Linens n' Things Trading Well Below Buy-out Price (LIN, BBBY)

Includes: BBBY, LIN-OLD
by: The Stalwart

The Stalwart submits: Risky yes, but we noticed that Linens n' Things (LIN-OLD) is still trading about 5% below its expected buy-out price of $28. There is some uncertainty surrounding the situation but also the potential for a counter-bid to appear. Not quite our personal style, but it could be interesting to some of our readers -- today's development:

LIN, based in Clifton N.J., saw its stock add 11%, or $2.61, to close at $26.52.

In a regulatory filing made late Tuesday, the retailer said that two of the conditions -- that the retailer's fourth-quarter comparable net sales not fall more than 6%, and that adjusted earnings before interest, taxes, depreciation, amortization be at least $140 million -- look to be fulfilled based on improving sales trends.

Additionally, the company said it will hold a special shareholders meeting on Jan. 30 to vote on the proposed $28 a share cash acquisition.

And from here...

In November, Linens N Things agreed to be acquired by a company formed by Apollo Management in a deal valued at $1.3 billion. Its shareholders are expected to receive $28 per share in cash.

Deutsche Bank analyst Mike Baker said the announcement could move the stock closer to the $28 per share acquisition price.

Shares of Linens N Things rose $2.57, or 10.8 percent, to $26.48 in afternoon trading on the New York Stock Exchange.

Baker thought the announcement also was good news for Bed Bath & Beyond Inc., since many investors expected the competing retailer to make a bid for Linens N Things if the Apollo-orchestrated acquisition fell through.

"While such a merger would be accretive to Bed Bath & Beyond, we believe the market would have viewed it poorly given the potential integration risks and disruptions to Bed Bath & Beyond's consistent business trends," Baker wrote in a research note.

Shares of Bed Bath & Beyond, which have traded between $35.50 and $46.99 in the past year, rose 22 cents to $36.94 on the Nasdaq.

Just looking to help out those hungry, overcrowded hedge funds...

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