NEW YORK — Loehmann’s Holdings Inc. is to be acquired for $177 million by an affiliate of Crescent Capital Investments, the off-pricer said Friday.
Crescent is an Atlanta-based private equity firm. The deal, which requires approval of shareholders at a special meeting expected to be held this summer, gives holders of Loehmann stock $23 per share in cash. Shares of Loehmann were trading between $20 and $21 in the days before Friday’s announcement.
Loehmann’s existing lender, CIT Group/Business Credit Inc., and Silver Point Finance will provide $100 million in financing to fund the debt portion of the deal, while also providing a working capital line once it closes. Peter J. Solomon was financial adviser to a special committee on Loehmann’s board. The committee unanimously recommended the acquisition.
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Alpine Associates is the off-pricer’s largest shareholder and, according to Loehmann’s, has entered into an agreement with Crescent to vote in favor of the merger. In addition, Robert Friedman, Loehmann’s chief executive officer, and Robert Glass, chief operating officer, will remain as members of the retailer’s senior management team.
Loehmann’s is the latest nameplate to surface on the mergers and acquisitions front. Spiegel recently said it was shopping for a buyer for its Eddie Bauer unit, and is in talks with a potential purchaser for its core Spiegel catalogue business.
Frederick Schmitt, vice president at investment bank The Sage Group, observed, “This is actually a great environment to do a merger or acquisition, especially in retail. Financial buyers have unusual amounts of equity that they haven’t spent in the past couple of years, and banks have been more generous in lending so it is still easy to get the transactions completed.”
Schmitt noted that the environment was still good for strategic buyers since strong stock prices for public companies mean that the stock can be used to finance a transaction. He added that because retail sales in March were so good, there’s a feeling that retail will have a good 2004.
“When the stock is doing well, shareholders feel good. If firms are confident about [retail sales in] 2004, then they will be more willing to take a risk and make an acquisition,” the banker said.
— Vicki M. Young