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Hawkshaw Capital will not vote shares in favor of Lesco, Deere & Co. transaction
By Lisa Kerner
Charlotte, N.C., Feb. 21 - A group of Lesco, Inc. shareholders led by Hawkshaw Capital Management, LLC with a 13.63% stake in the company, sent a letter to Lesco's board voicing dissatisfaction with the proposed acquisition by Deere & Co. for $14.50 per share.
Hawkshaw Capital Management, Lesco's second-largest shareholder, said it will not vote its shares in support of the transaction, according to a schedule 13D filing with the Securities and Exchange Commission.
"The proposed price of $14.50 at best captures the cost synergies available to Deere & Co. as a strategic acquirer, but fails to adequately compensate Lesco shareholders for a return to normal operating earnings and the value creation from continued expansion of the company's high return on capital retail service center business," the letter stated.
"We do not understand why the board decided to sell Lesco at such an inopportune time: that is, immediately following one of the worst operating years in the company's history. The issues that precipitated the stock's decline are, in our view, temporary in nature and largely fixable over the next two years."
Hawkshaw believes shareholder value will be increased if Lesco rebuilds the direct sales force, avoids the sizable hedging losses and uneconomic pricing commitments experienced in 2006 and grows the number of high return on capital service centers.
The shareholders also question Lesco's failure to conduct an open auction process for all interested parties.
Shares (Nasdaq: LSCO) of the Cleveland landscape services company closed at $14.30 on Feb. 20.
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