WWD.com/accessories-news/financial/swank-to-be-acquired-by-randa-5608700/
government-trade
government-trade

Randa in Deal to Acquire Swank for $57M

Acquisition creates an accessories powerhouse with more than $600 million in annual sales.

Randa Accessories Leather Goods LLC’s dominance in the men’s accessories category took another step forward Friday with its agreement to acquire and take private longtime competitor Swank Inc. for $10 a share, or about $57.5 million.

This story first appeared in the February 6, 2012 issue of WWD.  Subscribe Today.

The deal, expected to close in the second quarter following Swank shareholder and standard regulatory approvals, would create an accessories powerhouse with more than $600 million in annual sales. Randa, believed to be the largest men’s accessories firm in the U.S. with 2011 sales of $450 million, is privately held with highly developed global businesses in neckwear, luggage and leather goods. Swank, which had revenues in the 12 months through September of $136.7 million, is publicly held and traded on the pink sheets. Its business is less diverse geographically, with about 7 percent of volume coming from Europe and Central and South America, and focused on men’s leather goods and costume jewelry.

The $10-a-share offer constitutes an 111 percent premium over Swank’s closing bid price of $4.75 on Feb. 2. The agreement calls for a 35-day “go-shop” period to solicit better offers, as well as Randa’s right to match a superior proposal. Shares of Swank Friday closed at $7, up $2.25, or 47.4 percent, after moving as high as $9.84 in midday trading.

“The strategic benefits of this combination are clear and we are pleased to be able to move forward on terms that are financially attractive for Swank’s stockholders,” said Jeffrey Spiegel, chief executive officer of Randa.

John Tulin, chairman and ceo of Swank, told WWD that talks had been under way for nearly a year. “We weighed how this would affect our shareholders, customers and employees and it’s positive for all three constituencies,” he said. “We all know that these days, organic growth isn’t easy.”

He noted that the two firms work together on a number of licenses — both hold rights to the Chaps, Nautica, Claiborne, Geoffrey Beene and Pierre Cardin trademarks — although Swank doesn’t produce neckwear or luggage and has a smaller international footprint than Randa, which markets 75 brands around the world.

Gilbert Harrison, chairman of Financo Inc., which advised Swank on the deal, told WWD, “It’s a strategically important deal for both companies and there are strategic benefits coming from this combination. The two ceo’s know and respect each other and believe that this will be a great combination with respect to their companies’ reputations for quality, reliability and customer service.”

He pointed out that Randa’s in-store division, MCG, formed in 2002, had been so successful with point-of-sale management that it now provides its services to a number of third-party vendors, including Warnaco Group and Levi Strauss & Co., in addition to its own brands.

Randa was advised in the negotiations by Peter J. Solomon Co.