a top-five shareholder, currently
owning over 4% of the Company’s outstanding common stock.
As described more fully below, our proposal to acquire 100% of
LL Flooring shares in an all-cash offer for $5.85 per share
represents a 106% premium to the Company’s closing share price as
of October 6, 2023. For the reasons we outline, we believe this
proposal is the best path forward for all Company stakeholders –
and we are prepared to move quickly to execute it together.
About Live Ventures and its Successful Track Record in the
Retail and Flooring Industries
As a diversified, publicly traded holding company, Live Ventures
has considerable experience working with retailers that have faced
similar challenges LL Flooring is confronted with today. It is
encouraging that the Board has recognized these headwinds by
announcing the initiation of a strategic alternatives process,
especially considering the material losses shareholders have
experienced over the past several years. We fear that the Company’s
stock price will continue its decline unless LL Flooring enters
into a transaction with a well-capitalized acquiror that has
extensive experience working with synergistic retailers in the near
term.
Live Ventures seeks to acquire companies and partner with
management teams that we believe are in need of new ownership and
outside capital to support growth and enhance shareholder value. We
have a strategic focus on acquisitions of domestic middle-market
companies, with Flooring being one of our key segments (currently
representing 46% of total 2022 revenue).1 A transaction between
Live Ventures and LL Flooring, which includes 442 stores spanning
47 states across the U.S., would therefore be synergistic given our
extensive portfolio of flooring companies. Our portfolio includes
Marquis Industries, Inc., a leading carpet and hard-surface
flooring products manufacturer for which we have grown revenue
levels approximately 117% since acquiring it in 2015, as well as
Flooring Liquidators, Inc., a retailer and installer of floors,
carpets and countertops, which we acquired earlier this year for
$85 million.
We believe that adding LL Flooring to the Live Ventures
portfolio will help the Company thrive and be a major catalyst for
our buy-build-hold strategy, which has
delivered enhanced shareholder value since I joined as Chief
Executive Officer in 2012 and began refocusing our company’s
strategy. Since then, Live Ventures has delivered approximately
237% in total shareholder returns, strong revenue, earnings and
balance sheet growth.2 We have a successful track record acquiring
historic brands and working closely with existing management teams,
boards of directors and large, diverse employee bases to deliver
superior value for stakeholders. We firmly believe we can deliver
the same results for LL Flooring.
Additional Offer Details
Based on public information, we have conducted an extensive
analysis of the opportunity presented by LL Flooring. As a result
of our findings, and subject to completing confirmatory diligence,
we are pleased to submit this non-binding indication of interest
(the “Indicative Proposal” or “Offer”) to acquire 100% of the
issued and outstanding shares of common stock of the Company for
$5.85 per share in cash (the “Offer Price”), which equals an
aggregate equity value of approximately $194.4 million. This Offer
is based on our current understanding of the Company’s capital
structure, which comprises approximately 33.2 million fully diluted
shares of common stock.3
We believe that this Indicative Proposal represents compelling
value for the Company and its shareholders, with the Offer Price
corresponding to a 106% premium to LL Flooring’s closing price per
share of $2.84 as of October 6, 2023, providing a significant
premium relative to recent share price performance. The Offer Price
reflects a 94.4% premium over the 30-day volume-weighted average
share price. Importantly, our Offer provides the Company’s
shareholders with certainty, full and fair value and immediate
liquidity.
Closing would be subject only to LL Flooring shareholder
approval, as well as other customary closing conditions for a
transaction of this nature with no financing condition or
contingency.
The Indicative Proposal is subject to focused confirmatory
diligence, including finalizing views with our team on customer
financial and operational due diligence and customary accounting
and legal due diligence.
This transaction is a top priority for Live Ventures and we are
prepared to work at an expedited pace to reach an agreement with
you. We have engaged Vinson & Elkins as legal counsel for this
transaction.
The Indicative Proposal has been discussed with our Board of
Directors and we are prepared to dedicate all resources necessary
to complete our due diligence and negotiate definitive transaction
documentation in parallel. Given our advanced preparation and
commitment, we believe that we could expeditiously announce a
transaction assuming cooperation between the parties. We have a
strong desire to align on this timeframe as we are deferring other
strategic initiatives to focus on completing a transaction with LL
Flooring.
In consideration for the time, effort and expense incurred and
anticipated to be incurred by Live Ventures in connection with
pursuing a transaction, we would expect LL Flooring to enter into a
customary exclusivity agreement with Live Ventures pursuant to
which, among other things, LL Flooring would agree to cause its
affiliates, directors, officers, employees, advisors and other
representatives not to: (i) initiate, solicit, or knowingly
encourage or knowingly facilitate the submission of any proposal
for a potential alternative transaction, (ii) engage in
negotiations with respect to any potential alternative transaction
or any inquiries regarding a potential alternative transaction, or
(iii) provide any information to any person or entity (other than
Live Ventures or any representatives of Live Ventures) in
connection with any potential alternative transaction or any
inquiries regarding a potential alternative transaction for an
agreed period of time.
