Crain's Cleveland Business is reporting today that "the acquisition of Myers Industries Inc. (NYSE: MYE) for $22.50 a share by an affiliate of Goldman Sachs will not close by the end of this week as originally planned, if the deal ever is completed at all.
The Akron-based manufacturing and distribution company said the Goldman Sachs affiliate, GS Capital Partners, has requested more time to complete the acquisition of Myers. However, as part of the agreement to extend the closing deadline to April 30, 2008, from Dec. 15, 2007, Myers is free to respond to takeover proposals solicited or received from other parties during the extension period and will not be required to pay a termination fee to GS Capital Partners if it enters into an alternative transaction.The announcement caused the stock of Myers to plunge from the outset of trading today, and it has not improved throughout the session. Shortly after 1 p.m., Myers was trading for around $15.70 a share, down 27% from its Friday close of $21.56.In consideration for extending the closing date of the transaction, GS Capital Partners has agreed to make a non-refundable payment to Myers of a previously agreed upon $35 million fee. Myers said GS Capital Partners also has secured an extension of its debt financing commitments from Goldman Sachs Credit Partners and Key Bank, under which GS Capital Partners has agreed to contribute another $30 million of equity to the transaction.Myers said GS Capital has acknowledged that there has been no material adverse change in Myers’ business, and the deadline extension request “resulted from its desire to further evaluate conditions in certain industries in which Myers operates.”John C. Orr, Myers president and CEO, said in a statement: “Both sides continue to work closely to complete this transaction. In light of GSCP’s request for an extension, which we received the evening of Dec. 7, 2007, the board of directors determined that it is in the best interest of Myers’ shareholders to preserve this opportunity.” On Nov. 30, Myers made an exception to its policy of not responding to market rumors when it addressed rumors that its acquisition by GS Capital Partners would not close as scheduled. Myers said at the time it had not received any indication from its would-be acquirer that it did not intend to close the transaction within the time frame provided by their merger agreement.Myers in late April announced it had reached a definitive agreement to be acquired by GS Capital for $1.1 billion, including the assumption of certain debt. However, turmoil in the credit markets has caused some market observers to question whether the transaction will happen.In early November, Myers reported a sharp drop in third-quarter earnings despite a double-digit increase in sales. The company said net income in the period fell 75%, to $1.5 million, or four cents a share, from $6.1 million, or 17 cents a share.Myers said results in the latest third quarter were hurt by restructuring expenses, foreign currency transaction losses and expenses related to two acquisitions that were completed early this year. Myers also saw softness in several end markets and encountered increased resin prices.