UPDATE 1-Live Ventures makes offer to buy LL Flooring Holdings

(Adds stock price in third paragraph and company comment in sixth paragraph)

By Svea Herbst-Bayliss

NEW YORK, Oct 12 (Reuters) – U.S. investment firm Live Ventures has offered to buy LL Flooring Holdings Inc , formerly known as Lumber Liquidators, for roughly $180 million in cash, according to a letter seen by Reuters.

LL Flooring said in August that it was exploring strategic alternatives, including a possible sale.

The company, headquartered in Richmond, Virginia and one of the country’s leading retailers of hard-wood surface flooring, has seen its stock price tumble more than 78% in the last five years. Live Ventures’ offer of $5.85 per share represents a roughly 100% premium to LL Flooring’s closing price on Wednesday. On Thursday, the stock price jumped 36.5% to close at $4 a share.

“We fear that the Company’s stock price will continue its decline unless LL Flooring enters into a transaction with a well-capitalized acquiror that has extensive experience working with synergistic retailers in the near term,” Live Ventures CEO Jon Isaac wrote to the company’s board.

Given Live Ventures’ “experience, capabilities and track record of value creation,” Isaac added his company would be “the best partner” for LL Flooring.

LL Flooring said it will “carefully review and consider the proposal from Live Ventures in the context of LL Flooring’s strategic alternatives process to determine the course of action that it believes is in the best interests of the Company and all of its shareholders” and will invite Live Ventures to participate in the ongoing strategic review process.

Live Ventures, which owns Flooring Liquidators and Marquis Industries, reported approximately $290 million in sales and roughly $40 million in adjusted earnings last year. Its stock price is up more than 273% over the past five years.

In 2019, LL Flooring agreed to pay $33 million to settle with the U.S. Department of Justice and the Securities and Exchange Commission, after the company faced lawsuits related to allegations it sold flooring that contained illegally high levels of formaldehyde. Formaldehyde, used in making building materials, is a known carcinogen.

Live Ventures focuses on acquisitions of U.S.-based middle market companies and is concentrating on the flooring segment. “A transaction between Live Ventures and LL Flooring, which includes 442 stores spanning 47 states across the U.S., would therefore be synergistic given our extensive portfolio of flooring companies,” Isaac wrote.

If the acquisition goes through, Live Ventures would become one of the top five flooring retailers in the U.S on a revenue basis.

(Reporting by Svea Herbst-Bayliss; Editing by Rashmi Aich and Deepa Babington)