USA: Angelica Corp. taken over by Lehman Brothers

Angelica Corp. will change ownership and become a private company, President and Chief Executive Steve O'Hara promised Friday that little else would change.

Chesterfield-based Angelica, which provides textile rentals and linen-laundry services to the health care industry, said that it will be sold to an affiliate of global investment firm Lehman Brothers.

The deal is worth about $300 million including the company's debt, according to a Lehman Brothers spokesman, and is expected to close in late summer, pending shareholder approval and other standard procedures.

Friday's sale announcement comes more than eight months after Angelica began searching for a buyer.

Lehman Brothers Merchant Banking Partners IV LP will pay Angelica shareholders $22 a share in cash. The per-share price is nearly 34 percent more than Thursday's closing stock price of $16.45.

"It's a very good premium, considering the stock has been flat-lined for some time around $16" a share, said Juli Niemann, an analyst with Smith Moore & Co. in Clayton.

O'Hara, who joined Angelica in 2003 after steering Rawlings Sporting Goods Co. in Fenton to a sale, said Angelica is "pleased with the premium, especially given the incredibly difficult debt markets."

Angelica posted revenue of about $430 million for the year ended Jan. 26, an increase of 1 percent from the previous year, and closed its underperforming Edison, N.J., facility in January. The company expects to report its first-quarter results on June 2.

Angelica has been under pressure from shareholders to improve its results or be sold. In September 2006, the company staved off a fight with its largest shareholder, Steel Partners II LP, by giving it two board seats. Last July, Norwalk, Conn.-based Pirate Capital LLC encouraged Angelica to explore a sale.

Shortly after, Angelica announced that it had hired investment bank Morgan Joseph Co. to look for a buyer.

Angelica said Friday that Steel Partners supports the proposed sale. The New York-based hedge fund, which has a 18.8 percent stake in Angelica, declined to comment. Pirate Capital did not return a call.

O'Hara said the company met shareholders' demands by pursuing a sale. He would not comment on whether other offers were made to buy Angelica.

The company name will stay the same and O'Hara expects to continue as president and chief executive. Angelica's 5,900 workers, only 10 of whom are in St. Louis, can expect "very little changes," he said.

The major change will be losing its status as a public company, O'Hara said. Angelica's stock will be delisted from the New York Stock Exchange when the deal closes.

Angelica's stock surged Friday on the announcement, closing at $21.25 a share, up $4.80 or 29.2 percent.

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Added: May 27, 2008 Source: Agencies
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