Stewart Enterprises surprised at Service Corp. pulling its offer

By Jennifer Chiou

New York, Oct. 8 - Stewart Enterprises, Inc. announced that it was surprised and disappointed by the unexpected withdrawal on Tuesday of Service Corp. International's proposal to acquire Stewart for $11.00 per share.

In September, after Stewart's board of directors and independent committee consulted with its financial and legal advisers regarding the proposal, the board determined to explore, among others, the proposal and to share information with Service Corp., Stewart said in a news release.

According to an Oct. 7 letter to Stewart from Service Corp. attached to a press release, Stewart's three preconditions to negotiate a deal are unacceptable. The company said it had also filed the letter in a form 8-K with the Securities and Exchange Commission.

Service Corp. told Stewart in the letter that it cannot agree to accept all financing risk, regulatory risk on antitrust clearance and increase its $11.00-per-share proposal.

In response, Stewart said in an Oct. 7 letter to Service Corp. that it "disagrees with how [Service Corp.] characterizes the current state of [its] discussions in a number of ways."

Stewart president and chief executive officer Thomas J. Crawford added in the letter: "Throughout our discussions, you had consistently communicated to us that you were prepared to consider increasing your offer after receipt of limited due diligence information, that you were comfortable with the anti-trust regulatory risk and that your ability to deliver financing was key to the transaction.

"It is disappointing that you are publicly attempting to characterize us as unreasonable when the only thing that seems to have changed since our initial discussions is the state of the financing markets."

Crawford said that Stewart's board will continue to assess alternatives to maximize shareholder value and also remains open to dialogue with Service Corp.

Service Corp. increased its offer to purchase the company on July 22 to $11.00 per share. Service Corp. said on July 14 it would honor Stewart's decision to reject the $9.50-per-share offer made on June 25.

Stewart, in rejecting the initial offer, had said it was not in the best interest of shareholders and called the proposal "inadequate."

Service Corp. International and Stewart Enterprises both provide funeral and cemetery products and services. Stewart is located in Jefferson, La., and Service Corp. is based in Houston.

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