The family that founded Burlington Coat Factory is gearing up for a $1.3 billion payday after striking a deal yesterday to sell the discount retailer to Boston buyout firm Bain Capital for about $2.06 billion including debt.
Bain plans to pay Burlington shareholders $45.50 a share in cash – a 2.1 percent premium to the closing stock price of $44.58 Tuesday. Trading in the company’s shares was delayed yesterday morning pending the announcement.
The Post reported last week that Bain was the leader among a pack of private-equity firms bidding for the New Jersey company.
The Milstein family, which still owns about 62 percent Burlington’s shares, founded the company in 1972. Its 78-year-old patriarch, Monroe Milstein – who now serves as chairman and chief executive – and his sons Andrew and Stephen – both executive vice presidents – plan to leave the company once the deal with Bain is closed, according to Chief Accounting Officer Bob LaPenta. The buyout is expected to close in the next three months.
Mark Nesci, who has been serving as chief operating officer of Burlington and has been with the company for more than 30 years, will become chief executive, LaPenta said.
Some traders and analysts had been hoping for a slightly higher price, but many thought it likely the transaction would close since the Milstein clan has agreed to vote their shares in favor of the deal.
LaPenta said the company received bids from several financial firms but Bain offered the highest price and the best conditions. Goldman Sachs ran the sale. “I was certainly hoping for $3 to $5 more,” said one analyst who is also an investor in Burlington. “I’m assuming that Goldman ran a very wide auction process, so it’s hard to fault that.”
Burlington recorded strong sales over the holiday season but has struggled against rivals such as Wal-Mart, T.J. Maxx and Ross Stores. With 367 stores in 42 states, Burlington had sales of $3.2 billion in fiscal 2005, but its sales growth has slowed over the past year.
Burlington generates a lot of cash – $284 million in the twelve months ended last November – that can be used to pay down the enormous amount of debt typically used to finance leveraged buyouts.