It is understood that this letter represents our non-binding
indication of interest and is not subject to acceptance nor is in
any way binding on any party. There can be no guarantee that any
transaction will be entered into or completed. A binding commitment
between Live Ventures and the Company would result only from the
execution of mutually agreed upon definitive transaction
documentation.
We would like to reiterate our respect for LL Flooring and its
leadership and our enthusiasm for pursuing this transaction. We
firmly believe that Live Ventures would be the best partner for the
Company given our experience, capabilities and track record of
value creation as outlined in this letter. We
believe that this all-cash offer presents a highly compelling
transaction for all LL Flooring shareholders and
stakeholders.
We would very much appreciate the opportunity to further discuss
this Offer in further detail with you, as well as your financial
and legal advisors. We are ready to work expeditiously to move
forward and execute this compelling transaction.
Yours sincerely,
Jon Isaac President and Chief Executive Officer Live Ventures
Incorporated
***
Live Ventures Incorporated
Live Ventures is a diversified holding company with a strategic
focus on value-oriented acquisitions of domestic middle-market
companies. Live Ventures’ acquisition strategy is sector agnostic
and focuses on well-run, closely held businesses with a
demonstrated track record of earnings growth and cash flow
generation. The Company looks for opportunities to partner with
management teams of its acquired businesses to build increased
stockholder value through a disciplined buy-build-hold long-term
focused strategy. Live Ventures was founded in 1968 and in late
2011 Jon Isaac, Chief Executive Officer and strategic investor,
joined the Board of Directors and began to refocus it into a
diversified holding company. The Company’s current portfolio of
diversified operating subsidiaries includes companies in the
textile, flooring, tools, steel and entertainment industries. For
more information on Live Ventures please visit, www.liveventures.com.
CERTAIN INFORMATION
This press release does not constitute an offer to buy or
solicitation of an offer to sell any securities or a recommendation
to buy or sell securities.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, each as amended, that are
intended to be covered by the “safe harbor” created by those
sections. In accordance with such safe harbor provisions,
statements contained herein that look forward in time that include
everything other than historical information, involve risks and
uncertainties that may affect the Company’s actual results,
including statements relating to operating performance, events or
developments that Live Ventures expects or anticipates will occur
in the future — including statements relating to any possible
transaction between Live Ventures and LL Flooring. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” and similar statements. Live Ventures may
also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission on
Forms 10-K and 10-Q, Current Reports on Form 8-K, in its annual
report to stockholders, in press releases and other written
materials, and in oral statements made by its officers, directors
or employees to third parties. There can be no assurance that such
statements will prove to be accurate, and there are a number of
important factors that could cause actual results to differ
materially from those expressed in any forward-looking statements
made by the Company, including, but not limited to, (i) the
ultimate outcome of any possible transaction between Live Ventures
and LL Flooring, including the possibility that LL Flooring will
reject the proposed transaction with Live Ventures; (ii)
uncertainties as to whether LL Flooring will cooperate with Live
Ventures regarding the proposed transaction; (iii) the effect of
the announcement of the proposed transaction on the ability of Live
Ventures and LL Flooring to operate their respective businesses and
retain and hire key personnel and to maintain favorable business
relationships; (iv) the timing of the proposed transaction; (v) the
ability to satisfy closing conditions to the completion of the
proposed transaction (including shareholder approval); (vi) other
risks related to the completion of the proposed transaction and
actions related thereto; (vii) plans and objectives of management
for future operations or products; (viii) the market acceptance or
future success of our products; and (ix) our future financial
performance. The Company cautions that these forward-looking
statements are further qualified by other factors including, but
not limited to, those set forth in the Company’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2022 (available
at http://www.sec.gov). Live Ventures undertakes no obligation to
publicly update or revise any statements in this release, whether
as a result of new information, future events or otherwise.
1 YTD 2022 percentage of Total Revenue by
Segment.
2 Source: Bloomberg; Live Ventures’ total
shareholder returns include dividends reinvested and are calculated
as of market close on October 6, 2023.
3 As of the Company’s latest 10-Q filed on
August 9, 2023, reflecting restricted stock awards and deferred
stock units.
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version on businesswire.com: https://www.businesswire.com/news/home/20231012472055/en/
Longacre Square Partners Greg Marose / Charlotte Kiaie,
646-386-0091 liveventures@longacresquare.com
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