Swenson, Rock of Ages Merge
The merger, announced today by ROAC, comes five months after Swenson originally made a bid for the Barre-based stone quarrier/producer. The deal is subject to ROAC shareholder approval at a yet-undetermined date.
ROAC’s board of directors approved the deal after a special committee of three of the company’s independent directors unanimously recommended the merger. In a news release, the company noted that Boston-based Covington Associates LLC acted as independent financial advisor and found the proposal to be fair to shareholders.
Swenson initially proposed an unsolicited $4.38 per share offer on May 7. The agreement announced today, estimated by Reuters at a total value of $38.9 million, upped the price to $5.25, amounting to an 84% premium to the average closing price for the 12 months prior to the initial May bid.
Kurt Swenson, the chairman of Swenson Granite and non-executive ROAC chairman – along with brother Kevin Swenson, vice president of Swenson Granite, and Robert Pope, Swenson Granite president and CEO – own approximately 71 percent of Swenson Granite, according to a ROAC release.
Swenson Granite, founded in 1883, bought the 125-year-old Rock of Ages company in 1984. ROAC became a public-stock company in 1997 on the New York Stock Exchange, with the Swenson family holding a controlling interest.
The three Swenson Granite officers, along with certain other members of the company, currently hold 81 percent of the total voting power of all ROAC shares. All have agreed to vote in favor of the Swenson-ROAC deal.
Prior to the merger, the Swenson brothers, Pope and certain other ROAC-stockholding members will contribute a total of 258,326 Class A ROAC shares and 2,449,793 Class B ROAC shares to Swenson Granite. They’ll receive additional shares of membership interest in Swenson Granite in lieu of the $5.25 per-share cash payment for those ROAC shares.
The deal needs approval of majority vote of ROAC Class A and Class B common stock. ROAC will schedule a special meeting of its shareholders for the purpose of obtaining shareholder approval of the merger agreement.
People’s United Bank and Key Bank have committed, subject to customary conditions, to provide debt financing for the transaction.
Skadden, Arps, Slate, Meagher & Flom LLP of New York served as legal advisor to the ROAC special committee. Manchester, N.H.-based Sheehan Phinney Bass + Green PA served as Swenson Granite’s counsel.
Get the best in insightful and informed coverage of the stone industry every month with Stone Business magazine. Sign up for a free subscription (or renew your current account) and don’t miss a single issue – just click here.