AGT foods has received a proposal for privatization from a group that includes its President and CEO Murad Al-Katib.
The proposal says the Management Group would acquire common shares from their holders at $18 each, which represents a 37% premium on their closing price from Wednesday.
Al-Katib and the rest of the Management group currently own 17% of their shares.
Professor with Edwards School of Business Brooke Dobni said there’s multiple reasons why privatization makes sense.
“The stock price is at a point now where it makes it viable to invest, or reinvest and buy back stock,” Dobni said. “Another potential reason could be when you run a public-trade company as you are now, your hands are much more tied with respect to share-holder requirements.”
Dobni said a company with lots of shareholders doesn’t have a lot of flexibility.
“So the CEO pretty much has to act as much as a politician as he does as a leader trying to keep share holders happy, trying to keep the markets informed at this type of thing, so it’ll allow them more flexibility with fewer owners, if you know what I mean.”
AGT’s Board of Directors has created an independent committee to consider the deal. No timetable has been set on a decision.