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Lumber Liquidators Founder Ends Buyout Bid, Makes Millions

Lumber Liquidators Founder Sullivan Opts Not to Pursue Buyout

(Bloomberg) -- Lumber Liquidators Holdings Inc.’s founder said he has decided not to pursue a buyout of his former company. The shares sank.

Tom Sullivan had been working on a deal, including talking to banks and private-equity firms, but the stock price had gotten too high and the company had declined to engage in discussions, he said Friday in an interview. Sullivan has sold some of his shares, and will continue to monitor the situation, he said.

“Unless there is major change in the board and management, I’m sure there will be another opportunity for us,” he said.

Lumber Liquidators Founder Ends Buyout Bid, Makes Millions

Lumber Liquidators, which sells hardwood flooring and other home-renovation products, fell as much as 16% to $9.43 Friday, the biggest intraday decline in more than a month.

Before Sullivan disclosed a large stake in the company on Aug. 20, Lumber Liquidators had declined 15% this year. The shares steadily gained to being up as much as 37% as recently as Tuesday, but have now pared much of that gain.

Sullivan, who started the chain that now has about 400 locations, built a stake of 7.7% as he pursued a bid for the company that he said had been poorly managed. He had described the executive team and board as “pathetic,” criticizing their spending on a new headquarters, marketing strategy and bonus system for store employees.

Currently, he holds about 1.6%, according to a filing dated Sept. 13. During the time span of about a month, Sullivan, bought stock for an average price of $7.88 a share, and then sold 1.25 million shares this week at an average of $11.68, according to the filing. That equates to a gain of about $4.8 million, according to Bloomberg calculations.

Forecast Cut

The company trimmed its full-year outlook when it reported earnings last month, noting softening customer traffic and an uncertain tariff environment. It now sees same-store sales -- a key gauge for retailers -- as flat for the year. Revenue is expected to grow in the low-single digits.

Lumber Liquidators didn’t respond directly to Sullivan’s critiques, but said in a statement earlier this week that management and the board “are actively executing a transformational strategy to position the company for long-term value creation.”

The company didn’t immediately respond to a request for comment on the latest development.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Jonathan Roeder

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