WEBR - Weber majority holder offered to buy company at 55% discount to IPO this week

The majority owner of grill maker Weber Inc. ( NYSE: WEBR ) this week offered to buy the company at more than a 50% discount its initial public offer last August.

BDT Capital, which has an 86% stake in Weber ( WEBR ) and voting power of about 62%, offered to buy the remainder of the company it didn't already own for $6.25/share. The price represents a 55% discount to the grill maker's $14 IPO in early August of 2021.

BDT Capital, a Chicago-based investment company and merchant bank run by famed investment banker Byron Trott, has been a controlling shareholder in partnership with the Stephen family and Weber ( WEBR ) management since its investment in December 2010.

Weber ( WEBR ) said in a statement on Tuesday that its board previously formed a committee to evaluate and consider any potential or actual transaction proposal from BDT and any other alternative proposals or other strategic alternatives that may be available to the company.

At least one analyst said he sees the possibility of a higher bid as unlikely.

"In our view, this is a `take it leave it' type offer and counterbids (from other entities) among other alternatives seem a low probability," Wells Fargo analyst Chris Carey wrote in a note on Tuesday.

Carey highlighted that in BDT's proposal letter from Monday the investor said it's not interested in the disposition or sale of its shares in Weber ( WEBR ) and has no interest in participating in an alternative change of control transaction involving the grill maker. BDT added that it wouldn't vote in favor of any alternative sale, merger or similar transaction.

While the Weber ( WEBR ) takeout price at a 55% discount to the IPO may seem small, though rival grill maker Traeger ( COOK ) is currently trading at a 78% discount its IPO, which occurred around the same time as Weber's last year, Seeking Alpha contributor Donovan Jones of IPO Edge said in an email interview on Sunday.

"One could argue WEBR's shareholders are getting a better deal in those terms," Jones said. "Both companies went public during the pandemic when future sales were pulled forward as consumers bought grills for home use during the pandemic, so one could argue their valuations at IPO were temporarily excessive. That they now have to deal with lower demand that was really just pulled forward in their previous year comps is entirely reasonable in my view."

Citi analyst Chase Bender wrote earlier this week that while the BTD offer looks "generous," he sees the potential for the price to go higher.

Bender points out that Weber traded at 26.9x EV/EBITDA in mid-August, which equates to be about $9.50/share, he wouldn't be "surprised" to see a revised offer in between that price and the $6.25 offer. Bender has a sell rating and $2.75 price target.

Weber ( WEBR ) has short interest of 44%.

Also see IPO Edge's Jones piece on Weber ( WEBR ) from earlier this month entitled "Weber Faces Sharp Industry Downturn."

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