ST. LOUIS — A Lehman Brothers affiliate is poised to buy Angelica Corp., which provides textile rental and linen management services to U.S. healthcare clients, for $22 per share in cash.
Angelica’s board of directors unanimously approved the merger agreement with Clothesline Holdings and Clothesline Acquisition Corp. on May 22. It’s subject to shareholder approval and antitrust clearance, and is expected to close in late summer.
When announced, it represented a 33.7% premium over Angelica’s May 22 closing share price of $16.45. At the end of business Friday, the stock closed at $21.47.
Following completion, Angelica’s stock will be de-listed and no longer traded publicly. Should the deal fall apart, termination fees ranging from $3.5 million to $9 million depending on reasons for failure will be payable by Lehman Brothers or Angelica.
Last September, facing pressure from stockholders, Angelica authorized investment banker Morgan Joseph & Co. to pursue a possible sale of the company.
“We are pleased to reach a successful conclusion to the sale process,” says Ronald J. Kruszewski, speaking on behalf of Angelica’s board of directors. “Working under the Board’s direction, Morgan Joseph conducted a thorough and effective process in a difficult financial environment. We believe this transaction is a great outcome for shareholders, customers and employees of Angelica.”
“We are committed to building Angelica’s business in partnership with management, focused on growth organically as well as by acquisition,” says Jon Mattson, a managing director and partner with Lehman Brothers Merchant Banking.
Steve O’Hara, Angelica’s president and CEO, says his company is “…thrilled to have a committed long-term investor … who shares our growth vision anchored around delighting healthcare customers.”
Angelica was once a leading supplier of uniforms and other textiles, dating back to the 1870s. It began offering healthcare textile rental services in 1968 through a West Coast acquisition and later acquired other laundry facilities in the Northeast, on the West Coast and in Florida.
But it eventually decided to focus solely on textile rental services, selling its manufacturing division in 2002 and its retail division in 2004.