Cameron Ashley reviews latest offer for its stock - Brief Article

Home Channel News, March 6, 2000

DALLAS--After rejecting a bid by shareholder and rival wholesaler Bradco Supply and following Bradco's statement that it had no plans to make a counteroffer, the management of Cameron Ashley Building Products is reviewing Guardian Industries' $17-per-share offer for their company. That same management is also considering whether its own $15.10 per share bid, which put the building materials distribution into play in the first place, should be sweetened to compete with Guardian's offer.

For its part; the Auburn Hills, Mich.-based Guardian began a due diligence review on Feb. 14 to more closely examine Cameron Ashley's financial records and to decide if it wants to add the 165-branch company to its Building Materials Group, which currently includes Builders Marts of America and Guardian Fiberglass, a major producer of light-density fiberglass.

Considering all the twists and turns that have occurred to this point, no prospective purchaser of Cameron Ashley's assets can be dismissed. However, the Avenel, N.J.-based Bradco seems to have taken itself out of the running. In a Feb. 18 filing with the Securities and Exchange Commission, Barry Segal--who owns Bradco and 6 percent of Cameron's stock -- said Cameron Ashley refused his offer in light of Guardian's bid. Segal had offered to buy 60 percent of Cameron Ashley common stock at $16.25 per share.

That offer was eclipsed in less than 24 hours, when Guardian swooped in with' the $17 bid. In the filing, Segal said he didn't believe that the bid tendered by Guardian, or the one by a investment partnership formed by Cameron's management, CGW Southeast Partners and Citicorp Venture Capital, was superior to his.

Nevertheless, Segal said he now has. "no further current interest in pursuing the stated transaction with Cameron" and that he will hold into his existing stock for investment purposes.

If a Bradco/Cameron deal is dead, it would mark the second time an attempted union between the two distributors has failed. In 1997, Cameron Ashley unsuccessfully tried to acquire Bradco Supply.

Executives at Cameron Ashley and Guardian. citing ongoing negotiations, have not spoke in depth about the current offer or released a time frame for a decision. In a statement issued Feb. 17. Cameron Ashley said it has delayed both the mailing of its annual report and its annual meeting until the Special Committee of the Board of Directors "completes its evaluation of the pending proposals to acquire Cameron Ashley."

Bids seem to help stock price

In the meantime, the distributor's first quarter results were a mixed bag. Cameron Ashley's sales for the three months ended Jan. 31 rose 15 percent to $256 million. But it has lost $1.2 million compared to a loss of $43,000 in the same quarter a year earler.

Ron Ross. Cameron Ashley's chairman and CEO, attributed the loss chiefly to operating expenses associated with the rollout of its new software system and a business re-engineering project. He said the company's core business remains strong, as evinced by a 7 percent climb in same-branch sales.

Cameron Ashley's stock price did not suffer from its most recent results. Prior to the Jan. 18 offer by the investment group that included Cameron management, the stock was trading below $15 per share. On Feb. 22, it closed at $16.25.