Heartland Inks Springs Recap –

Wrapping up a more than two-month negotiation process, Heartland Industrial Partners on April 25 finalized its joint bid with the Close family to take private Springs Industries Inc. in a deal totaling more than $1.2 billion. However, the transaction is still in the “definitive agreement” stage and is not likely to close until late this summer.

Although Dan Tredwell, a partner at Heartland, declined to provide much information beyond what appears in press releases and the as-of-yet unreleased proxy statement, he said his firm “sees Springs as the largest and strongest player in the home furnishings industry.” He added that “it being private gives Heartland an opportunity to accelerate some of the changes that are already going on inside the company and in the industry.”

Tredwell declined to comment further on those changes.

Springs supplies retailers with a line of sheets, towels, comforters, window treatments and other home fashions used for decorating. Its major brands include Wamsutta, Springmaid, Regal, Graber, Bali, Nanik and Dundee.

Breaking it Down

Under terms of the transaction, Heartland and the Close family, which includes Springs’ CEO Crandall Bowles, will pay Springs shareholders $46 per share, which is $2 more than the group’s February offer and 27% more than Springs’ closing price on the trading day before that offer. Heartland is slated to commit approximately $225 million in equity, while J.P. Morgan Chase & Co. handles the debt portion.

Upon completion of the deal, which is actually classified as a recapitalization, the Close family’s ownership interest in Springs’ common stock will increase from about 41% to 55%, and Heartland will own about 45% of the company’s common stock.

Bowles announced back in February that taking Springs private would give the company more financial and operating freedom. In the past few months, Springs has cut production and jobs to trim costs, while upgrading equipment to stay competitive with other textile manufacturers.

Due to demographics and Springs’ position in its industry, Tredwell said he believes the company’s future is bright.

“It is well-positioned with the customers that are achieving the most growth,” he said. “There is great opportunity in the sector.”

Springs is expected to hold a shareholders meeting to vote on the proposed transaction by late July or early August.