Shares of StoneMor (STON) soared 50% on Wednesday after the owner and operator of cemeteries and funeral homes struck a deal to be acquired by Axar Capital Management.
Axar is StoneMor's largest investor. The private equity firm owns roughly 75% of StoneMor's stock. Under the terms of the agreement, Axar would purchase all the company's outstanding shares it does not already possess for $3.50 per share. That's approximately 54% above StoneMor's closing stock price on Tuesday.
The deal includes a 60-day period during which StoneMor can solicit other bids, though the company noted that a superior offer may not be found. StoneMor also agreed to pay Axar a termination fee under certain conditions of up to 4% of the total value of its non-Axar-owned shares if it chooses a different merger partner.
As it currently stands, the transaction is expected to close in the fall, subject to shareholder approval, at which time StoneMor would become a privately held company.
StoneMor is one of the largest businesses within the death care industry. It oversees a collection of more than 300 cemeteries and over 70 funeral homes in 24 states and Puerto Rico. It provides an array of offerings, including burial lots, caskets, and their related installation services.
Under Axar's wing, StoneMor could gain access to more of the financial resources it needs to expand its operations, such as by acquiring smaller cemetery and funeral home companies.
"Our agreement with Axar delivers a significant premium for StoneMor's stockholders and ensures a strong foundation for us to continue our expansion," CEO Joe Redling said.