In a special shareholders’ meeting that lasted a mere five minutes, the purchase of LESCO by John Deere Landscapes sailed through May 3.
The meeting began shortly before 10 a.m. eastern at The Forum in downtown Cleveland and was adjourned at about 10:04 a.m. A member of LESCO’s board of directors brought the meeting to order, then a secretary read the votes which had been tallied before the meeting began. LESCO is headquartered in Cleveland, and the shareholder meeting took place a few blocks from the company’s offices.
More than 6 million votes were cast in approval of the sale, while there were nearly 1.7 million votes against the sale. About 87,000 votes were withheld.
Just this week, Dutton Associates, a California-based investment research firm, issued its analysis of the company, in light of the Deere’s purchase:
“Over the past five years, LESCO has been engaged in an ongoing restructuring as it has sought to increase profitability and put itself on a growth path. The Company has changed top managements, exited manufacturing activities while remaining committed to purchasing products from the sold facilities, restructured and then disposed of its distribution operation, sought to lock in material costs and then shifted away from locking in costs, and disbanded and then reconstituted its direct sales team. Earnings have reflected the missteps in these efforts and the Company reported a substantial loss from operations in 2006. We expect LESCO to show significant improvement in 2007, but to report a loss, albeit a significantly smaller one.”
On April 27, Institutional Shareholder Services (ISS), an independent proxy advisory firm which provides voting recommendations, urged LESCO shareholders to approve the sale. "[B]ased on our review of the proposed transaction, particularly the 39 percent 1-day premium, the implementation risk inherent in executing the management's plan, and the downside risk if the transaction is voted down, we recommend shareholders vote for the proposed merger,” the ISS statement reads.
It’s expected that LESCO and its 332 service centers and 125 stores-on-wheels will merge with John Deere Landscapes.
Shortly after the proposed sale was announced in late February, Hawkshaw Capital Management LLC, which owns about 13.6 percent of shares outstanding, sought to halt the deal, saying the proposed sale price of $14.50 per share wasn’t enough. Hawkshaw owns more than 1.2 million shares of LESCO common stock.
