LL Flooring Holdings Inc. shares slumped Thursday after its founder withdrew his proposal to buy the flooring business, ending what was a second takeover attempt in four years.
In a filing to the US Securities and Exchange Commission, Tom Sullivan said he sent a letter to the company, formerly known as Lumber Liquidators, rescinding his offer “in light of LL’s deteriorating financial and operational performance and eroding value,” following its 2023 second quarter earnings results. Shares ended the day 4.2% lower.
Sullivan did not respond to Bloomberg’s request for comment.
The pulled offer comes just days after LL Flooring’s board of directors said it had initiated an exploration of strategic options, including a potential sale of the company. Sullivan’s filing has no impact on that process, which is still underway, according to a company spokesperson.
“The Board is taking the opportunity to explore a range of potential strategic alternatives to maximize shareholder value based on multiple inbound indications of interest regarding a potential transaction with the Company,” the spokesperson said.
Sullivan, through F9 Investments LLC, currently holds 8.8% of LL Flooring stock, about 2.7 million shares, according to data compiled by Bloomberg. In May, Sullivan disclosed his holdings when he said he was prepared to buy LL Flooring’s remaining outstanding shares for $5.76 and merge it with Cabinets to Go, another company he founded.
A month later, a group of investors holding 5% of LL Flooring shares encouraged the board to take Sullivan’s offer. But the board rejected it, saying that the offer significantly undervalued the company.
LL Flooring traded for $4.14 per share at Thursday’s close, far from its pandemic high of about $35 in 2020. At its all-time high in 2013, the company was worth about $114 per share.
This is the second time Sullivan has launched an unsuccessful buyout attempt for LL Flooring, which he left in 2016 following a controversy in 2015 over allegations that it sold tainted Chinese-made flooring. In 2019, he walked away from a proposal to buy the company when it declined to participate in discussions, then sold part of the stake he’d acquired, making about $4.8 million.
(Updates stock move at market close)