Stein Mart’s buyout cancelled

Stein Mart’s plan to go private has been derailed by the COVID-19 pandemic.

The off-pricer retailer and Kingswood Capital Management have mutually agreed to terminate their merger agreement, announced in January, which would have taken Stein Mart private.   

Stein Mart’s board directors on a special committee voted to terminate the merger agreement in response to "the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, uncertainty regarding Stein Mart's ability to satisfy the conditions to closing, and the substantial expense to Stein Mart of soliciting shareholder approval for a transaction which is unlikely to close," the company said in a press release.

Under the terms of the deal, an affiliate of Kingswood agreed to buy all shares of  Stein Mart not controlled by company chairman Jay Stein and related investors.  The retailer,  which operates 283 stores in 30 states, has struggled in increase sales in today’s competitive retail markets. It has furloughed most of its employees as its stores remain closed amid the virus outbreak.

“While we both believed in the benefits of the proposed transaction, we have mutually concluded after careful consideration that given the current environment and significant uncertainty, it would not be prudent to continue to pursue the transaction,” said Richard L. Sisisky, Stein Mart board member, and Alex Wolf, managing partner of Kingswood, in a joint statement. 

The termination was approved by the Stein Mart Board of Directors (other than Mr. Stein) acting on the recommendation of the Special Committee of independent directors that oversaw negotiation of the merger agreement, and is in response to the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, uncertainty regarding Stein Mart’s ability to satisfy the conditions to closing, and the substantial expense to Stein Mart of soliciting shareholder approval for a transaction which is unlikely to close.

In a joint statement, Richard L. Sisisky, Stein Mart Board member and Chairman of the Special Committee, and Alex Wolf, Managing Partner of Kingswood, said, “While we both believed in the benefits of the proposed transaction, we have mutually concluded after careful consideration that given the current environment and significant uncertainty, it would not be prudent to continue to pursue the transaction.”

Because the decision to terminate the agreement was mutual, neither company will be required to pay the other a termination fee.