Perry Ellis International Inc. is expanding its profile with a dealto buy Rafaella Apparel Group Inc. from Cerberus Capital Management.
Thepurchase price includes $70 million and 106,564 warrants to purchasePerry Ellis stock. The deal is expected to close by Jan. 28 and willhelp the company expand its women’s offering.
The transactionhelped lift Perry Ellis shares $2.77, or 10.6 percent, to $28.84 Fridayafter they reached a new 52-week high of $30.24 earlier in the day.
“PerryEllis will immediately become a more significant player in the women’sapparel industry,” said George Feldenkreis, chairman and chief executiveofficer.
Rafaella designs, sources and distributes women’sbetter sportswear. The business had revenues of $122 million andadjusted earnings before interest, taxes, depreciation and amortizationof $12.4 million for the 12 months ended Sept. 30.
That puts thepurchase price at 5.9 times adjusted EBITDA.
Rafaella ceoChrista Michalaros will become group president of all the company’swomen’s brands, including Laundry by Shelli Segal and C&CCalifornia.
The acquisition also brings the company a Hong Kongsourcing office and a platform to potentially launch other brands intowomen’s sportswear. On a conference call, Oscar Feldenkreis, presidentand chief operating officer, said the company has been consideringLaundry sportswear as well as, over the longer term, the relaunch of aPerry Ellis women’s line.
Gilbert Harrison, chairman of FinancoInc., which advised Rafaella on the transaction, said the wholesale sideof the fashion business would continue to consolidate.
“Thereare an awful lot of very profitable private wholesale companies outthere, like Rafaella, that are doing $50 million or $100 million to $200million,” Harrison said. “There are going to be more and moreopportunities like this.”
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