In a regulatory filing on Friday, Bryant Riley, co-CEO of B. Riley Financial (NASDAQ:RILY), proposed to acquire the investment bank, sending the company’s shares soaring over 16% on Friday. The $7 per share offer represents a 39% premium to the stock's last closing price.
The move comes as B. Riley's stock has plummeted 70% this week, highlighting the significant challenges the Los Angeles-based financial services firm faces, particularly regarding its investment in Franchise Group (FRG), the parent company of Vitamin Shoppe.
Riley, the co-founder and largest shareholder of B. Riley, stated that the acquisition would only proceed with approval from a special committee of independent directors on the board. He emphasized that the current public company structure forces the bank to prioritize short-term objectives and devote undue attention to external stakeholders who may not share the company's long-term vision.
Earlier this week, B. Riley shares tumbled nearly 52% after it disclosed preliminary second-quarter results, including the suspension of its dividend and a projected net loss of $435 to $475 million for the quarter ending June 30. This equates to a loss of $14 to $15 per share.
The financial setback was largely attributed to non-cash losses tied to B. Riley's investment in Franchise Group and a loan receivable from Vintage Capital, which is collateralized by equity interests in FRG. Riley cited these investments as the primary factors behind the poor quarterly performance.