LL Flooring Board of Directors Unanimously Rejects Unsolicited Proposal from Cabinets To Go

Posted: June 26, 2023
Category: Industry News

LL Flooring

LL Flooring Holdings, Inc. today announced that its Board of Directors has unanimously rejected an unsolicited, non-binding proposal from Cabinets To Go, LLC, a subsidiary of F9 Brands, Inc., to acquire all of LL Flooring’s outstanding shares for $5.76 per share in cash. The Company previously acknowledged receipt of the unsolicited proposal from Cabinets To Go on May 30, 2023.

The LL Flooring Board and management team are committed to enhancing shareholder value and regularly review the Company’s strategic alternatives and assess opportunities to further this objective. Consistent with its fiduciary duties and in consultation with its financial and legal advisors, upon receipt, the LL Flooring Board carefully reviewed and considered Cabinets To Go’s non-binding proposal. The Board unanimously determined that the proposal significantly undervalues the worth of LL Flooring, its business, and its prospects and is not in the best interests of the Company and its shareholders. The Board is always open to considering a transaction that appropriately reflects the Company’s value and prospects.

Independent Chairperson of the Board, Nancy Taylor, said, “The LL Flooring Board of Directors is committed to enhancing shareholder value and we are open-minded about the best path to achieve this objective. The Board undertook a comprehensive review of the Cabinets To Go proposal and determined that it significantly undervalues LL Flooring. We remain open to engaging further on any opportunity that we believe will deliver appropriate value to all our shareholders.”

Ms. Taylor added, “LL Flooring’s unique positioning differentiates it from others in the market, and the Board and management team are confident in the Company’s business plan as it continues to deliver the high-touch service of an independent flooring retailer combined with the value and convenience of a national brand. LL Flooring is executing on its six core growth strategies and is well positioned to take advantage of the medium- to long-term tailwinds for repair and remodel spending.”

The Board of Directors communicated its response to F9 Investments and Cabinets To Go in the following letter on June 26, 2023:

Dear Messrs. Sullivan and Delves:

I am writing this letter on behalf of the Board of Directors (the “Board”) of LL Flooring Holdings, Inc. (“LL Flooring” or the “Company”) in response to your letter, dated May 26, 2023, regarding your interest in acquiring LL Flooring. Since receiving your indication of interest, the Board has met several times and, with the assistance of our independent financial advisor, JP Morgan Chase & Co., and our legal advisor, Skadden, Arps, Slate, Meagher & Flom LLP, carefully reviewed and considered it along with a variety of factors and information.

Following our comprehensive review process, the Board is unanimous in its belief that the price of $5.76 per share in cash proposed in your letter significantly undervalues LL Flooring, its business, and its prospects. In making its determination, the Board considered LL Flooring’s attractive market position as the Company delivers the high-touch service and in-store customer experience of an independent flooring retailer, combined with the value, convenience, assortment, and digital capabilities of a scaled, national specialty retailer. The Board believes that despite macroeconomic headwinds LL Flooring’s future is bright and is confident in the Company’s ability to execute its business plan and achieve its growth objectives. The Company has several value-enhancing initiatives in the pipeline and we firmly believe that pursuing your opportunistically timed $5.76 per share proposal will transfer the Company’s upside potential to Cabinets To Go, LLC and away from LL Flooring’s stockholders.

Nonetheless, the Board is deeply committed to enhancing value for all of our stockholders and receptive to opportunities that will help us achieve that goal. In that spirit, the Board is open to discussions about a transaction that adequately rejects the value of LL Flooring’s business and prospects as well as the significant benefits that would accrue to F9 Investments, LLC and Cabinets To Go, LLC as a result of an acquisition of LL Flooring.

If you were to significantly increase your $5.76 per share proposal to a level that is reflective of the value of the Company, we will consider it consistent with the Board’s fiduciary responsibilities and provide you with confidential information pursuant to a customary non-disclosure and standstill agreement.

If you have an interest in communicating further on this basis, feel free to contact me at your earliest convenience.

Very truly yours,

Nancy M. Taylor

J.P. Morgan Securities LLC is serving as the financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to the Company.

About LL Flooring

LL Flooring is one of the country’s leading specialty retailers of hard-surface flooring with more than 440 stores nationwide. The Company seeks to offer the best customer experience online and in stores, with more than 500 varieties of hard-surface floors featuring a range of quality styles and on-trend designs. LL Flooring’s online tools also help empower customers to nd the right solution for the space they’ve envisioned. LL Flooring’s extensive selection includes waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile, and cork, with a wide range of flooring enhancements and accessories to complement. LL Flooring stores are staffed with flooring experts who provide advice, Pro partnership services, and installation 3options for all of LL Flooring’s products, the majority of which are in stock and ready for delivery