Fertitta ‘blank check’ firm OKs merger

Landcadia Holdings combines with HMAN, a hardware and home improvement company

Tilman Fertitta’s third “blank check” company, Landcadia Holdings III, said Monday that it agreed to merge with HMAN Group Holdings Inc., parent company of Hillman Group Inc., a Cincinnatibased

hardware and home improvement distribution business.

Hillman is controlled by private equity firm CCMP Capital Advisors, which acquired a majority interest in 2014 and will remain the company’s largest shareholder upon closing. It has estimated sales will reach $1.4 billion for the fiscal year ended Dec. 26, 2020.

In announcing the deal, the partners said the transaction valued Hillman at $2.64 billion.

Landcadia III, a special purpose acquisition company, or SPAC, raised $500 million in its October public offering. It was the third time Fertitta partnered with Jefferies Financial Group for a SPAC. Their first, Landcadia Holdings I, acquired food delivery service Waitr and Landcadia Holdings II late last year merged with Fertitta’s Golden Nugget Online Gaming.

The merger with Hillman marks a departure from the hospitality and gaming holdings of Fertitta, owner of Landry’s Inc., the Houston Rockets and Golden Nugget casinos.

“Jefferies and I felt that this was one business that was going to continue to be there,” Fertitta said. “We’re not necessarily looking for that tech business that’s going to get a big boost.” He said Hillman was the sort of business that was “going to be there for the next 25 years.”

As part of the transaction, Wells Capital Management and Columbia Threadneedle Investments’ Small Cap Growth Strategy have committed to invest $375 million in the form of a private investment in a public enterprise, or PIPE, at a

price of $10 per share of common stock of Landcadia III immediately prior to the closing of the transaction.

Existing Hillman shareholders are expected to own 49 percent of the combined company, the release announcing the deal said. Landcadia III sponsors are expected to own 5 percent of the combined company, PIPE participants are expected to own 20 percent of the combined company and public stockholders are expected to own 26 percent of the combined company.

CCMP Capital Advisors, which specializes in middle market buyouts and growth equity investments of $100 million to $500 million, has offices in New York and

Houston. Fertitta said the deal came in through Jefferies, which was doing a banking deal with CCMP.

Hillman said it would use the proceeds from the transaction to accelerate growth initiatives, reduce debt, support marketing efforts and provide working capital. It is anticipated that the combined company will have approximately $741 million of debt net of $96 million of cash and cash equivalents on its consolidated balance sheet.

The boards of directors of each of Landcadia III and Hillman have unanimously approved the transaction, which still needs approval from each company’s stockholders. The transaction is expected to close in the second quarter.

Upon closing, the company will be named Hillman Solutions Corp. and will be listed on Nasdaq under the ticker symbol HLMN.

Doug Cahill, Hillman’s chairman and chief executive, will continue to lead the company, along with the current management team, and will be a significant equity participant in the company, the announcement said.

Founded in 1964, Hillman is a distributor of hardware and home improvement products, personal protective equipment and robotic kiosk technologies. It serves home improvement centers, mass merchants, national and regional hardware stores and other retailers, including Home Depot, Lowe’s, Tractor Supply, True Value and Walmart.

Shares of Landcadia Holdings III closed Monday at $10.48, down 0.38 percent. In after-hours trading, shares were trading up more than a point at $10.60.