Entrepreneur Efrem Gerszberg has signed a definitive agreement to acquire and take private Hampshire Group Ltd., maker of Dockers men’s sweaters and Joseph Abboud men’s sportswear, via his investment vehicle NAF Acquisition Corp. Gerszberg is the president of George Foreman Enterprises and the younger brother of Seth Gerszberg, co-founder and chief executive officer of Marc Ecko Enterprises.
NAF Acquisition Corp., a subsidiary of Gerszberg’s NAF Holdings II LLC, has tendered an offer, approved by New York-based Hampshire’s board, to acquire the outstanding shares of publicly traded Hampshire for $5.55 a share, representing a 200 percent premium on their closing price of Feb. 23. For the deal to go through, NAF must acquire at least 82 percent of Hampshire Group’s 5.47 million outstanding shares, making the purchase price at least $24.9 million and valuing the company at about $30.4 million. Upon completion of the deal, NAF would merge with Hampshire Group, and the latter would survive as a private company.
On Tuesday, Hampshire Group shares skyrocketed $2.90, or 156.8 percent, on account of the news, closing at $4.75. According to Gerszberg, he has received commitments to finance the entire purchase price.
Hampshire chairman Michael Jackson said, “The board of directors is pleased to provide this opportunity to achieve liquidity to our shareholders in this economic environment at a price we believe is fair, and we believe that the transaction will have a positive outcome for our customers and employees.”
Hampshire Group chief executive Michael Culang told WWD it was too early to predict if enough shareholders would agree to the deal or when the sale would be finalized. “We have just signed the agreement, and we are beginning the process of sending out the tender offer materials,” he noted.
Culang added that as a relatively small company, a limited number of large Hampshire shareholders would be involved in the merger decision. Among those key shareholders is Milwaukee-based Heartland Advisors, which owns 450,920 shares of Hampshire, and Kentucky-based River Road Asset Management, which owns 556,705 shares, according to Securities and Exchange Commission documents filed earlier this month.
Prior to joining George Foreman Enterprises, Gerszberg, 34, was a practicing attorney and served on the board of directors and strategic advisory panel of Marc Ecko Enterprises. “As an investor in the apparel industry,” he stated, “I have come to know and admire Hampshire for its reputation for producing high-quality, trend-right apparel at attractive price points. I look forward to working with Hampshire’s excellent team to enhance its already strong status as a compelling resource for national retailers.”
Hampshire Group owns and markets Spring + Mercer, Designers Originals, Mercer Street Studio, Requirements and RQT brands to major retailers including Macy’s, Kohl’s, J.C. Penney, Dillard’s, Bloomingdale’s and Nordstrom. Additionally, it licenses the Geoffrey Beene and Dockers brands for men’s sweaters, and Joseph Abboud and Alexander Julian for men’s tops and bottoms.
In the third quarter ended Sept. 27, Hampshire Group posted net income of $2.7 million, down 34 percent from income of $4.1 million in the year-ago quarter. Total sales in the quarter slipped 5 percent to $81 million, down from $85.2 million in the previous quarter. For the nine months ended Sept. 27, the company posted a net loss of $9.1 million compared to a net loss of $6.1 million in the year-ago period. Total sales fell 3 percent to $153.6 million, down from $158.5 million a year ago. Fourth-quarter figures have yet to be released.
Hampshire Group was delisted from the Nasdaq in 2007, due to late filings of its quarterly earnings, and currently trades on the Pink Sheets.