Never Mind About That Lumber Buyout

Tom Sullivan is the founder and former chief executive officer of Lumber Liquidators Holdings Inc.; he left at the end of 2016. As of mid-2018 he owned about 1.3% of the company. Then, in August 2019, he bought a bunch more shares, taking him up to 5.96%. U.S. securities laws say that if you acquire more than 5% of a public company you generally have to file a form—Schedule 13D—saying how much you own and what you’re up to, and Sullivan did, on Aug. 20.

The form said, as these forms often do, that he bought the stock “in the belief that the shares are undervalued,” at an average price of $7.88 per share. It went on to add that Sullivan and his investment vehicle “are considering all their options and, while they have no present plan to do so, they reserve the right and are considering whether to propose other transactions.” “Other transactions,” in this context, more or less means a leveraged buyout or other going-private transaction; Sullivan, as the founder of Lumber Liquidators and the owner of another lumber-related company, would be a natural person to buy out Lumber Liquidators. And after some scandals earlier this decade, Lumber Liquidators is a shadow of its former self, with a market capitalization of around $280 million, down from a high of over $3 billion in 2013; a bid to buy it out might be well received.