Direct marketer and distributor Interline Brands, Inc. (IBI) agreed Tuesday to be taken private by GS Capital Partners LP and P2 Capital Partners, LLC in a $1.1 billion all-cash deal, including assumed debt.
The deal, which has the unanimous approval of Interline's board, is expected to close by the end of the third quarter of 2012. However, the deal is primarily subject to approval by majority of the holders of the Interline's outstanding shares.
"This agreement provides excellent value to shareholders. This is also an exciting new chapter for Interline, one that we believe will bring broad benefits to all of our stakeholders," Interline's Chairman and CEO Michael Grebe said in a statement.
GS Capital Partners is one of the 16 private equity investment vehicles of Goldman Sachs Group, Inc. (GS), while Claus Moller's New York-based investment firm P2 Capital Partners is a shareholder of Interline and applies a private equity approach to investing in the public market.
The deal translates to an offer price of $25.50 per share, which represents a 42 percent premium to Interline's closing stock price of $17.94 on Friday, the last trading day before the announcement of the deal.
Shares of Interline jumped $7.21, or 40.19 percent to $25.15 in Tuesday's regular trading in order to reach the offer price.
GS Capital Partners and P2 Capital Partners have also secured committed debt financing from Goldman Sachs and Bank of America Corp. (BAC). Interline noted that Grebe and certain members of its management are expected to invest a portion of their proceeds from the deal.
Following the completion of the deal, Jacksonville, Florida-based Interline intends to maintain its corporate headquarters in Jacksonville, Florida, as well as its distribution and sales footprint.
Interline noted that the agreement provides a go-shop-period for it to solicit alternative proposals from third parties through June 28. It also provides for a termination as well as reverse termination fee.
Interline Brands was initially operating as Wilmar Industries, which went public in 1996. It was then taken private in May 2000 after it had acquired a few competing businesses. Wilmar was then merged with Barnett, Inc. and the combined company was named Interline Brands, which then went public in late 2004 again.
"We remain laser-focused on our goals and capabilities, and look forward to working with partners that have proven track records of investments in the distribution sector, as well as financial and operational expertise in global markets. Moreover, Interline has operated successfully in both public and private settings in the past," Grebe added.
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