Things are heating up in the boardroom at one of the world's biggest candle companies. Blyth, Inc.'s board has unanimously rejected the unsolicited conditional proposal from CVSL, Inc. to acquire Blyth.
The board also retained the law firm of Wachtell, Lipton, Rosen and Katz to provide legal services and Jefferies LLC to provide financial advisory and similar services to Blyth, and conducted a thorough review with management and the aforementioned advisors of the unsolicited proposal from CVSL to acquire, subject to conditions, all of the public common shares of Blyth for a per share consideration of $16.75, payable in CVSL shares or cash. Blyth's shares closed at $12.50 yesterday.
The Board of Directors cited the following as major reasons for its rejection of the offer, based on both the terms outlined in CVSL's offer letter dated October 25, 2013, and information obtained in subsequent discussions between Blyth's and CVSL's advisors:
• The offer was not supported by any committed debt or equity financing.
• The offer potentially required Blyth public shareholders to take as consideration a debt instrument for a portion of the purchase price.
• The offer required the management of Blyth, as well as significant shareholders of Blyth, to take as consideration stock (in CVSL or a subsidiary) for all or a portion of the purchase price for their shares of Blyth.
• The advisors to CVSL, in discussions with Blyth's advisors, indicated that there was no capacity to raise additional debt at CVSL.
• Consequently, any debt raised to finance the cash portion of the purchase price would be raised based solely on the leverage capacity of Blyth.
• The offer required using Blyth's cash and cash equivalents to repay Blyth's existing indebtedness and did not address the ongoing working capital needs of Blyth's domestic and international businesses.