Ralph Lauren could soon be almost $900 million richer.
The founder, chairman and chief executive officer of Polo Ralph Lauren Corp. is set to give up about a quarter of his Class B voting shares in the company in a secondary public offering that could net him almost that amount, yet dilute his control of the voting stock by a mere 1.6 percent — to about 93.5 percent.
Polo said late Monday the company would commence a secondary offering of common stock in which Lauren will sell 9 million shares of Class A common stock to the public and grant the underwriters a 30-day option for an additional 1.35 million shares to cover overallotments. The 10.35 million shares will come from the conversion of an equal number of Class B shares.
Additionally, Polo will purchase 1 million shares from Lauren at the same price as the public offering, the maximum price of which was listed as $78.55 in a shelf registration provided to the Securities and Exchange Commission.
At that price, the sale of the shares would add $891.5 million to the Lauren family coffers. According to Forbes magazine’s latest billionaires list, Lauren is worth an estimated $4.6 billion.
Shares of Polo closed Monday at $84.17, up 72 cents, or 0.9 percent. That price puts the value of the 2.4 million Class A shares Lauren currently owns at $202.9 million, but the 39.8 million Class B shares, calculated at the same price, are worth $3.35 billion.
The company said Lauren’s role as chairman and ceo wouldn’t be affected by the offering and noted that “Mr. Lauren and his family will continue to maintain a significant controlling interest in the company.” Polo described the offering as part of Lauren’s “asset diversification plan.”
Lauren, 70, has never hinted at retirement.
According to the shelf registration filed Monday, the sales will reduce Lauren’s share of Class A stock to 3.6 percent from 4.3 percent without reducing their number, while his Class B holdings, reduced to 29.5 million shares from 39.8 million, will be cut to 93.5 percent from their current level of 95.1 percent.
The total combined voting power of Lauren and his family following the sales would be 80.1 percent. The calculation of Class A shares include unvested options held by Lauren, the company said.
The shares acquired by Polo in the transaction constitute a stock buyback, reducing the number of Class B shares without adding to those listed as Class A.
J.P. Morgan and Goldman Sachs are serving as joint bookrunners for the offering, with Deutsche Bank Securities and UBS Investment Bank serving as co-managers.
Whatever Lauren’s personal and familial stake in the firm that bears his name, sources hearing of the offering were quick to point out that the notion of him disengaging himself from Polo in any way was simply unthinkable. While recently strengthening his management ranks and placing many responsibilities in the hands of Roger Farah, president and chief operating officer since April 2000, Lauren remains hands-on, his imprimatur on virtually every activity undertaken by the firm. Last week, he discussed plans for his new Big Pony fragrance collection, due to hit stores this summer, likening the presentation to those used by his signature Polo shirts at retail.
Last month, as the company reported fourth-quarter profits that were about two-and-a-half times year-ago levels, along with a 9.2 percent increase in revenues to $1.34 billion, Lauren commented: “We successfully took control of our Asian operations, we made great strides in the development of our accessories products and we opened several luxury stores in key global markets.”
Farah also noted that, with more than $1.2 billion in cash and investments, the firm would continue to engage in stock buybacks and debt reduction and amp up its efforts in both international retailing and e-commerce.
In April, Lauren made his biggest retail statement yet in Europe, opening a 23,000-square-foot flagship in a 17th-century town house on the Left Bank.
“I don’t think we can call it a store,” he told WWD. “This is beyond a store. This is my dream in Paris.”