LL Flooring receives $194M acquisition proposal

Las Vegas-based holding company Live Ventures has submitted a proposal to acquire Henrico County-based hard-surface flooring retailer LL Flooring Holdings for approximately $194.4 million in cash.

Live Ventures, which specializes in the retail and flooring industries, published Thursday the letter sent by its president and CEO, Jon Isaac, to the LL Flooring board the previous day. The company is offering $5.85 per outstanding share in cash.

LL Flooring — previously Lumber Liquidators — share prices rose sharply in 2020, from $4.12 at close on April 2 to a peak of $33.70 at close on Dec. 24, 2020. Its share prices have fallen fairly steadily since. On Oct. 6, LL Flooring shares traded for $2.84 at market close.

“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,” Isaac wrote in the letter.

At market close on Oct. 6, the acquisition premium — the difference between the amount paid for the company receiving the offer and its assessed market value — was about 106%.

LL Flooring shares traded for $2.90 at closing on Tuesday and at $2.93 at close on Wednesday.

But on Thursday, the day Live Ventures released the letter, LL Flooring share prices increased more quickly, and at 2:45 p.m. Thursday, LL Flooring shares were trading for $4.12, which dropped the acquisition premium to almost 42% at the time.

LL Flooring has 442 stores spanning 47 states. Earlier this year, Live Ventures acquired California-based floor, carpet and countertop installer Flooring Liquidators. The holding company also owns Georgia-based Marquis Industries, a carpet and hard-surface flooring manufacturer.

“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 [CEO] in 2012,” Isaac wrote.

LL Flooring confirmed Thursday afternoon its receipt of the unsolicited, non-binding proposal. In June, the flooring company rejected F9Brands’ subsidiary Cabinets To Go’s unsolicited proposal to acquire LL Flooring’s outstanding shares for $5.76 per share in cash, saying in a statement that “it significantly undervalued the worth of LL Flooring, its business and prospects.”

In August, the company announced its board had “initiated an exploration of strategic alternatives in response to receipt of multiple inbound expressions of interest regarding a potential transaction with the company” and would consider options including a potential sale, merger or other strategic transaction.

In its statement Thursday, LL Flooring said, “The LL Flooring Board of Directors will carefully review and consider the proposal from Live Ventures in the context of LL Flooring’s strategic alternatives process to determine the course of action that it believes is in the best interests of the company and all of its shareholders, which will include inviting Live Ventures to participate in the ongoing strategic review process on similar terms as others.”

Shareholders do not need to take any action at this time, the company said in the statement. “LL Flooring’s Board and management team believe that with a strong balance sheet and liquidity, the company is well-positioned for the future.”

In 2019, then-Lumber Liquidators agreed to pay a $33 million penalty following a Department of Justice investigation into alleged fraudulent statements about the level of formaldehyde in its laminate flooring from China.

For fiscal 2022, Live Ventures reported $287 million in revenue. LL Flooring reported $1.11 billion in net sales for 2022.