Shareholders of Roots Corp. (TSE: ROOT) have voted in favour of taking the iconic Canadian retailer private.
New York-based Marquee Brands, a private equity firm, has offered to purchase Roots and take the company private at a price of $4.10 per share.
The take private deal, which shareholders have supported, is valued at a total cost of $160.72 million.
Management at Roots said that a majority of shareholders voted in support of the deal but did not disclose how much support the deal garnered.
The transaction is subject regulatory approvals but is expected to close by the end of this year. Once the deal is finalized, ROOT stock will be delisted from the Toronto Stock Exchange.
Marquee Brands plans to use JM&A Design and Development to manufacture and distribute Roots clothing, which include its well-known hoodies emblazoned with Roots’ iconic beaver logo
Marquee Brands also manages the Martha Stewart, Laura Ashley, and Roberto Cavalli labels and intends to expand Roots to other markets around the world such as India and Mexico.
The purchase price of $4.10 per share represents an 11% premium to the $3.69 closing price of the retailer’s stock on Aug. 20, which was just before Marquee Brands made its offer.
Under terms of the deal, Marquee Brands is acquiring all of Roots’ 39.2 million outstanding common shares.
Roots has struggled for years with declining sales and a slumping stock price, leading management to announce in March of this year that they were undertaking a strategic review.
In June, Roots reported a net loss of -$10.1 million, equivalent to a loss of -$0.26 per share. That was worse than a net loss of -$7.9 million, or -$0.20 a share, a year earlier.
Roots has faced growing competition and lost ground with younger consumers to trendier clothing brands such as Canada’s Aritzia (TSE: ATZ).
Consequently, Roots’ share price has steadily eroded. After peaking at $13.53 a share in 2018, the stock has declined 73% to close at $3.69 per share on Aug. 20 of this year.
The stock is currently trading at the $4.10 acquisition price agreed to with Marquee Brands.
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