B. Riley co-CEO offers to acquire investment bank

(Reuters) – B. Riley Financial’s co-CEO Bryant Riley has proposed to buy the investment bank, he disclosed in a regulatory filing on Friday.

The offer of $7 per share held represents a premium of 39% to the stock’s last close. The bank’s shares rose 18.5% before the bell.

The stock has plunged 70% so far this week, underscoring the challenges the Los Angeles-based bank is facing, particularly concerning its investment in Franchise Group (NASDAQ:), the parent company of Vitamin Shoppe.

Riley is the co-founder and the largest shareholder of the investment bank. He said he would not proceed with the transaction unless he gets approval from a special committee of independent directors of the bank’s board.

“The current public company paradigm requires us to focus on short-term objectives and allocate unnecessary attention and time on constituencies who are not aligned with the owners of the business,” Riley said in a letter.

On Monday, shares tumbled 52% after B. Riley warned of a loss of between $435 million and $475 million for the quarter ended June, a significant drop from the profit of $44 million reported a year earlier.

The bank also delayed its quarterly report and warned of a markdown of $330 million to $370 million in the period related to its investment in FRG, a deal under scrutiny by both its shareholders and regulators.