Axar Capital Management, LP to Acquire StoneMor Inc.
May 25, 2022 By MarketDepth
StoneMor Inc. (NYSE: STON) has announced entry into a definitive merger agreement where a subsidiary of Axar Capital Management, LP will be merged with and into StoneMor and all outstanding shares of StoneMor common stock not owned by Axar. This will convert into the right to receive USD 3.50 in cash per share. Axar currently owns 75% of the outstanding shares of StoneMor common stock, the cash consideration represents a 54.2% premium to the company’s closing share prince on May 24th, 2022. “Our agreement with Axar delivers a significant premium for StoneMor’s stockholders and ensures a strong foundation for us to continue our expansion,” said Joe Redling, President and Chief Executive Officer. “Our Board firmly believes that this transaction is in the best interests of all of our stockholders other than Axar and its affiliates and delivers an ongoing commitment to excellence for our customers, employees and communities we serve.”
Company is Actively Seeking Proposals
The agreement provides for a “go-shop” period during which the Conflicts Committee (acting through its financial advisor) will actively initiate, solicite, facilitate, encourage and evaluate alternative acquisition proposals, and potentially enter into negotiations with any parties that offer alternative acquisition proposals. The “go-shop” period is 60 days subsequent to signing of the Merger Agreement, ending July 23, 2022. There can be no assurance that this “go-shop” process will result in a superior proposal, particularly in light of Axar’s ownership position and the fact that Axar has no obligation to support any such superior proposal. StoneMor does not intend to disclose developments with respect to the solicitation process unless and until its Conflicts Committee and the Board of Directors has made a decision with respect to any potential superior proposal. The Company will pay Axar a termination fee in certain circumstances, including a fee equal to 2% of the aggregate value of the non-Axar shares if the Company terminates the agreement during the “go-shop” period to enter into a superior proposal that Axar supports, and a fee equal to 4% of the aggregate value of the non-Axar shares if the Company terminates the agreement after the “go-shop” period to enter into a superior proposal that Axar supports. No termination fee is payable if the Company terminates the agreement upon a change of recommendation in connection with a superior proposal that is not supported by Axar.