Iconic Canadian retailer Roots (TSE: ROOT) has agreed to be taken private in a deal valued at $160.72 million.
Marketing company Marquee Brands will take Roots private at a price of $4.10 per share, which represents an 11% premium to the $3.69 closing price of the retailer’s stock on Aug. 20.
Under terms of the deal, Marquee Brands and its partners will acquire all of Roots’ 39.2 million outstanding common shares.
The go-private deal is expected to be finalized by year’s end subject to regulatory approvals and a shareholder vote in October.
For Roots, going private ends a long slow decline for the company as a publicly traded entity.
Roots has struggled for years with declining sales and a slumping stock price, leading management to announce this March that they were undertaking a strategic review.
In June of this year, 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 Aritzia (TSE: ATZ) and Abercrombie & Fitch (ANF).
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.
Trading under $5 a share made Roots a penny stock and the company’s market capitalization of $143.70 million made it a micro-cap security.
