ABILENE, Kan. — Argonne Capital Group LLC, a private investment firm based in Atlanta, Ga., has entered into a definitive merger agreement with Alco Stores, which will allow Argonne to acquire all outstanding shares of the broad-line retailer’s common stock for $14 per share in cash.
This price represents a premium of approximately 63% to Alco's share price on July 24, 2013, the last trading day prior to Alco's announcement of the transaction contemplated by the merger agreement. The cash price for Alco shares in the proposed transaction totals approximately $47 million.
The independent members of Alco’s board of directors have unanimously approved the merger agreement and recommended that the retailer’s shareholders approve the transaction.
"Argonne Capital is very selective in its acquisition process and focuses on companies that have strong growth potential," Royce Winsten, chairman of the board of Alco, stated. "We are proud of Alco CEO Rich Wilson and his management team, and how they have positioned the company for growth. We believe Argonne will help Alco grow and achieve the goals management and the board have established for the company."
"Alco Stores has a unique model for providing an attractive merchandise selection and exceptional value to consumers in underserved communities in small-town America,” added Wilson. “Our associates are supportive of the new brands, variety and value we offer shoppers — as well as the operational improvements behind the scenes. Alco looks forward to partnering with Argonne, and we believe the support they will provide will accelerate the company's plans for sustained growth."
The merger, which is expected to close later this year, is subject to approval from Alco's shareholders and other customary closing conditions.
William Blair & Company, L.L.C. is serving as financial adviser to the company, and Norton Rose Fulbright and Lathrop & Gage LLP are serving as legal advisers to the company. Sagent Advisors, LLC is serving as financial adviser to Argonne, and King & Spalding LLP is serving as legal adviser to Argonne.
Founded in 1901, Alco Stores are primarily located in small, underserved communities across 23 states. The company operates 213 stores that offer both name brand and private label products. ALCO has its distribution center in Abilene, Kan., and is in the process of moving its headquarters from Abilene to suburban Dallas, Texas.
Argonne operates or franchises more than 775 restaurants under brands such as Iho, Applebee's, Krystal and Stevi B's Pizza. Argonne's real estate investment platform, RCG Ventures, LLC, owns more than 60 shopping center assets across 18 states with a focus on value-add opportunities.