AUBURN HILLS, Mich. - SPAR Group, Inc. (NASDAQ: SGRP), a global merchandising and marketing services provider, has announced its intention to be acquired by Highwire Capital in a cash transaction valued at $58.0 million, or $2.50 per share. This announcement follows a unanimous decision by SPAR's Board and a Special Committee of Independent Directors after an extensive review of strategic alternatives aimed at maximizing shareholder value.
The proposed deal, which is currently outlined in a non-binding letter of intent (LOI), is subject to negotiation and execution of a definitive merger agreement, including customary closing conditions and adjustments. Highwire Capital's offer reflects a 19% premium over SPAR's 20-day average closing share price and a 107% premium over the average closing price of the last 12 months.
Jim Gillis, Chairman of the Board of SPAR Group, highlighted the thorough process and analysis conducted over the past 18+ months, including discussions with over 165 parties and consideration of multiple lower-value offers. The Board's decision to move forward with Highwire's proposal is seen as a strategic move to capitalize on recent value creation and offer significant returns to shareholders.
SPAR Group's CEO, Mike Matacunas, expressed confidence that the merger would enable the company to continue its growth trajectory, provide innovative solutions, and add value for clients. Highwire Capital plans to retain the SPAR executive team, maintaining the company's commitment to client service and results.
The transaction is contingent upon satisfactory due diligence by Highwire, approval by a majority of SPAR's shareholders at a special meeting, necessary regulatory approvals, and other closing conditions. The Board and Special Committee anticipate receiving a fairness opinion from financial advisor Lincoln International prior to entering into any definitive agreements.
The LOI does not constitute an agreement to complete the proposed acquisition or any other transaction, and SPAR Group will prepare and distribute relevant materials to its shareholders in compliance with SEC rules if a definitive agreement is reached.
SPAR Group, Inc. is known for providing comprehensive merchandising, marketing, and distribution solutions to retailers and brands, while Highwire Capital focuses on integrating innovative technologies with traditional operating models to transform middle-market businesses.
This news is based on a press release statement.
In other recent news, SPAR Group Inc. has reported a strong Q1 2024, with a 6.7% increase in consolidated revenue. This growth was boosted by the strategic decision to exit its South Africa business, resulting in a $7.2 million gain and a net income of $6.6 million. The earnings per share for the quarter were $0.28, and the company's US and Canada operations saw significant growth, particularly in the US remodel business which increased by 98%.
Financially, SPAR Group Inc. is in a robust position with a total worldwide liquidity of $21 million and a cash position of $16.6 million. The company has also secured over $35 million in new business, including a substantial multi-year contract worth over $12 million annually.
In terms of future developments, SPAR Group Inc. is focusing on the US and Canada markets, pursuing organic growth, considering potential acquisitions, and enhancing shareholder value through stock buybacks or dividends.
InvestingPro Insights
Amidst the news of SPAR Group, Inc.'s (NASDAQ: SGRP) potential acquisition by Highwire Capital, recent data from InvestingPro provides a deeper look into the company's financial health and market performance. With a market cap of approximately $53.78 million and an attractive P/E ratio of 5.39, SPAR Group stands out as an investment with a reasonable valuation in the sector.
Investors may find SPAR Group's recent market activity particularly noteworthy. The company has experienced a significant return over the last week of 7.6%, which could be indicative of positive investor sentiment following the announcement of the acquisition proposal. Additionally, SPAR Group has shown a strong return over the last month, with a 71.52% increase in its stock price.
InvestingPro Tips further reveal that SPAR Group has been profitable over the last twelve months, which aligns with the company's reported solid Q1 2024 performance. Moreover, SPAR Group has been trading at a low revenue valuation multiple, suggesting potential for upside if the company continues to grow its earnings. For investors looking to delve deeper into SPAR Group's metrics and future outlook, InvestingPro offers a comprehensive list of tips, including the fact that analysts anticipate a sales decline in the current year, which should be considered when evaluating the company's long-term growth prospects.
To gain more insights and access additional InvestingPro Tips, which can further inform investment decisions, visit InvestingPro's SPAR Group page. As an added benefit, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable investment information.
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