EGL Global Logistics founder and chairman Jim Crane’s efforts to take the Houston-based transport company private (see earlier posts here, here and here) continued this week as Crane hooked up with New York City-based private investment firm Centerbridge Partners LP and Toronto-based The Woodbridge Co. Ltd., to propose buying all the outstanding common stock of EGL for $36 per share in cash. The new proposal provides EGL shareholders with the same consideration that Crane offered in his earlier proposal to acquire the company, which amounted to about a 20 percent premium over the closing price of EGL stock on Dec. 29 of $29.78. The Woodbridge Company plans to team up with Merrill Lynch to provide the $1.175 billion of debt financing necessary to complete the transaction.
EGL is a good example of a company that could benefit from a management-led leveraged buyout. The company’s growth has lagged over the past couple of years, so the 20% premium that Crane is willing to pay would likely not be available to EGL shareholders anytime soon. Crane built the business since starting it back in the 1980’s, so he understandably remains bullish on its future prospects. However, the market generally is not as sanguine about EGL’s future. Thus, this looks on the surface like a good deal for EGL shareholders, despite what Ben Stein would probably say.