StoneMor Inc (NYSE: STON), a leading operator and owner of funeral homes and cemeteries, announced it has executed a merger agreement whereby it’ll merge with an Axar Capital Management subsidiary. All of the company’s outstanding shares not owned by Axar Capital will now become the right to get $3.50 per share in cash.
Axar Capital Management currently controls roughly 75% of StoneMor common stock’s outstanding shares. The cash consideration according to the agreement represents a premium of 54.2% to StoneMor’s closing stock price.
Details of the agreement
The merger agreement was executed by both parties following the receipt of an Axar Capital proposal on Sept 22, 2021. In the proposal, Axar Capital showed that it wanted to discuss concerning strategic alternatives that may benefit the company and its shareholders.
The Conflicts Committee, a creation of StoneMor’s Board of Directors, negotiated the deal. The committee is made up of independent directors who are assisted by independent legal and financial advisors.
The company’s Chief Executive Officer and President, Joe Redling, said:
Our Board firmly believes that this transaction is in the best interests of all of our stockholders other than Axar and its affiliates and delivers an ongoing commitment to excellence for our customers, employees and communities we serve.
The CEO claimed:
Our agreement with Axar delivers a significant premium for StoneMor’s stockholders and ensures a strong foundation for us to continue our expansion.
The “go-shop” period of the deal
The deal has a “go-shop” period whereby the Conflicts Committee, via its legal and financial advisers, will actively facilitate, solicit, initiate, evaluate and encourage alternative acquisition proposals, as well as potentially negotiate with any other entities that provide alternative acquisition approvals.
This “go-shop” period is around two months or 60 days after execution of the merger agreement. There’s no guarantee that this period will lead to a better acquisition proposal.
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