Perry Ellis International, whose special committee said last month that it would “not be rushed” into a deal, entered into a $437 million transaction to go private via acquisition led by founder George Feldenkreis.
Perry Ellis shareholders will get an over 21 percent premium on the value of the stock in cash, according to the company. The board approved the deal after the special committee unanimously signed off on it.
The company said in a statement that the next annual meeting will be deferred so the new private entity can elect directors. The newly formed company will be controlled by Feldenkreis, who is also a member of the Perry Ellis board and will “acquire all of the outstanding common shares of Perry Ellis not already beneficially owned by the Feldenkreis family for $27.50 per share in cash.”
Once the deal is complete, which is expected in the second half, Oscar Feldenkreis will remain at the company, serving as chief executive officer. George Feldenkreis will take on a management role, but the company did not say what title.
The deal is being financed through an asset-backed revolving loan. The underwriter is Wells Fargo Bank and it includes a $282 million “multi-tranche term financing facility” by Fortress Credit Advisors LLC as well as equity “provided by the Feldenkreis family,” the company noted.
P.J. Solomon was the financial adviser to the Perry Ellis International special committee while Paul, Weiss, Rifkind, Wharton & Garrison LLP and Akerman LLP are served as the legal counsel.
On the buy side, Scope Advisors LLC was financial adviser to the group that was led by George Feldenkreis while Olshan Frome Wolosky LLP and Proskauer Rose LLP served as legal advisers. Stearns Weaver Miller Weissler Alhadeff & Sitterson was the legal counsel to Oscar Feldenkreis.
“The purchase price represents a premium of approximately 21.6 percent to Perry Ellis’ unaffected closing stock price on Feb. 5, 2018, the last trading day prior to George Feldenkreis announcing his proposal to take the company private,” Perry Ellis International said in a statement.
J. David Scheiner, non-executive chairman of the Perry Ellis board of directors and chair of the special committee, said the committee and its advisers “conducted a disciplined and independent process to ensure the best outcome to maximize value for shareholders.”
“We believe, upon the closing, that this transaction delivers an immediate cash premium and is in the best interest of all Perry Ellis shareholders,” Scheiner added.
George Feldenkreis said he believes the deal opens a “new chapter” for the brand. “The markets the company competes in have undergone transformative changes and I believe that Perry Ellis’ ability to invest and innovate is limited by the short-term pressures of being a public company,” he explained. “The transaction delivers immediate value to shareholders amid an environment of unprecedented disruption and competition. I am confident that as a private company, Perry Ellis will be best positioned to make investments in digital innovation, artificial intelligence and marketing, that support our long-term strategy to grow the company’s powerful global lifestyle brands, while expanding into higher-margin businesses and channels of distribution, including international, direct-to-consumer and licensing.”
Oscar Feldenkreis described the brand as a “renowned influencer” of fashion since it was founded and said it is “a magnet for highly creative individuals and brands.”
“The completion of this transaction will enable Perry Ellis to preserve the integrity of its infrastructure and business units across the United States and abroad,” the ceo said. “Our partners should benefit from our enhanced ability to make long-term investments in brands, technology and innovation while continuing to remain focused on executing on our long-term growth strategy. Perry Ellis intends to be at the forefront of the crucial digital transformation of the apparel industry from marketing to e-commerce, to applications of artificial intelligence.”