NEW YORK — It might be a tough economy, but Goody’s Family Clothing Inc. managed to score a potential acquisition deal that could give shareholders a substantial premium of between 37 and 58 percent over the current market value of the retailer’s shares.
This story first appeared in the October 1, 2002 issue of WWD. Subscribe Today.
Goody’s said Monday it has entered into a non-binding letter of intent with a private equity group to acquire its outstanding common stock at between $6.50 and $7.50 a share. Goody’s stock closed Monday at $4.72, down 21 cents in over-the-counter trading.
The letter of intent provides for an exclusive due diligence period of up to three months, with the first phase to end in 60 days. The parties proceed to the second phase of due diligence for 30 days, provided they agree on a price and structure. When the second phase is completed, the parties will seek to negotiate a definitive agreement that could have the transaction closing by the end of April 2003.
Gilbert Harrison, chairman of Financo Inc., a New York-based investment banking firm that provided financial advisory services to Goody’s, would disclose only that the private equity firm has “extensive experience in the retail sector, with access to over $1 billion.”
Robert M. Goodfriend, chairman and chief executive of Goody’s, said, “We’re pretty happy with it. The equity fund [people] are really good folks to work with. They approached us, and because they are a financial buyer, the purchase will keep the employees intact. It won’t be a question of which jobs will be kept.”
Goodfriend said discussions haven’t gotten far enough yet to determine what his role would be if the deal comes to fruition, but said he would like to stay on as a consultant and oversee the advertising for the retailer. Goodfriend, whose father started the business in 1953, became president and ceo in 1979 and then chairman in 1990.
Goody’s has agreed not to solicit other transactions nor to otherwise provide information to other prospective purchasers during the 90-day period. The deal is structured, according to Harrison, in a way that allows the “Goody’s board to entertain and be responsive to other potential unsolicited offers.”
For the second quarter ended Aug. 3, the company posted earnings of $1.3 million, or 4 cents a diluted share, against a loss of $11.1 million, or 34 cents, in the same year-ago period. Sales dipped 1 percent to $284 million from $286.9 million, while comparable-store sales decreased 3.1 percent.