The board unanimously concluded the buyout firm's offer is not a superior proposal and is not reasonably likely to lead to one. A rally in Patrick Industries' shares has cut the gap between the two to about 4%.
LCI Industries has answered the buyout firm that tried to break up its merger.
The RV parts maker said Friday that its board, with outside financial and legal advisers, "unanimously determined that the unsolicited, non-binding proposal received from Monomoy Capital Partners to acquire LCI for $101 per share in cash does not constitute a superior proposal and is not reasonably likely to lead to a superior proposal."
That leaves LCI's all-stock merger with Patrick Industries signed and recommended, with both companies' shareholders voting on Nov. 18.
The gap keeps shrinking
When Monomoy's proposal surfaced on Wednesday, it was worth about 15% more than the Patrick deal. Patrick's rally since then has closed most of that.
Under the merger agreement, LCI holders receive 1.244 Patrick shares for each LCI share. With Patrick up about 3.5% at $77.78 in early afternoon Friday, that is worth about $96.76 per LCI share, by our arithmetic. Monomoy's $101 is now about 4.4% higher, down from about 8% at Thursday's close.
LCI shares were flat at about $98.91. That is about 2.1% below Monomoy's price and about 2.2% above the value of the Patrick deal, a sign the market still sees some chance of a better outcome for LCI holders.
Monomoy's options
The merger agreement carries a termination fee of $94.2 million, payable in specified circumstances including a change in the LCI board's recommendation. Monomoy's proposal was non-binding and no financing has been disclosed.
From here Monomoy can raise its price, take its case directly to shareholders or walk away. It has not said which.
Settled or still open?
The board's decision, combined with a narrowing price gap, strengthens the case for the Patrick deal. LCI's own share price, still above the stock deal's value, says investors are not yet treating the contest as over.
What to watch
Any response from Monomoy, Patrick's share price into the vote, and the Nov. 18 special meetings.