Newcastle Ends Whitehall Jewellers Bid

Following the announcement that Whitehall Jewellers has accepted the Prentice/Holtzman bid to purchase the company, competing offer maker Newcastle Partners, L.P. said it will return all tendered shares it received during its bid attempt.

Newcastle said in a release that it had originally made the $1.50 per share offer based, in part, on its belief that the transaction Whitehall originally entered into with Prentice Capital Management, LP and Holtzman Opportunity Fund, L.P “was grossly unfair to stockholders.”

According to Newcastle, had the original Prentice/Holtzman bid been accepted, 87 percent of Whitehall's outstanding common stock would have been purchased at $0.75 per share. Newcastle entered into negotiations with Whitehall, which decided in January that Newcastle's $1.50 offer, together with other deposits and lent money, was superior to the Prentice/Holtzman transaction.

Prentice/Holtzman eventually raised its offer to $1.60 per share and won the bid. According to Mark Schwarz, the managing member of Newcastle Partners, “Although we are disappointed that our proposal was not successful, we are pleased that by launching our tender offer Prentice and Holtzman were prevented from acquiring control of Whitehall for $0.75 per share and not paying a control premium to stockholders.

“We believe that Newcastle's $1.50 per share tender offer, in addition to being far superior to the original Prentice proposal, was instrumental in causing Prentice/Holtzman to propose a $1.60 per share tender offer, more than double their prior offer, which had the effect of allowing Whitehall's stockholders to receive over a 100% premium on their Whitehall common stock from the original Prentice transaction.”