The retailer said it would enter into talks with the new bidder, which it didn't identify, according to a report in The Street. As part of that agreement, Vitamin Shoppe had been seeking competing bids from what it said was a range of strategic and financial entities, a so-called go-shop period, which was part of the acquisition agreement with Liberty Tax Inc.
In early August, Vitamin Shoppe said it had definitively agreed to be acquired by Liberty Tax for $6.50 a share, or $208 million. That’s a 59% premium over the company’s 30-day weighted average stock price. That sales price, while welcome news for those who recently bought the stock, represents a steep discount from the company’s heyday. In early 2013 they were trading above $60 a share.
The Vitamin Shoppe went public in 2009. After an initial honeymoon, the company has struggled with falling earnings for years. The Vitamin Shoppe reported $1.11 billion in sales in 2018. For 2017, the figure was $1.15 billion and in 2016 sales were $1.29 billion.
Liberty Tax is the parent company of Liberty Tax Service, a chain of franchise tax preparation outlets. Last summer the company announced a plan for strategic acquisitions. The first of these was the purchase of Buddy’s Home Furnishings, a rent-to-own furniture store chain. As of 2017, Buddy’s had 255 stores owned by franchisees and 31 company-owned stores.
Liberty says it intends to finance The Vitamin Shoppe transaction with up to about $170 million in debt financing and a combination of available cash and/or through the issuance of common stock of Liberty Tax. In connection with the execution of the merger agreement, Liberty Tax entered into debt commitment letters with institutional lenders and an equity commitment letter with an affiliate of Vintage Capital Management, LLC.
But the anonymous bidder could throw a wrench into Liberty’s plans.
Vitamin Shoppe said the new buyout offer is “reasonably likely” to lead to a “superior proposal” to the Liberty Tax deal and that it will continue to negotiate with the secret bidder. But for now, Vitamin Shoppe says it has not changed its recommendation in favor of its pending merger with Liberty Tax.
The new bid is subject to a number of conditions, including the completion of a due-diligence inquiry and negotiation of a definitive deal agreement. Vitamin Shoppe gave no guarantees that talks with the new bidder would lead to a more lucrative deal.
Vitamin Shoppe operates more than 750 stores under the banners Vitamin Shoppe and Super Supplements as well as through its website.
