A major
Fleetwood Enterprises'
(NYSE:FLE) shareholder asked the board to consider selling the company
to rival RV and manufactured house maker Champion Enterprises
(NYSE:CHB), according to a
Schedule 13D/A filing made with the SEC yesterday.
SLS
Management, which owns about 11.8 percent of the company, said in a
letter to the board that the company has significant intrinsic value
and has taken steps to unlock value but has remained unprofitable with
a high cost structure.
SLS Managing Member Scott L. Swid argued
that the best solution to unlock value would be a tax-free merger with
rival Champion Enterprises, which would create $600 million - or about
$3/share - in value for shareholders of both companies due to an "ideal
overlap" of manufacturing facilities.
"The most uniquely
compelling aspect of the combination of Fleetwood and Champion is their
ideal overlap of manufacturing facilities," Swid wrote. "We believe the
synergies and efficiencies of this combination would result in a
combined annual savings of $60 million."
The activist hedge fund
believes that the combined company could close 11 plants without
exiting any market, which would result in significant cost savings and
improved operating efficiency. Whether or not this transaction is
consummated remains to be seen, but it is definitely a
stock to watch!
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