ENGLEWOOD, Colo.-Big O Tires Inc.'s senior management and franchised dealers have made another offer to buy the firm. Similar to the same group's last acquisition plan-which was tendered last December, then consequently withdrawn earlier this year-the new one differs, for the most part, only in numbers.
Unlike the earlier offer to purchase Big O's outstanding stock for $18.50 per share, the latest proposal, made April 6, is for $16 per share-or about $52.8 million.
And while late last year the company's stock topped $17.13 on news of the group's first offer, two weeks ago it recorded a 52-week low of $13.
Again leading the group of ``insiders'' attempting to take the company private is Big O President Steven P. Cloward. He had watched what appeared to be a successful strategy to take over the tire franchiser evaporate when a number of unexplained problems arose in February, just prior to Big O's tumultuous annual meeting. He later acknowledged that dealers and management could not agree on several important points.
But all that now appears to have been smoothed out.
The new offer is in the hands of the Board of Trustees' Investment Committee, an advisory group that will analyze the proposal, then make its recommendation.
Among several contingencies Mr. Cloward outlined for TIRE BUSINESS: the purchaser group must obtain financing, and it needs participation by at least 80 percent of the shares held by the company's ESOP (Employee Stock Option Plan), as well as participation by dealers owning at least 85 percent of the franchised locations.
From the various surveys of and presentations made to the company's dealer-owners, Mr. Cloward said the acquisition plan has ``overwhelming support-we don't think 85 percent will be a problem.'' For the deal to be consummated, eventually all dealers will have to sign on.
He anticipates that Big O's current management team would remain in place, with the exception of the firm's recently named chairman, John E. Siipola, and another board member, Horst K. Mehl-feldt, who is also vice chairman.
Management and dealers decided on the $16-per-share offer, he explained, after assessing how much financing they could obtain, what kind of equity stake could be lined up for the dealers, and what the group could afford to pay based on current operations and forecasted improvements.
``I'm sure there's a lot of shareholders who would like to see it at a higher price,'' Mr. Cloward said. ``And if somebody else steps in to buy the company at a higher price, we obviously will bow out.''