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BlueLinx largest shareholder to attempt takeover

BY HBSDEALER Staff

Cerberus ABP Investors LLC, an affiliate of Cerberus Capital Management, has announced in a July 22 filing with the Securities and Exchange Commission (SEC) that it intends to make a tender offer for all of the outstanding publicly held shares of BlueLinx Holdings Inc. that it doesn’t already own.

Based on its calculations, as of May 7, 2010 Cerberus currently owns 55.39% of the outstanding common stock of BlueLinx. It plans to offer $3.40 a share in cash for the remaining balance of BlueLinx ‘s common stock, representing a premium of approximately 35.5% over the closing price on July 21, 2010, and a 16.8% premium over the volume-weighted average closing price for the last 30 trading days.

The offer should commence in approximately seven days, the filing said.

The tender offer will be conditioned upon, among other things, the tender of a majority of shares not owned by Cerberus or by the directors or officers of the company and, unless waived, Cerberus owning at least 90% of the outstanding BlueLinx common stock as a result of the tender offer.

Any shares not acquired in the tender offer are expected to be acquired in a subsequent merger transaction at the same cash price per share. The tender offer is not subject to any financing or due diligence condition. The aggregate consideration for the outstanding BlueLinx shares (excluding shares outstanding following exercise of in-the-money options) would be approximately $49.6 million, according to the SEC filing. 

In a separate letter filed with the SEC, Blue Linx president and CEO George Judd reminded shareholders and employees that the tenders offer had not officially begun; nor was it a done deal, he said.

“In situations like this, it is typical to form a special committee consisting of independent directors not affiliated with Cerberus, to consider its tender offer and to make a recommendation to the company’s stockholders.” Judd wrote. “We will provide further information when the BlueLinx Board makes a determination about whether to form a special committee and any recommendation made by that committee or the full board.”

“There can be no assurance the proposal from Cerberus will be approved.

For all employees, I expect no change for you, our customers and our vendors. It is important we stay focused on serving our customers better than anyone else in the industry.”

Headquartered in Atlanta, BlueLinx is a leading distributor of building products throughout North America, offering more than 10,000 products from over 750 suppliers.

Established in 1992, Cerberus Capital Management, L.P. along with its affiliates, is one of the world’s leading private investment firms with approximately $23 billion under management. Last July, Cerberus announced it had hired Bob Nardelli, the former CEO of Home Depot and Chrysler, as CEO of Cerberus Operating and Advisory Company, where he will serve on Cerberus’ investment committee and valuation committee and will be involved in due diligence projects relating to prospective Cerberus investments. 

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States look for slice of internet sales tax

BY HBSDEALER Staff

Revenue hungry states and local government have come up with an unlikely ally in their efforts to collect sales tax from internet retailers: business groups.

An article in the Los Angles Times  explains how businesses in California and elsewhere are supporting legislators’ efforts  to redefine what makes a “physical [retail] presence” in a state or, in some states, require e-tailers to hand over their customer lists.

California officials estimate that almost $1.1t billion in state sales tax from on-line and catalog sellers goes uncollected each year. Shoppers are supposed to keep track of purchases and pay the sales tax at the end of the year, but few do.

Colorado and New York are also looking at ways around the 1992 U.S. Supreme Court Decision that set up the system this way.

Meanwhile, brick-and mortar retailers – who must pay sales tax because they have a “physical presence” in a state – claim that Amazon, Overtock, and other large e-tailers draw consumers seeking a sales-tax discount, giving them an unfair competitive advantage.

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