Proposal Significantly Undervalues LL Flooring
and is Not in the Best Interests of Shareholders
LL Flooring Board Remains Open Minded to All
Opportunities to Enhance Value
No Shareholder Action Required at this Time
LL Flooring Holdings, Inc. (“LL Flooring” or
“Company”) (NYSE: LL) today announced that its Board of Directors
has unanimously rejected an unsolicited, non-binding proposal from
Cabinets To Go, LLC (“Cabinets To Go”), a subsidiary of F9 Brands,
Inc., to acquire all of LL Flooring’s outstanding shares for $5.76
per share in cash. The Company previously acknowledged receipt of
the unsolicited proposal from Cabinets To Go on May 30, 2023.
The LL Flooring Board and management team are committed to
enhancing shareholder value and regularly review the Company’s
strategic alternatives and assess opportunities to further this
objective. Consistent with its fiduciary duties and in consultation
with its financial and legal advisors, upon receipt, the LL
Flooring Board carefully reviewed and considered Cabinets To Go’s
non-binding proposal. The Board unanimously determined that the
proposal significantly undervalues the worth of LL Flooring, its
business and prospects and is not in the best interests of the
Company and its shareholders. The Board is always open to
considering a transaction that appropriately reflects the Company’s
value and prospects.
Independent Chairperson of the Board, Nancy Taylor, said, “The
LL Flooring Board of Directors is committed to enhancing
shareholder value and we are open-minded about the best path to
achieve this objective. The Board undertook a comprehensive review
of the Cabinets To Go proposal and determined that it significantly
undervalues LL Flooring. We remain open to engaging further on any
opportunity that we believe will deliver appropriate value to all
our shareholders.”
Ms. Taylor added, “LL Flooring’s unique positioning
differentiates it from others in the market, and the Board and
management team are confident in the Company’s business plan as it
continues to deliver the high-touch service of an independent
flooring retailer combined with the value and convenience of a
national brand. LL Flooring is executing on its six core growth
strategies and is well positioned to take advantage of the medium-
to long-term tailwinds for repair and remodel spending.”
The Board of Directors communicated its response to F9
Investments and Cabinets To Go in the following letter on June 26,
2023:
F9 Investments, LLC 844 Alton Road Miami
Beach, FL 33139 Attn: Tom Sullivan, Sole Manager
Cabinets To Go, LLC 2350 W O Smith Street
Lawrenceburg, TN 38464 Attn: Jason Delves, Chief Executive
Officer
Dear Messrs. Sullivan and Delves:
I am writing this letter on behalf of the
Board of Directors (the “Board”) of LL Flooring Holdings, Inc. (“LL
Flooring” or the “Company”) in response to your letter, dated May
26, 2023, regarding your interest in acquiring LL Flooring. Since
receiving your indication of interest, the Board has met several
times and, with the assistance of our independent financial
advisor, JP Morgan Chase & Co., and our legal advisor, Skadden,
Arps, Slate, Meagher & Flom LLP, carefully reviewed and
considered it along with a variety of factors and information.
Following our comprehensive review process,
the Board is unanimous in its belief that the price of $5.76 per
share in cash proposed in your letter significantly undervalues LL
Flooring, its business and prospects. In making its determination,
the Board considered LL Flooring’s attractive market position as
the Company delivers high-touch service and in-store customer
experience of an independent flooring retailer, combined with the
value, convenience, assortment and digital capabilities of a
scaled, national specialty retailer. The Board believes that
despite macroeconomic headwinds LL Flooring’s future is bright and
is confident in the Company’s ability to execute its business plan
and achieve its growth objectives. The Company has several value
enhancing initiatives in the pipeline and we firmly believe that
pursuing your opportunistically-timed $5.76 per share proposal will
transfer the Company’s upside potential to Cabinets To Go, LLC and
away from LL Flooring’s stockholders.
Nonetheless, the Board is deeply committed to
enhancing value for all of our stockholders and receptive to
opportunities that will help us achieve that goal. In that spirit,
the Board is open to discussions about a transaction that
adequately reflects the value of LL Flooring’s business and
prospects as well as the significant benefits that would accrue to
F9 Investments, LLC and Cabinets To Go, LLC as a result of an
acquisition of LL Flooring.
If you were to significantly increase your
$5.76 per share proposal to a level that is reflective of the value
of the Company, we will consider it consistent with the Board’s
fiduciary responsibilities and provide you with confidential
information pursuant to a customary non-disclosure and standstill
agreement.
If you have an interest in communicating
further on this basis, feel free to contact me at your earliest
convenience.
Very truly yours,
Nancy M. Taylor
J.P. Morgan Securities LLC is serving as financial advisor, and
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
advisor to the Company.
About LL Flooring
LL Flooring is one of the country’s leading specialty retailers
of hard-surface flooring with more than 440 stores nationwide. The
Company seeks to offer the best customer experience online and in
stores, with more than 500 varieties of hard-surface floors
featuring a range of quality styles and on-trend designs. LL
Flooring's online tools also help empower customers to find the
right solution for the space they've envisioned. LL Flooring's
extensive selection includes waterproof hybrid resilient,
waterproof vinyl plank, solid and engineered hardwood, laminate,
bamboo, porcelain tile, and cork, with a wide range of flooring
enhancements and accessories to complement. LL Flooring stores are
staffed with flooring experts who provide advice, Pro partnership
services and installation options for all of LL Flooring's
products, the majority of which is in stock and ready for
delivery.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes statements of the Company’s
expectations, intentions, plans and beliefs that constitute
“forward-looking statements” within the meanings of the Private
Securities Litigation Reform Act of 1995. These statements, which
may be identified by words such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “believes,” “thinks,”
“estimates,” “seeks,” “predicts,” “could,” “projects,” “potential”
and other similar terms and phrases, are based on the beliefs of
the Company’s management, as well as assumptions made by, and
information currently available to, the Company’s management as of
the date of such statements. These statements are subject to risks
and uncertainties, all of which are difficult to predict and many
of which are beyond the Company’s control.
The Company specifically disclaims any obligation to update
these statements, which speak only as of the dates on which such
statements are made, except as may be required under the federal
securities laws. For a discussion of the risks and uncertainties
that could cause actual results to differ from those contained in
the forward-looking statements, see the “Risk Factors” section of
the Company’s annual report on Form 10-K for the year ended
December 31, 2022, and the Company’s other filings with the
Securities and Exchange Commission (“SEC”). Such filings are
available on the SEC’s website at www.sec.gov and the Company’s
Investor Relations website at https://investors.llflooring.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20230625961885/en/
For further information: LL Flooring Investor Relations
ICR Bruce Williams ir@llflooring.com Tel: 804-420-9801
For media inquiries: Leigh Parrish / Ed Trissel Joele
Frank, Wilkinson Brimmer Katcher 212-355-4449
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