Rotman Furniture could have new owner after spin-off by parent company

February 22, 2022  by HFBusiness Staff in Business Strategy, Industry   

Vystar said it will continue with a previously announced spin-off of its RxAir and Fluid Energy Conservation subsidiaries, but is adding a third subsidiary, latex and rubber producer Vytex, into the spin-off.

That will leave Rotman’s as the lone Vystar subsidiary. However, Vystar said it hopes to complete a so-called “reverse merger” that would allow another major retailer or manufacturer to become the majority owner of Vystar and Rotman’s.

“We have been approached by parties interested in different Vystar divisions,” stated Steve Rotman, Vystar CEO. “We always explore options, but after thorough analysis, we believe that a reverse merger by a significant furniture retailer or other manufacturer into Vystar could yield a four to six times multiple over a buyout.”

“Rather than a one-time buyout payment, a specifically targeted reverse merger could create a combined entity that could have significantly higher revenue ($100 to $150 million), increased buying power to achieve greater economies of scale for enhanced profits ($10 to $15 million) and a higher PE ratio,” Rotman explained. “Ultimately, we believe this would support a significantly higher share price and greater market cap.”

He said Vystar is also keeping the Vytex license for the manufacture of mattresses, pillows, mattress toppers and other product after the spin-off -- a move that could create and additional revenue stream.

“The combination of furniture retailer and Vytex license to produce bedding and upholstery is ideal for a reverse merger candidate that is looking for immediate growth and a low-cost entry into the capital markets,” Rotman said.

The spin-off involving the other subsidiaries will be known as RxAir NewCo. Vystar will have a 9.5 percent ownership stake in the new company.