Robbins Arroyo LLP: Acquisition of Belk, Inc. (BLKIA) by Sycamore Partners May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Belk, Inc. (OTC US: BLKIA) by Sycamore Partners. On August 24, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Sycamore will acquire Belk. Under the terms of the agreement, Belk shareholders will receive $68.00 in cash for each share of Belk common stock.
Is the Proposed Acquisition Best for Belk and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Belk is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $68.00 merger consideration represents a discount of 12.8% based on Belk’s last closing price on April 2, 2015. This consideration is significantly below the average premium of nearly 37% based on the last trading date of comparable transactions within the past year. In the last three years, Belk traded as high as $78.00 on April 2, 2015.
On May 27, 2015, Belk reported strong earnings results for its first quarter 2016. Net sales for the 13-week period were $985.0 million compared to $955.1 million in the prior year period. The company’s online sales from belk.com increased 36.7% for the period. Online sales positively affected the company’s comparable store sales by 2.1% for the period. First quarter net income totaled $21.8 million compared to $19.3 million in the prior-year period. In commenting on these results, Belk Chairman and Chief Executive Officer Tim Belk remarked, “First quarter sales remained strong, continuing the trend we saw in the fourth quarter of fiscal year 2015. eCommerce continues to be our fastest growing business. Although the expenses related to our investments continue to impact earnings, we are beginning to see the benefits from those investments in top line growth and higher margins.”
In light of these facts, Robbins Arroyo LLP is examining Belk’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Belk shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Belk shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.