By and  on September 23, 2005

NEW YORK — Mossimo Inc. and Mossimo Giannulli said they reached an agreement for the outstanding publicly held minority shares of Mossimo at $5 a share. But there's a good chance the deal won't happen as shareholders push for a higher price.

Institutional investors and hedge funds lit up the phones following the Mossimo announcement Thursday morning. They discussed between themselves what the appropriate price-per-share should be, and whether or not to vote in favor of the deal.

A hedge fund manager whose firm owns shares of Mossimo, but spoke on the condition of anonymity, said $5 a share is too low. "It's worth much more," he said. "It's just an absolute farce. It's worth well more than $6 a share."

The hedge fund manager said he doesn't think the board will get the majority approval it needs from existing shareholders who hold the shares Giannulli doesn't. The manager's firm, along with a few other investors, collectively own 14 percent of the 35 percent of shares not owned by Giannulli.

The fund manager said he does not plan to approve the buyout offer. He said the Mossimo board was aware of his firm's feelings because he had been in contact with the board prior to the new tender offer.

As reported, Giannulli, chairman and co-chief executive officer, owns about 65 percent of Mossimo. He made an offer on April 11 to acquire the same shares for $4 each. On Aug. 16, he withdrew that bid and shares of Mossimo, which had climbed to a 52-week high in over-the-counter trading the week before when it hit $6.20, closed at $4.90 the day of the withdrawal.

Shares of Mossimo on Thursday closed at $4.99, up 1 cent, a penny shy of the $5 offer price.

"The shares are worth at least $7.50. We're not tendering [our shares]. You don't come back later when you've walked away and say I'm now upping the offer after the stock price has dropped. That's [not fair]. In addition, the $5 per share amount doesn't include the Modern Amusement contribution. This is not a fair deal," said another portfolio manager, who said he sent a letter to the Mossimo board. He also requested anonymity because of company policy.

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