Joint Merger Plan Considered by Wickes and Riverside Companies

Strategic Insights -

Wickes Lumber Company and Riverside Group, Inc. are exploring a plan to combine their operations. Under the proposal, Riverside's remaining businesses would be sold, and the company would focus on its investment in Wickes. The plan aims to strengthen Wickes' capital and liquidity, enabling the company to gain a competitive advantage. Riverside's largest shareholder, Wickes, would benefit from the plan, which would also facilitate the disposal of Riverside's other assets.

Key Takeaways:

  • The proposed merger would combine Wickes Lumber Company and Riverside Group, Inc. under a single entity.
  • Riverside would sell its remaining operations, except for its interest in Wickes, to focus on its investment in the company.
  • Wickes would benefit from the increased capital and liquidity, gaining a competitive advantage in the market.
  • The plan values Wickes' shares at $8 per share, based on its recent market value.
  • Riverside's shares would be valued based on the expected proceeds from the sale of its remaining insurance operations and other assets.
  • As of June 30, 1995, Riverside had shareholders' equity of $38.9 million.
  • The plan is being considered by the independent directors of Wickes and Riverside, subject to various conditions, including the negotiation and execution of a definitive merger agreement and shareholder approval.

Statistics:

  • Riverside's shareholders' equity as of June 30, 1995: $38.9 million
  • Number of shares of common stock outstanding for Wickes: 6.2 million
  • Percentage of shares owned by Riverside in Wickes: 35.5%
  • Value of Wickes' shares in the proposed combination: $8 per share
  • Number of building centers operated by Wickes: over 120
  • Number of states in which Wickes operates building centers: 24
  • Number of component manufacturing facilities operated by Wickes: 11

Sources:

  • Wickes Lumber Company (Nasdaq: WIKS)
  • Riverside Group, Inc. (Nasdaq: REGI)
  • PRNewswire
  • Securities and Exchange Commission
  • George A. Bajalia, Chief Financial Officer, Wickes Lumber Company
  • Duane T. Miller, Riverside Group, Inc.
  • Bill Murphy or Fred Nachman, The Financial Relations Board