Los Angeles Business Journal :: July 5, 2004

Price of Going Private

Shareholders of Edelbrock Corp. can thank the company’s chairman and chief executive, Victor Edelbrock, Jr., and his financial advisor, Bank of America, for a generous boost in the price he’s paying to take the company private.

Edelbrock, whose father founded the Torrance-based maker of performance auto parts in 1938, originally offered $14.80 a share to buy the 48.8 percent of the company he and his family didn’t already own. At the time, the company’s shares hadn’t risen above $15 for nearly five years. In June of last year, the stock was trading around $10.

Nevertheless, a shareholder lawsuit claimed that the offer price was too low.

Edelbrock formed a special committee of three directors to negotiate the best deal for shareholders. They hired Kerlin Capital Group, LLC, a boutique investment bank that produced the fairness opinion on the deal, and the law firm Skadden Arps Slate Meagher & Flom LLP, which helped negotiate with Edelbrock.

Edelbrock ultimately agreed to pay $16.75 a share.

The final price represents a 24 percent premium over the $13.52 a share closing price immediately before discussions took place a few months ago. Bank of America and City National Bank provided the $53 million in debt financing for the transaction.

“We went through a two-month process to come up with a fair price,” said Bill Doyle, principal of Kerlin Capital in Los Angeles.

The fairness opinion will be included in Edelbrock’s upcoming proxy.

— Kate Berry