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Mod-Pac Corp.’s two top executives have sweetened their bid to buy the Buffalo specialty printing company by 10 percent as part of an agreement that will lead to a group of shareholders dropping lawsuits that had opposed the proposed deal because they viewed the offer as too low.

The Keane family, led by Mod-Pac chief executive Daniel G. Keane and his father, Kevin, the company’s chairman, agreed to increase their offer to take the company private to $9.25 per share, up from the $8.40 that they had offered to pay to acquire all of the company’s stock that they did not already own. In exchange, all the lawsuits against the purchase will be dropped.

The increased bid, disclosed in a Securities and Exchange Commission filing on Monday night, is the second time the Keanes have agreed to increase their offer for the company since they made their initial bid late last year.

The stock closed at $9.12 on Tuesday, up 72 cents, or 8.57 percent.

In April, the Keanes increased their offer to $8.40 per share in cash, a 17 percent increase over the $7.20 per share they initially offered in late October, in response to shareholder complaints that the price was too low and did not reflect the recent improvement in the company’s sales and profits.

The takeover bid had spawned four class-action lawsuits from shareholders opposing the deal. As part of the agreement to increase the Keanes’ offer, the dissident shareholders agreed to merge their lawsuits into a single complaint that will be dropped and pledged to vote in favor of the sweetened takeover bid.

“As a shareholder, I like it,” said Christopher Carosa, who manages the Bullfinch Funds family of mutual funds. “This is one of the rare times that it worked to the advantage of shareholders.”

The Keanes, in the filing, said they believed that the $8.40 offer price was fair to shareholders.

“They wished to settle the litigation ... in order to eliminate the burden and expense of further litigation and put the claims of the plaintiffs in the litigation to rest finally and forever, and to avoid any possible delay in the shareholder vote on the merger,” the filing said.

The settlement comes less than three weeks after Mod-Pac had sent shareholders proxy materials on the Keanes’ $8.40-per-share bid in advance of a special shareholders meeting on Sept. 27 to vote on the takeover proposal.

But a special committee of independent Mod-Pac directors met Sept. 3 to consider – and ultimately accept – a proposal to sweeten the takeover bid to $9.25 in exchange for the shareholders behind the class-action lawsuits agreeing to support the merger.

The deal must be approved by a majority of Mod-Pac’s shareholders, excluding the Keanes, who control 41 percent of the voting rights in the company through their majority ownership of a class of stock that gives them 10 votes for every share they own of that super-voting class.

Overall, the Keanes own 18.7 percent of Mod-Pac’s common stock, which has one vote per share, and nearly 52 percent of its Class B shares, which have 10 votes per share.

The Keanes said they have arranged up to $18 million in debt financing to help pay for the $28.3 million deal. The Keanes also plan to use nearly $5.3 million of their own cash, along with about $5 million in cash that the company currently has on its books.

The Keanes, who through a spokesman declined to comment, previously have said they plan to continue running Mod-Pac as they now do, retaining the current management team and the company’s workforce of roughly 375 employees.

Mod-Pac, which had about $59 million in sales last year, has been profitable for the last three years after a long struggle to rebuild its business following the loss of its biggest customer midway through the last decade.

The company’s improved financial performance has continued into this year, with Mod-Pac’s sales rising by 5 percent to $28.6 million during the first six months of 2013. The company also is much more profitable than it was a year ago, earning $344,000, or 10 cents per share, during the first half of the year, compared with a loss of $243,000, or 8 cents per share, a year ago. Mod-Pac’s sales and profits typically are strongest during the second half of the year.

email: drobinson@buffnews.com