NEW YORK — Confirming its belief in its future growth prospects, Kellwood Co. said Thursday it has entered into an $80 million accelerated share repurchase agreement with the Bank of America N.A.
Kellwood will repurchase $80 million of outstanding common stock, or about 18 percent of its outstanding shares based on Kellwood’s current stock price. Bank of America is expected to buy Kellwood’s common stock in the open market, and the ASR program is expected to take up to nine months to complete.
Pressure has been mounting on the St. Louis apparel firm since private equity firm Sun Capital Securities Group — Kellwood’s second-largest shareholder with a 9.9 percent stake — issued and then reissued an unsolicited bid for the apparel company last fall. Kellwood twice turned down the $21-a-share offer, saying it undervalued the company. Sun has made it clear it intends to buy the $1.6 billion company despite Kellwood’s two flat-out rejections, and sources said a hostile takeover is a distinct possibility.
“The repurchase of shares is an attractive use of our capital, aligned with our goal of enhancing shareholder value and consistent with our long-term financial plans and 2008 guidance,” said Robert C. Skinner Jr., chairman, president and chief executive officer of Kellwood, in a statement.
Kellwood said the transaction is consistent with its previously announced long-term financial plans and intended use of proceeds from the anticipated closing of the sale of Smart Shirts for $161 million.