Trans World CEO Drops Acquisition Bid7 May, 2008 By: Erik Gruenwedel
Citing the poor credit market, Trans World Entertainment Corp. founder, chairman and CEO Robert Higgins has withdrawn his offer to acquire all outstanding stock and take the retailer private.
The news, which Albany, N.Y.-based Trans World disclosed after the market closed May 6, sent shares falling 25% May 7 to $2.47 per share in midday trading.
The company said it might become “engaged in confidential negotiations” or sale with another buyer without “prior notice in the future,” according to a regulatory filing.
Higgins, who founded the retail parent of f.y.e., Second Spin, Suncoast and Wherehouse stores in 1972, together with investor Bryant Riley had offered to buyout shareholders for $5 per share cash.
Higgins had said taking Trans World private would reduce expenses and eliminate market pressures associated with operating a publicly held company.
Trans World, which considers itself one of the last true entertainment retailers, struggled last year with sales falling 14% to $1.2 billion and same-store sales down 8%.
Higgins owns more than 16 million shares, or 46%, of Trans World's stock, and Riley owns 3.7 million shares, or 8%.
Their decision was expensive as it cost them a combined $15 million in shareholder value.
Ed Woo, analyst with Wedbush Morgan Securities in Los Angeles, said taking Trans World private would have cost Higgins & Co. even more.
“The high likelihood for failure was greater than 50%, which is why the stock was trading well below the offer price, particularly the past several months,” Woo said.
Trans World will hold its annual shareholder meeting July 1.