Ben Stein won’t like it, but the board of directors of global logistics company EGL, Inc. approved a $1.7 billion private equity buyout of the company by a group headed by chief executive officer Jim Crane, who is also the largest shareholder of the company. Previous posts on the private equity plays for EGL are here, here and here.
Crane will have 51% of the privatize company and the other 49% will be owned by private-equity firm Centerbridge Partners LP and Canada’s Woodbridge Co., which is the investment vehicle of the Thomson family, one of Canada’s wealthy Canadian family. The price of $38 a share represents over a 25% premium over the $29.75 price of EGL’s shares in late December. Crane’s previous buyout offer, which tanked after the release of less-than-stellar fourth quarter numbers, was based on a $36 per share price. EGL’s shares closed at $34.96 in Nasdaq Stock Market composite trading this past Friday.
Meanwhile, the Chronicle’s Bill Hensel is reporting today that a letter from New York-based Apollo Management has surfaced stating that it had put together a group that had offered an all-cash deal for EGL worth $2 a share more than the management-led buyout. No word yet on whether EGL’s board, in approving the management-led offer, had considered the competing bid, which will remain open until this Friday. The NY Times/Reuters story on the Apollo bid is here.
In its letter, Apollo claims to have left several voicemails and e-mails with the boardís special committee, its financial advisers at Deutsche Bank and its counsel at Andrew & Kurth. Also, Apollo claims that EGL refused to open its books to allow Apollo to conduct due diligence. Finally, Apollo asserts that the last written communication from the company was last Thursday, when EGL advised that ìbest and finalî bids were due March 26. As late as last Sunday, Deutsche had told Apollo that no deal was imminent. The following is from the letter:

We wonder what urgency the company saw in cutting this process short (without informing us or giving us a chance to exceed the C.E.O.ís bid) or in suddenly negotiating a deal at an inferior price and with, we suspect, breakup fees and other deal protections for the benefit of the CEO. That would not seem in the best interests of your shareholders, other than Mr. Crane personally.

So, even if Crane’s group is the winning bidder for EGL, he and the board will likely have to endure a shareholder’s lawsuit that they favored Crane’s lower bid over the non-insider, higher bid. Public equity is not looking all that attractive these days. Frankly, is anyone surprised?