Afternoon edition: StoneMor receives 2nd offer to take it private. . . .and more news from the death care universe

StoneMor, Inc.,  the Philadelphia area based operator of funeral homes and cemeteries, announced in this press release on Friday, July 31, that they are in receipt of a 2nd offer from a company that would seek to take the company private.  If you remember, earlier this year, Axar Capital Management offered the company $0.67 per share to acquire the company.  That offer was rejected by StoneMor in June as, according to the press release, an inadequate price.

Axar Capital Management has now offered a price of $.80 per share for all the outstanding shares of StoneMor, Inc. in its second attempt at securing ownership of the company.  It should be noted that Axar Capital Management already owns about 62% of StoneMor, Inc. at this time and that Axar’s General Partner, Andrew Axelrod, is also serving as the Chairman of the Board of StoneMor, Inc.

While the $0.80 price per share is an approximately 20% increase over the last offer of $0.67 per share it is also noted that the price is an approximately 5% increase over StoneMor’s closing stock price on Friday, July 31, 2020, of $0.763 per share.

According to E-Trade, StoneMor has about 42.6 million of shares outstanding making the market capitalization of the offer a total of about $34 million.

For the last several years, it is our opinion that StoneMor has been trying to “right-size” their business by both restructuring some operations and divesting itself of properties that, for differing reasons, may not fit their going-forward portfolio of properties.

According to Friday’s press release, StoneMor, Inc. at present owns 319 cemeteries and 88 funeral homes.  As you can read in this Funeral Director Daily article, they produced revenue in 2019 of $289.5 million which was a drop of about 8% from their 2018 revenue of $316 million.  By revenue, those numbers are second only to Service Corporation International (SCI) in public death care companies, but with the growth of Park Lawn and Carriage Services, it is conceivable that StoneMor, Inc. drops to 4th among public death care companies in revenue generated in 2020.

Disclaimer:  The author of this article maintains stock positions in Service Corporation International and Park Lawn Corporation.

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