Earl Scheib Takes Itself Off the Block

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Auto paint and body shop operator Earl Scheib Inc. said it has abandoned plans to sell the company or enter into a business combination with another company.


Sherman Oaks-based Earl Scheib ended its relationship with New York investment banking firm Ryan Beck & Co. effective Jan. 13. Ryan Beck had been retained in May 2003 to help the company explore strategic alternatives, including a possible sale.


“After going through the process with Ryan Beck of examining strategic alternatives, we decided it is in the best interest of stockholders, at present, to continue to focus on the business, which has steadily improved over the past year-and-a-half,” said Earl Scheib General Counsel David Sunkin. “Shareholders are better served by exiting the sale process at this point and continuing to hopefully improve the financial performance of the company.”


The company’s thinly-traded stock had dipped 0.9 percent by mid-day on Tuesday to trade at $3.25 per share.


Last year, Earl Scheib had attempted to sell out to private investment firm Elden Holdings Group LLC. Elden was going to pay $15 million for the company, plus $2 million in transaction costs. However, Scheib’s board terminated the letter of intent after Elden missed two deadlines and the process dragged on.


Other companies had expressed interest in Scheib after the deal with Elden fell apart last September, Sunkin said.


For the second quarter ended Oct. 31, the company reported a 3.2 percent decline in net sales to $12.4 million compared with the year-ago period. The company cited the closure of eight paint and body shops. Same store sales increased slightly, Scheib said. Operating income was $231,000, versus a loss of $282,000 in the year-ago period.

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