Craftmade Board Of Directors Rejects Litex's Hostile Tender Offer
COPPELL, Texas, March 15 /PRNewswire-FirstCall/ -- Craftmade International, Inc. (OTCQX: CRFT) ("Craftmade" or the "Company") today announced that its Board of Directors, after careful consideration with its financial and legal advisors, voted unanimously to reject the unsolicited, conditional tender offer from Litex Industries, Limited ("Litex") to acquire all outstanding common shares of Craftmade at a price of $5.25 per share in cash. The Board unanimously recommends that Craftmade stockholders not tender their shares into Litex's offer.
The basis for the Board's recommendation with respect to the Litex tender offer is set forth in Craftmade's Schedule 14D-9 that will be filed today with the Securities and Exchange Commission ("SEC").
"Although we appreciate Litex's interest in Craftmade, it doesn't begin to recognize the intrinsic value of our company," commented James R. Ridings, Craftmade's founder and Chairman of the Board. "Their interest, while understandable, is ill-timed for Craftmade stockholders who stand to take advantage of our company's upside as the industry it serves recovers. We believe that we are extremely well-positioned to take advantage of market opportunities when industry conditions improve." Mr. Ridings concluded, "As a significant stockholder of Craftmade, I do not believe that it is in our best interests to sell at this time."
The reasons for the Craftmade's recommendation to reject Litex's offer, which the Company detailed in its Schedule 14D-9 filing, include:Litex's Offer significantly undervalues Craftmade . Litex's Offer does not reflect the underlying value of Craftmade's assets, operations and strategic plan, including its industry-leading position and future growth prospects. Craftmade believes that the price offered by Litex does not place value on its furniture business recently acquired from Woodard. Since its founding, Craftmade has delivered superior results for its stockholders and, by virtue of its industry position, strategic direction, management, and culture, Craftmade is poised to continue to provide superior results for its stockholders. Craftmade's Board is confident that Craftmade will, consistent with its history, deliver greater value to its stockholders by executing its strategic plan than would be obtained under Litex's Offer. The timing of Litex's Offer is extremely opportunistic . Litex is trying to obtain the future value of Craftmade at a bargain price. Craftmade has positioned itself to realize significant benefits as the economy emerges from the recession, which makes the timing of Litex's Offer the wrong time to sell. Despite the challenges faced by the housing industry the last few years, the Company has continued to introduce innovative and distinctive products at an increasing pace. Craftmade has received an inadequacy opinion from its financial advisor . B. Riley & Co., LLC rendered an opinion to Craftmade's Board that the consideration proposed to be paid to the holders of Craftmade's shares (other than Litex or its affiliates) pursuant to Litex's Offer was inadequate from a financial point of view to such holders. The Consummation of Litex's Offer and the proposed merger is illusory and highly uncertain . The amount that Litex discloses it has to complete the Offer and pay off the Company's indebtedness is $7 million short based on the amount of debt Litex estimated the Company has. This shortfall is actually closer to $19 million because the Company's debt has increased since year-end to fund ordinary seasonal increases in working capital. In addition, the numerous conditions of Litex's Offer, many of which may be asserted by Litex in its sole discretion, create significant uncertainty and risk as to whether Litex's offer can be completed and the timing for completion. "During this industry downturn, our strong management team has worked hard to create a lean and efficient company," stated J. Marcus Scrudder, Chief Executive Officer of Craftmade. "Over the past two years, we've introduced the most innovative and robust product lines in the company's history. We've done all of this with the best interests of our stockholders in mind, and I believe they deserve to reap the rewards and returns of these efforts." The Board also took action under Craftmade's stockholder rights plan to defer the distribution of rights that would otherwise occur ten business days after the announcement of Litex's offer, which action is further described in Craftmade's Schedule 14D-9.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV