NEW YORK – Steel Connect, Inc. (NASDAQ:STCN), a global provider of supply chain management services currently trading at $10.25, announced on Monday a definitive agreement to undergo a short-form merger with Steel Partners Holdings L.P., a diversified global holding company.
The transaction is expected to result in Steel Connect becoming a wholly owned subsidiary of Steel Partners. According to InvestingPro data, Steel Connect maintains a "GREAT" financial health score of 3.08, with strong fundamentals including a current ratio of 3.94.
The agreement, approved by Steel Connect's Audit Committee on November 27, 2024, stipulates that shareholders of Steel Connect, excluding Steel Partners and its affiliates, will receive $11.45 in cash per share at the effective time of the merger.
The offer represents an 11.7% premium to the current trading price, while InvestingPro analysis shows the company trading at attractive multiples with a P/E ratio of 3.31 and price-to-book ratio of 0.42. This arrangement is in line with the Delaware General Corporation Law's Section 253, allowing for a merger without the approval of the board or other shareholders, given that Steel Partners already owns over 90% of Steel Connect on an as-converted basis.
Additionally, if certain litigation proceeds known as the Reith Net Litigation Proceeds have not been distributed before the merger's effective date, each share of Steel Connect will receive one contingent value right (CVR) related to these proceeds. These CVRs are non-transferable and will not represent any equity or ownership interest in Steel Connect or Steel Partners.
The merger is subject to customary closing conditions, including the filing and dissemination of a Schedule 13E-3 to Steel Connect's shareholders in compliance with SEC regulations. Upon completion, Steel Connect's common stock will be delisted from the NASDAQ Stock Market and deregistered under the Securities Exchange Act.
This news is based on a press release statement and does not constitute an endorsement of the merger's potential benefits or outcomes. For investors seeking deeper insights into merger valuations and company fundamentals, InvestingPro offers comprehensive analysis tools, including 8 additional ProTips and advanced metrics to evaluate merger opportunities. Subscribers can access detailed financial health scores, valuation metrics, and expert insights to make more informed investment decisions.
In other recent news, Steel Connect, Inc. has reached a settlement agreement in a class and derivative action lawsuit titled Reith v. Lichtenstein, et al., which alleged fiduciary breaches by certain current and former directors and major stockholders.
The pending settlement, which is yet to receive court approval, includes a $6 million payment by the defendants' insurers to Steel Connect. After deducting court-approved legal fees and expenses, this amount will be distributed to common stockholders per the terms of an amended Stockholders Agreement.
The settlement also mandates the adoption of certain corporate governance enhancements, such as a review process for compensation clawbacks and a reduction in the threshold for reviewing related party transactions. A court hearing is scheduled to consider the approval of the proposed settlement and related matters.
Steel Partners Holdings L.P., its affiliates, and current directors and officers of Steel Connect have waived their rights to any portion of the distribution related to shares held as of May 1, 2023, or issuable upon conversion of convertible instruments, ensuring a fair distribution to other common stockholders.
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