Whitehall Agrees to Buyout Offer

The seesaw battle to control troubled Whitehall Jewellers may be over.

In early February, the company announced that it had reached an agreement with Prentice Capital Management and Holtzman Opportunity Fund to acquire the 389-store chain. The move is a blow to persistent suitor Newcastle Partners, the company’s leading lender, whose bid the board had smiled on just days earlier.

Prentice and Holtzman will buy all outstanding shares of Whitehall common stock at $1.60 per share.

In late January, the company’s board deemed Newcastle’s $1.50-a-share bid “superior” to an earlier proposal by Prentice and Holtzman. But then Prentice made a counteroffer, and the board accepted Newcastle’s increased bid.

The bidding process has been unusually contentious, with Newcastle and Whitehall trading dueling press releases and Newcastle suing to have its bid accepted. Newcastle could not be reached for comment at press time.

In the third quarter of 2005, Whitehall experienced a net loss per share of $5.15. There has been a revolving door in its executive suite since the death of chairman Hugh Patinkin last year, and it’s also contended with uneven sales and an SEC investigation. It was delisted from the Nasdaq last year and now trades on the over-the-counter “pink sheets.”