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Secchia Family Sells 2 Million Shares Back To Universal
GRAND RAPIDS — Universal Forest Products announced Friday it will buy back 2 million shares of company stock held by the family of Peter Secchia, majority shareholder and chairman.
The company is repurchasing the shares at $18 per share. Company shares were priced at $18.10 Friday morning on the open market. The purchase is expected to be completed before Jan. 15.
Chief Executive Officer William Currie said after the company evaluated all investment opportunities in the marketplace, the buyback from the Secchia family provided the greatest return for shareholders.
"We feel this is a win-win transaction for both the family and the shareholders," he stated. "We offered a fair price to the family, which allows them to diversify their holdings, increase their investment in the community and make gifts to previously chosen charities.
"Our shareholders will benefit from an estimated increase in earnings per share of approximately 9 percent. It's an excellent package all the way around."
Secchia, who recused himself from the board decision, had announced in September his intention to sell or transfer a significant portion of his family holdings in Universal in advance of his retirement.
The sale involves a substantial block of his beneficial ownership shares, unregistered shares he has given or gifted to foundations, universities, charities and family members. The holders of unregistered shares earn the stock growth and dividends.
The 1.5 million shares personally owned by Secchia are not involved in the sale.
Even with the sale of the 2 million beneficial ownership shares, he remains second largest shareholder in the company.
Secchia will retire from active employment at the company in December 2002 in accordance with the company's policy of mandatory retirement at age 65. He will continue to serve Universal as its non-employee chairman of the board.
He said the majority of the shares being repurchased by the company are in 18 different family, education and charity trust funds and that a lot of the cash from their sale will go into Sibsco, a downtown development company and Secchia family partnership that invests in West Michigan businesses.
The remainder will go to charitable trusts, local business investments and projects.
Sale of the shares to Universal was a means of exiting his career and transferring the assets he's built up over 40 years to the "next stage" of his life, which he said would revolve around community activism, community investment and charitable giving.
In that respect, he sees money from the buyback being funneled into community "give backs."
"We're moving our assets from here to the next stage of my life to fund what I'm going to do in the future," Secchia said.
"I have decided that I want to spend the last years of my business career helping others and doing things that could be either investments in our community or charitable gifts. That's where we go from here."
If he were to have waited until his retirement in December 2002 to dispose of a large number of shares, it could create a hardship for Universal because it's a small company with a small float and is more than 50 percent insider owned, he said.
Universal only trades a few thousand shares a day, and under SEC rules, as majority shareholder he would have been limited to selling 1 percent of his shares outstanding per business day.
That would have meant sales at a pace of 1,000 shares per business day.
"The problem with that is if you're adding an extra 1,000 shares a day to the free market it creates an 'overhang' of more sellers than buyers and you impact the market," Secchia said.
By repurchasing the stock, the company has reduced the number of shares outstanding by 10 percent, from 20 million to 18 million. The buyback benefits both Universal and the community and should have a positive effect on future earnings per share, he said.
William Grant Sr. founded Universal Forest Products in 1955. Secchia took a sales job with the then $1 million company in December 1962. He was seated on the board in 1967.
Secchia has served as chairman of the board since 1971. That same year, he bought controlling interest in the company, which by then was recording annual sales of $11 million. He took the company public in November 1993.
UFPI has since grown into the nation's largest manufacturer of engineered components for the manufactured housing and site-built construction markets, as well as a major supplier to the do-it-yourself market.
The company currently has 89 manufacturing plants in 77 locations throughout the United States, Canada and Mexico and employs more than 7,000.