ST. PAUL, Minn. – Gander Mountain Co. (Nasdaq: GMTN – News), a retail network of stores for hunting, fishing, camping, and marine products and services and outdoor lifestyle apparel and footwear, intends to cease its public company status, it reported in a statement yesterday.
A special committee of the company’s board of directors, comprised of independent directors, has recommended, and the board of directors has approved, plans to cease the registration of its common stock with the Securities and Exchange Commission under the Securities Exchange Act of 1934, according to the company. Gander Mountain expects that, as a result of this deregistration, its shares of common stock will cease to be listed on the Nasdaq Global Market.
Gander Mountain’s board of directors decided to pursue taking the company private after concluding that the disadvantages of remaining an SEC-reporting company, including the costs associated with ongoing regulatory requirements, outweighed the benefits of public company status to the company and its shareholders, the company reported.
In order to ensure that it will be eligible to deregister its shares of common stock, in accordance with SEC rules and regulations, Gander Mountain said it will reduce its number of beneficial shareholders to below 300. To accomplish this, the special committee of the board recommended, and the board of directors approved, an amendment to the company’s articles of incorporation to effect a 1-for-30,000 reverse stock split of its common stock.
After the reverse stock split, any shareholder holding less than one share will receive a cash payment of $5.15 for each share held prior to the reverse split. Immediately following the reverse stock split, the company will file a second amendment to its articles of incorporation to effect a 30,000-for-1 forward stock split. As a result, shareholders owning 30,000 or more shares of common stock at the time of the reverse split will retain their current numbers of shares of common stock without change and not receive cash in the transaction. The funding for the cash payment for the fractional shares described above will be provided by the company’s two largest shareholders, Gratco LLC and Holiday Stationstores, Inc. The company said Greene Holcomb & Fisher LLC, independent financial advisor to the special committee, determined that the cash-out price of fractional shares is fair from a financial point of view to those shareholders who would be cashed out in the proposed transaction.
Once Gander Mountain becomes a private company, it intends to continue its efforts to improve operating performance and reduce its outstanding indebtedness, according to the company. The company’s two largest shareholders have agreed to make an offer to purchase shares held by remaining shareholders following the going private transaction at the same price of $5.15 per share following effectiveness of the stock splits described above.
Gander Mountain said it anticipates the transaction will be completed in early 2010.