Linens 'n Things to be Acquired by Apollo Management for $1.3 Billion

Strategic Insights -

Linens 'n Things, Inc., a leading national large format retailer of home textiles, housewares, and home accessories, has entered into a definitive agreement to be acquired by a company newly formed and controlled by Apollo Management, L.P. on behalf of itself and its managed funds, together with certain co-investors, including NRDC Real Estate Advisors I, LLC. The acquisition will result in Linens 'n Things stockholders receiving $28.00 per share in cash, totaling approximately $1.3 billion in consideration.

The acquisition marks the completion of Linens 'n Things' strategic review process, with Apollo investing in the company's concept, management team, and future prospects. Norman Axelrod, Chairman and Chief Executive Officer of Linens 'n Things, stated, "This transaction with Apollo achieves the completion of our strategic review process. Apollo is investing in our concept, our company and our future, which will lead to additional new opportunities for all our associates and our business partners." Peter Copses, a senior partner of Apollo, said, "We are extremely excited about the prospect of acquiring one of the nation's leading home goods retailers. We look forward to partnering with the management team to continue to build a world-class retailer focused on its customers, vendors, and employees."

Key Takeaways:

  • The acquisition is subject to customary closing conditions, including approval of Linens 'n Things stockholders, funding of the contemplated debt financing, expiration of antitrust waiting periods, and no material adverse change in the company's business.
  • The debt financing commitment defines EBITDA as net earnings before interest, taxes, depreciation, and amortization, with other specified adjustments. Linens 'n Things' EBITDA prior to those adjustments for the first thirty-nine weeks of 2005 was approximately $54.5 million, on an unaudited basis.
  • Comparable store sales for fiscal October 2005 were approximately negative 8.4%. The company does not undertake or plan to update its 2005 fourth quarter results or expectations until after its 2005 fiscal year is completed.
  • The acquisition is subject to various conditions, including Linens 'n Things achieving EBITDA of not less than $140 million for the full 2005 fiscal year and comparable net sales of not less than negative 6% for the 2005 fourth quarter.
  • The companies' performance is subject to various risks and uncertainties, including the impact of severe or unusual weather on guest traffic or store closings, the difference between forecasted results and actual results for prior fiscal periods, and other significant accounting estimates.
  • Apollo Management, L.P. has managed the investment of over $12 billion in a wide variety of industries, both domestically and internationally, since its inception in 1990.
  • NRDC Real Estate Advisors I, LLC is a partnership between the principals of National Realty & Development Corp. and principals of Apollo Real Estate Advisors, owning and developing over 14 million square feet of shopping centers throughout the United States.

Statistics:

  • $1.3 billion: The total consideration to be paid to Linens 'n Things stockholders in the acquisition.
  • $28.00: The price per share that Linens 'n Things stockholders will receive in cash.
  • $54.5 million: Linens 'n Things' EBITDA prior to adjustments for the first thirty-nine weeks of 2005, on an unaudited basis.
  • -8.4%: Comparable store sales for fiscal October 2005.
  • $140 million: The EBITDA target for the full 2005 fiscal year, subject to various conditions in the debt financing commitment.
  • -6%: The comparable net sales target for the 2005 fourth quarter, subject to various conditions in the debt financing commitment.
  • 45 states and 5 provinces: The number of regions where Linens 'n Things operates as of September 30, 2005.
  • 516 stores: The number of stores Linens 'n Things operated as of September 30, 2005.
  • 1990: The year Apollo Management, L.P. was founded.
  • $12 billion: The amount of investments managed by Apollo Management, L.P. since its inception in 1990.
  • 14 million square feet: The square footage of shopping centers developed by National Realty & Development Corp.