The off-price department store has entered into a definitive merger agreement with Kingswood Capital Management to take itself off the public market.
For 90 cents a share, the financial firm will acquire all outstanding Stein Mart common stock that is not currently owned by Jay Stein, chairman of Stein Mart’s board of directors and former chief executive officer of the company.
That’s a 38 percent premium on Thursday’s closing price of 65 cents a share. The stock shot up more than 35 percent Friday morning after the news broke, moving up to roughly 88 cents.
Even so, the price has fallen about 95 percent in the last five years — having traded at $16.44 a share on the Nasdaq in February 2015. Among the exchange’s many requirements, companies must maintain a minimum trading price of $1 a share to stay listed. Stein Mart has been trading below that level as far back as March 2019.
The decision to go private was unanimously approved by Stein Mart’s board of directors, aside from Stein himself, after a special committee of independent directors was appointed to examine the business.
“The special committee and its advisers conducted a thorough and independent process to review the company’s strategic alternatives and identify a transaction that would maximize shareholder value,” said Richard L. Sisisky, a Stein Mart board member and chairman of the special committee. “We believe that this transaction is in the best interest of all Stein Mart stakeholders, including our many loyal employees.”
The deal will be financed by Wells Fargo Bank, National Association and Pathlight Capital LP, and by equity provided by affiliates of Kingswood. PJ Solomon is serving as financial adviser to the special committee.
The transaction is expected to close in the first half of 2020 and is subject to approval by Stein Mart shareholders.
Stein Mart operates 283 stores in 30 states.