Stein Mart Inc. on April 16 called off plans for a buyout by a private equity firm amid the “unpredictable economic conditions” caused by the COVID-19 pandemic.
The Jacksonville-based fashion retailer and Kingswood Capital Management L.P. said the merger agreement was terminated by mutual agreement.
An affiliate of Kingswood in January agreed to buy all shares of the company not controlled by Chairman Jay Stein.
However, since the agreement was announced Jan. 31, the retailing industry was hit hard by the pandemic. Like other chains, Stein Mart closed its 281 stores March 18.
The company said March 31 that because of the closings, it was furloughing most of the 8,600 employees in its stores and in its supply chain and cutting about half of the 375 employees in its corporate office at 1200 Riverplace Blvd. on the Downtown Southbank.
Kingswood agreed to buy the available Stein Mart shares for 90 cents each, with Jay Stein remaining in control of about one-third of the company.
But Stein Mart’s stock dropped sharply with the rest of the market in February. It closed April 16 at 35 cents, well below the buyout price.
Stein Mart announced the termination of the merger agreement after the market closed Thursday.
“While we both believed in the benefits of the proposed transaction, we have mutually concluded after careful consideration that given the current environment and significant uncertainty, it would not be prudent to continue to pursue the transaction,” Stein Mart board member Richard Sisisky and Kingswood Managing Partner Alex Wolf said in a joint statement.
Sisisky was chairman of a special committee of independent Stein Mart directors who oversaw the merger negotiations.