An unsolicited bid for Coast Dental Services Inc. has thrown a good-sized monkey wrench into the plans of majority shareholders to take the Tampa dental management company private.
Great Expressions Dental Centers Inc., a privately held Detroit company, said Monday it has offered to purchase 100 percent of Coast Dental for $6 a share.
That's 33 percent better than the offer of $4.50 a share made Feb. 21 by three brothers, Terek, Adam and Tim Diasti, who founded Coast Dental in 1992 and who own about 52 percent of the company's outstanding shares.
Terek Diasti is chief executive of Coast Dental and chairman of the board; Adam Diasti is president and director of Coast Dental. The company manages 112 dental centers in Florida, Georgia, Tennessee and Virginia.
The surprise offer from Great Expressions, which manages 60 dental offices in five states and had 2002 revenues of $35-million, drove the price of Coast Dental shares to $5.46, up 95 cents, making it one of the day's top percentage gainers on the Nasdaq. It also fueled talk of bidding wars and class-action lawsuits among shareholders.
Bruce Galloway, a New York City investor who owns about 42,000 of Coast Dental's 2.09-million outstanding shares, applauded Great Expressions' bid while criticizing the Diastis' initial offer.
"The Diastis' offer was sneaky, ludicrous and absolutely absurd," he said. "They were trying to buy the company at 1.5 times earnings and about one-fifth of its book value. The Diastis have done nothing to promote the company. They're just trying to steal it from the outside shareholders."
Galloway said he thinks a fair offer for Coast Dental would work out to about $12 to $15 a share, based on projected operating earnings of about $5.2-million. And he expects Great Expressions' offer will spark wider interest for Coast.
"I don't know what their (the Diastis') legal tactic is, but I suspect they can't block it," Galloway said. "As a shareholder, I think it's in the company's best interest to keep it public."
Coast Dental received Great Expressions' offer March 4 but only replied publicly Monday after the Michigan company made its bid public. In a request for clarification, the special committee overseeing Coast's self-tender offer asked if the unwanted suitor was interested in buying only the 48 percent of its shares held by minority shareholders:
"The special committee will reiterate to Great Expressions the previously disclosed information that the majority shareholders (the Diastis) were not interested in selling their shares and consequently the entire company is not for sale."
That statement brought howls of disbelief to Coast Dental's once-moribund investor message board and threats of legal action.
Richard Beckman, chief executive of Great Expressions, said he's not interested in generating lawsuits.
"We made this offer to expand our company," said Beckman, who added that if he had been aware the company was for sale he would have acted earlier. "We want to get a lot bigger and buying groups of practices is the only way to do it."
Beckman said his company has watched Coast Dental's development for years and it shares the same type of computer system and provides services through many of the same insurers. But he has no interest in buying minority interest in Coast Dental.
"We're interested in 100 percent of the company," he said. "We would be foolish to buy 48 percent of a company where the majority is owned by a family."
_ Kris Hundley can be reached at hundleysptimes.com or (727) 892-2996.