F45 Training Holdings Inc., Austin, Texas, received an unsolicited proposal from one of its investors, Kennedy Lewis Investment Management LP (KLIM), to acquire the company in a $385 million take-private offer, F45 Training announced on Oct. 3.
Disclosed on a Sept. 30 13D filing with the Securities and Exchange Commission by KLIM, the bid is at a price per share equal to $4.00 in cash and is for all of the outstanding shares of common stock of the company that are not already beneficially owned by KLIM or other stockholders participating in the proposed transaction.
KLIM is the third largest shareholder in the company, owning about 14.6 percent of shares after a late August purchase of more than 3.5 million shares of the brand.
KLIM is owned by Darren Richman, who sits on the F45 board, and David K. Chene.
F45 Training went public in July 2021 at a price of $16 per share and was valued at $1.4 billion. It trades on the New York Stock Exchange as FXLV. Its stock has never risen higher than $16.44 per share and fell to as low as 78 cents per share at one time. After Kennedy Lewis made the bid public on Sept. 30, the stock rose to $3.09 per share from $2.19 the day prior.
The filing states that KLIM believes returning to private status would allow the company to “be in a stronger position to maximize its resources and realize strategic value that enhances its operations and supports its stakeholders.”
Members of the F45 Training board of directors, which includes actor and producer Mark Wahlberg, will evaluate the proposal with its advisors to determine the best course of action for the company and its stockholders, the company said.
The proposal calls for the board to establish an independent committee to review the proposal, to solicit and evaluate other proposals and to negotiate terms of the proposal.
In July, the company announced it would lay off 110 people in the corporate office, comprising 45 percent of its corporate workforce.
The layoffs would cost the company $10 million to $12 million in severance and related costs, but it would save $15 million to $20 million per quarter in selling, general and administrative (SG&A) expenses, which is approximately 40 percent to 50 percent less than SG&A expenses during first quarter 2022, according to the announcement.
This announcement caused F45’s stock to fall 61.5 percent to close at $1.35 per share on July 27. A few laws firms are soliciting shareholders who lost money after the announcement to contact them as they allege the company may have issued false and/or misleading statements and/or failed to disclose information pertinent to investors.
At the time of the layoff announcement, Adam Gilchrist, one of the founders of the company, also stepped down as president, CEO and chairman of the board, but remained on the board as a non-employee director. Ben Coates stepped in as interim CEO as the board searches for a new CEO, receiving a base salary of $1.5 million as well as an option to purchase one million shares of common stock at a price equal to the closing price on Aug. 17, 2022, which was $2.23 per share.
As part of his separation agreement, Gilchrist was eligible for a one-time cash payment of $4.8 million, a one-time cash payment of $1 million and payment of up to $1.2 million by the company of a 12-month lease on his home in Florida, according to F45’s 8-K filing with the Securities and Exchange Commission.
In its August release of second quarter financials, F45 lowered its projections for full-year 2022 revenue to between $120 million and $130 million, compared to the prior guidance of $255 million to $275 million. This compares to 2021 revenue of $134 million and 2020 revenue of $82.3 million.