The deal to take private Houston-based transportation and logistics company EGL – the first-ever deal for Centerbridge Capital Partners – has grown to $1.7 billion (€1.3 billion). A new acquisition agreement offers shareholders $38 per share, or $2 more than in the previous buyout agreement announced last month.
In late February, EGL said that Centerbridge – along with EGL’s founder, senior members of EGL’s management and The Woodbridge Company, the Toronto, Canada-based holding company of the Thomson family – would take EGL private just weeks after General Atlantic withdrew its equity sponsorship from an identical deal.
The Greenwich, Connecticut-based private equity firm said it pulled out of the deal due to an expected shortfall in EGL’s fourth quarter 2006 results. The company’s fourth quarter 2006 net income was $10.9 million, or $0.27 per diluted share, down nearly 43 percent from its fourth quarter 2005 net income of $19.1 million.
Recruitment of Centerbridge and Woodbridge effectively replicated terms of the original buyout announced January 2 by Jim Crane, EGL’s founder, chairman and chief executive, who owns 18 percent of the firm’s outstanding common stock.
Under terms of the most recent agreement, shareholders will receive $38 per share, a 4.3 percent premium over Monday’s opening share price. The figure is a 27 percent premium over the $29.78 closing price of December 29, 2006, the last day of trading prior to announcement of the initial buyout. The transaction is expected to close in the second or third quarter of 2007, and is subject to shareholder and regulatory approval.
EGL said previously that Merrill Lynch, Pierce, Fenner & Smith and Woodbridge would provide approximately $1.2 billion in debt to finance the transaction. According to a statement, Wachovia will now also provide debt financing, though the total amount of debt to be financed by the four firms was not disclosed. EGL did not return a phone call request for comment.
EGL founder Crane will continue chairman and CEO of the firm, which operates as Eagle Global Logistics. The 23-year old transportation and logistics company has more than 10,000 employees at more than 400 offices worldwide.
Centerbridge is led by the former head of The Blackstone Group’s private equity programme, Mark Gallogly, and a former distressed securities expert from hedge fund Angelo Gordon, Jeffrey Aronson. Centerbridge closed its debut fund in September on $3 billion, making it among the largest first-time funds ever raised.