Julie & Holleman is investigating the proposed buyout of Distribution Solutions Group, Inc. by LKCM Headwater Investments LLC — DSG's controlling shareholder, which already owns approximately 79% of the company's stock — for $35.00 per share. Because the transaction would cash out DSG's public stockholders entirely and the company's Chairman and CEO also serves as Managing Partner of the buyer, it presents potential conflicts of interest. The firm is examining whether the process and the $35.00 per share price are fair to the company's minority stockholders.
What happened
LKCM Headwater Investments LLC already controls approximately 79% of Distribution Solutions Group's stock. It has now agreed to acquire the remaining publicly held shares — those it does not already own — for $35.00 per share in cash. If the transaction closes, DSG's public stockholders will receive $35.00 in cash for each share and will cease to own any shares in the company.
Why we're looking at it
This is a buyout by DSG's controlling stockholder, not an acquisition by an unrelated third party. LKCM Headwater and its affiliates already own approximately 79% of DSG, and DSG's Chairman and CEO, J. Bryan King, is also Managing Partner of LKCM Headwater. These relationships create potential conflicts between the buyer and DSG's public stockholders.
What we're investigating
We are investigating whether DSG's directors, officers, and others involved in the transaction fulfilled their fiduciary and other legal obligations to the company's public stockholders. We are examining, among other things:
- how the transaction was negotiated and approved;
- potential conflicts involving directors, officers, advisors, or other participants in the transaction;
- whether stockholders will receive all material information needed to evaluate the transaction; and
- whether the $35.00 per-share consideration is fair to DSG's public stockholders.
What this means for DSG stockholders
If the transaction closes, DSG's public stockholders will receive $35.00 in cash for each share they own and will no longer own an interest in the company. Stockholders may have legal rights relating to the transaction, including rights concerning the process by which it was approved, the information provided to stockholders, and the consideration they will receive. DSG stockholders with questions about the transaction or their rights are encouraged to contact us.