The board of Houston-based EGL on Monday approved a $38 per share leveraged buyout led by its chief executive Jim Crane, and backed by the Blackstone and Angelo Gordon spin-out Centerbridge and the Thomson family’s Woodbridge Company. But it has emerged that Apollo Management had offered the same price weeks prior, and unsuccessfully tried to reach EGL Sunday to deliver a $40 per share, all cash offer which it characterised as “clearly superior”.
Frustrated, Apollo fired off a letter Monday, obtained by PEO, to EGL’s board and advisors.
“Having already bid $38 per share (a $2/share increase over Crane’s first two offers), and having indicated to you that we believed we could further increase our offer upon completion of brief confirmatory diligence, we were prepared to come to Houston, the next day, to finish our work,” the letter says. “Instead, you have elected to accept a deficient price to the detriment of your shareholders.”
Noting that Apollo had been told the bidding process would continue through March 26, the letter continues, “we wonder what urgency the company saw in cutting this process short (without informing us or giving us a chance to exceed the CEO’s bid), or in suddenly renegotiating a deal at an inferior price…”
In early February, General Atlantic withdrew its equity sponsorship from the first Crane-led buyout deal. Days later, EGL’s board called for its special committee to continue reviewing strategic alternatives and for its financial advisor, Deutsche Bank Securities, to solicit third party offers.
Apollo’s letter argues that this process was not started with shareholder value in mind. “Rather it was designed to ‘legitimise’ a transaction with Crane by soliciting bids from third parties (specifically Apollo) without providing them with adequate or customary information to fully value the company.”
A source familiar with the situation said Apollo had been “banging on their door” for months, and had been trying to get access to due diligence since January.
On Tuesday, EGL issued a statement confirming it had received a written proposal from Apollo dated March 19, and said its special committee had determined it to be an alternative proposal to the Crane-led deal.
“Accordingly, the special committee has also informed the Crane affiliate of the existence of the proposal, and has made arrangements so that Apollo may conduct its due diligence investigation with respect to its proposal,” EGL said.
EGL, which does business as EGL Global Logistics, did not return phone calls requesting comment.
In 2005, New York-based Apollo purchased a similar company, CEVA Logistics.