Weber (NASDAQ:WEBR), the outdoor grill maker whose stock became a failed meme while losing half its value, jumped 25% on a buyout offer from its largest shareholder.
BDT Capital Partners, led by Byron Trott, is offering to take the company private at $6.25 share. Weber closed Oct. 25 at $5.03, but jumped overnight to $6.46, above the strike price.
From Cold to Trott
Weber stock traded at more than $17 last October. The market for portable grills fell as the pandemic ebbed. The result was a loss of $52 million, or 14 cents per share, in the most recent quarter, with sales down 21% year over year. CEO Chris Scherzinger stepped down and the company’s debt was rated as junk.
Weber went public in 2021, raising $250 million at a valuation of $4 billion. Its current market capitalization is $1.9 billion. Its troubles and high short interest had brought out meme traders like Will Meade, who urged other small investors to get in on a short squeeze.
The company is no more than it seems to be: a modest manufacturer in Palatine, Illinois founded by inventor George Stephen. In an average year it might churn out $1.5 billion in kettles and bring in profits of $100 million. But there hasn’t been a normal year in years.
Enter Byron Trott. Trott is a former Goldman Sachs (NYSE:GS) executive, a disciple of Warren Buffett. BDT already held 48% of the common. Two weeks ago, Trott offered to refinance its debt. But the stock continued to fall, dropping from $7.50 to its Oct. 24 low.
What Happens Next for WEBR Stock?
If Trott can steady the ship at Weber, he can make a nice profit. Supply chain problems should ease, the market for grills should return to normal and employees facing potential layoffs should be saved. Once that’s done, Trott can either do another initial public offering or sell it on to recoup his investment.
This looks like a win-win. Expect the deal to close quickly.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.