DirectBuy, Z Gallerie owner bids for Flexsteel

This story has been updated.

MERRILLVILLE, Ind. — CSC Generation is publicly outlining a bid to buy Flexsteel Inds. at a premium to the company’s recent share price after, it says, Flexsteel’s board did not respond to an earlier bid. Flexsteel disputes that it saw any proposal before Wednesday.

CSC, which owns DirectBuy, Z Gallerie, One Kings Lane and other brands, is offering $20.80 per share in an all-cash proposal. CSC noted that’s a premium of 22% over Flexsteel’s Tuesday close of $17.10 per share. The company’s stock soared in late morning trading and closed up more than 14% to $19.59 per share.

With 5.56 million Flexsteel shares outstanding, according to data on Yahoo Finance, that would put the purchase price at about $115.6 million, minus the shares CSC Generation said it already owns as “a meaningful shareholder.”

In an Aug. 24 letter to Flexsteel’s board, CSC Generation founder, Chairman and CEO Justin Yoshimura, said the digitally-native CSC has the backing of several venture capital firms and Wayfair’s founders, among others.

“Based on our experience and today’s post-pandemic environment, we believe transformation is needed at Flexsteel, and that a successful outcome can only be executed as a private business with the additional resources of a digitally native owner like CSC,” Yoshimura said.

In a statement issued by Flexsteel late Wednesday, the company indicated that the letter sent the same day was the first time it had heard of any proposal from CSC and that it’s evaluating the offer.

“Prior  to today’s public proposal, Flexsteel had no interaction with CSC Generation Holdings or any  knowledge of its proposal,” it said. 

“Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Flexsteel board … will carefully review and evaluate the proposal to determine the course of  action that it believes is in the best interest of the company and all of its shareholders.”

It added that shareholders don’t need to take action at this time and that it wouldn’t be commenting further on the proposal until its board has completed the review.

See Yoshimura’s full letter to Flexsteel’s board below:

Members of the Board of Directors:

As you know, CSC Generation Holdings, Inc. (together with its affiliates, “CSC” or “we”) is a meaningful shareholder of Flexsteel Industries, Inc. (“Flexsteel” or the “Company”). We are disappointed that the Board of Directors of the Company (the “Board”) has failed to respond to our recent acquisition proposal. We continue to firmly believe that the Company’s performance would be optimized under private ownership, and are accordingly pleased to present a new proposal to acquire 100% of the outstanding shares of common stock of Flexsteel not already owned by CSC at a price equal to $20.80 per share in cash (the “Transaction”). We are submitting this new proposal to acquire the Company in order to facilitate constructive discussions with the Board, with the goal of entering into a mutually agreeable Transaction that is in the best interests of all shareholders.

CSC believes this proposal provides an attractive opportunity for shareholders to obtain immediate liquidity at a full value that exceeds what we believe the Company can be expected to achieve in the coming years if it remains on its current standalone course in the public market. For shareholders, our proposal represents approximately a 22% premium over yesterday’s closing price of $17.10.

We would be able to fully fund the Transaction using cash on hand and external financing from our existing lenders, such that the Transaction would not be contingent on obtaining financing. Given our familiarity with Flexsteel and our deep experience in the furniture products industry, we would require limited due diligence in connection with the Transaction. We are prepared to immediately commence and promptly complete this diligence. 

About CSC and its Track Record of Success in Retail and Ecommerce

CSC is a technology company that acquires overlooked store and catalogue-based companies and transforms them into high-performance, “digital first” brands. We rely on our proven omni-channel technology platform, operating expertise and scale. We are backed by world-class institutional investors, including Altos Ventures, Khosla Ventures, Panasonic and the family offices of domain experts in the industry, including the founders of Wayfair and

Since our founding in 2016, we have acquired and successfully integrated a number of well-known brands, such as Sur La Table and One Kings Lane. When we acquired Sur La Table, the business – like Flexsteel – was predominantly driven by offline sales in physical stores and had struggled to adapt to the online landscape. In just two years, we have evolved Sur La Table into a digitally-centric business, while achieving a majority of sales online and increasing adjusted EBITDA by more than 4x. Across our portfolio, we also have a strong track record of partnering with existing management and building upon the legacies of longstanding furniture businesses. One such example is the Home Consignment Center, which the long-time founder has continued to operate since we acquired the business. If you would like to ask him about his experience working with us, I would love to put you in touch with him. 

Based on our experience and today’s post-pandemic environment, we believe transformation is needed at Flexsteel, and that a successful outcome can only be executed as a private business with the additional resources of a digitally native owner like CSC. We believe that the Company’s stock has traded at a substantial discount to its true value for the past several years and will continue to trade below its intrinsic value if it remains publicly listed, particularly as there appears to be little appetite among institutional investors for wholesale furniture companies.  

Additional Proposal Details

The Transaction would be subject to the following conditions: (i) receipt of required Board and shareholder approvals; (ii) receipt of any required governmental and third-party approvals (including the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Act, to the extent required, and any required consents under any material contracts); (iii) limited confirmatory due diligence; and (iv) the negotiation and execution of a definitive merger agreement providing for the Transaction, which agreement would provide for customary break-up fees and “go shop” and “fiduciary out” provisions, as well as other customary representations, warranties, covenants and conditions. We would work with the Company to promptly obtain shareholder approval for the Transaction. We, together with our legal advisors Olshan Frome Wolosky LLP, are ready to conduct the limited due diligence required, negotiate and prepare definitive documentation, and finalize and enter into binding agreements, including, without limitation, any required financing commitments, in short order. We are prepared to devote considerable resources to completing this Transaction. We are confident that with your cooperation we will be able to execute a definitive transaction agreement without delay.

Please note that our proposal is based entirely on publicly available information. If upon further due diligence, we become aware of some component or aspect of the business and its prospects that evidences additional value inherent in the Company, we are prepared to increase our proposed price to reflect this new information. We are also willing to discuss alternative transaction structures, and stand ready to engage meaningfully and constructively with the Board to achieve a successful transaction in a quick and efficient manner in order to maximize value for all the Company’s shareholders. Of course, this letter constitutes an expression of interest only and does not create and shall not be deemed to constitute or create any legally binding or enforceable obligations on the part of either of us until a definitive transaction agreement is executed. We reserve the right to withdraw or modify any proposal at any time and for any reason.

Next Steps 

As noted, we believe that our proposal represents the best opportunity for the Company’s shareholders to achieve full and certain value for their shares on an expeditious basis. We look forward to hearing from you and opening up a dialogue to accomplish a value-maximizing transaction. 


Justin Yoshimura

Founder, Chairman and CEO

Clint Engel

Clint Engel is a veteran home furnishings industry journalist and executive editor of Home News Now. Please share your feedback with him at

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