Sun Capital Securities Group LLC is hoping the third time's the charm in its bidding for Kellwood Co.
The private equity company late last night repeated its tender offer for the St. Louis-based vendor, but this time went directly to Kellwood shareholders and bypassed the company's board, which has twice rejected Sun Capital's bid.
The offer is again for $21 a share in cash, or approximately $762 million, with the assumption of Kellwood's debt. Made through Sun Capital affiliate, Cardinal Integrated LLC, the bid is set to expire Feb. 12. Kellwood's stock Monday closed at $16.51.
"Your continued unwillingness to enter into a constructive dialogue with us regarding our interest in acquiring control of Kellwood has left us no choice but to take our proposal directly to your shareholders," according to a letter sent Monday to Kellwood's board from Jason Bernzweig, vice president of Sun Capital.
Sun Capital added it would lower the bid to $19.50 if Kellwood does not terminate its $60 million tender offer for the 7.875 percent notes due in 2009 the company made last week — a move Sun Capital asserts is ill advised and reduces equity value.
"We simply cannot justify the premium set forth in our initial proposal if you continue to destroy equity value through ill-advised initiatives, including but not limited to the bond offer," said the letter, which also demanded access to Kellwood's books and records to investigate the impact of and motive behind the vendor's bond tender on shareholder value. "Repaying $60 million of notes is another clear example of financial mismanagement."
Kellwood made the bond tender offer a week after unveiling a plan to buy back $80 million in stock, following completion of the sale of Smart Shirts, which netted the company $162 million in cash. Sources called the bond buyback a defensive move to clear the $1.6 billion group's cash coffers and ward off Sun Capital's takeover.
If Kellwood does not reach an agreement with Sun Capital in the near term, the equity firm warned it will file preliminary proxy materials to nominate its own slate of directors for election at Kellwood's 2008 annual meeting.
The back-and-forth between the vendor and Sun Capital, which owns 9.9 percent of Kellwood, has been going on since last fall."Importantly, we believe the board should also seriously consider that the stock is clearly trading on the prospect of a transaction," according to Sun Capital's letter Monday. "Since we made our initial offer, Kellwood's peer group has depreciated 27 percent, while the S&P Consumer Discretionary Index has declined 19 percent due to weakening fundamentals in the consumer sector. Conversely, during this time frame, Kellwood's stock has appreciated 7.5 percent, reflecting the significant value inherent in our buyout proposal. Accordingly, we believe Kellwood's stock price would decline significantly, likely to a level well below its trading price on Sept. 18, 2007, absent the prospect of a sale of the company. Therefore, our offer of $21 a share arguably represents a premium substantially greater than 38 percent relative to Kellwood's unaffected stock price."
The bid is conditional upon not only the majority of Kellwood's shareholders accepting it, but also on the vendor's board making its supermajority voting provisions inapplicable to the offer. This might be unlikely, given the Kellwood board's resistance to Sun Capital's efforts thus far.
Supermodel @helenachristensen teamed up with longtime friend and designer @camillastaerk on a joint @paredeyewear collaboration. The lineup features three styles and 11 offerings, all of which embody a vintage feel. Get all the details on how they celebrated the collab on WWD.com. #wwdaccessories #wwdeye (📷: @slovekinpics)
“It’s a hard industry to keep motivated, as well, so finding different subjects and people is what makes it worth it – when you’re like, oh, I’ve met great people, I feel like I’ve done something good, and I feel proud of having done this,” said French actress Stacy Martin on being grateful for the variety of roles she’s take on. Read @ktauer’s full interview with Martin on her her latest film “Godard Mon Amour.” #wwdeye (📷: @danieldorsa)
After showing in front of the Eiffel Tower for his last two women’s ready-to-wear collection, it looks like @anthonyvaccarello may be heading to the Big Apple. Sources say the designer will stage his next @ysl show in NYC on June 6. Get all the details on WWD.com. #wwdnews #wwdfashion (📷: @aitorrosasphoto)
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion