HOUSTON and DENVER—Denver-based VCG Holdings Corp. has announced that a letter of intent to merge with Rick's Cabaret International Inc. has expired after the two companies failed to reach a final agreement.
In February, Houston-based Rick's agreed to acquire all of the outstanding shares of VCG Holding to form the largest publicly traded operator of upscale gentlemen's clubs in North America.
Thursday, however, VCG issued a press release saying the companies—despite the fact that they were committed to completing the deal as recently as March 11—were "unable to enter into a definitive Merger Agreement prior to the expiration of the Letter of Intent." The original letter of intent was originally set to expire March 12, but was extended to March 31.
According to the Denver Business Journal, had the deal gone through, Troy Lowrie, VCG’s chairman, CEO and largest single stockholder would have stayed on as a consultant to Rick’s for three years.
"Last November," the paper reported, "Lowrie said he wanted to buy up all outstanding VCG stock for $2.10 a share, through an investment entity called Lowrie Management LLP and 'certain other unidentified investors,' and take the company private. But in December, a special VCG board committee evaluating Lowrie’s offer deemed it 'currently inadequate.'"
Rick's Cabaret currently operates 18 nightclubs in seven states while VCG Holding operates 20 clubs in 10 states.
VCG operates 20 clubs in 10 states, including the Diamond Cabaret and the Penthouse Club in the Denver area.
The two companies had combined revenues of $131.3 million for the 12-month period ending September 30, 2009.