IDOL FOCUSING ON DKI, MUM ABOUT FUTURE
Byline: Vicki M. Young / With contributions from Miles Socha, Paris
NEW YORK — John Idol says he’s focused on one thing and one thing only — Donna Karan International.
The chief executive officer of DKI declined comment on his future with the fashion firm if the acquisition offer by LVMH Moet Hennessy Louis Vuitton goes through, but said his intention right now is to stay with the company.
“I am currently chief executive officer and I intend to fulfill my responsibilities and duties,” he told WWD Monday. One of those responsibilities is maximizing shareholder value.
As reported, a special committee of the DKI board is currently reviewing the LVMH proposal, with the assistance of Merrill Lynch & Co. as financial adviser and Mayer, Brown & Platt as legal counsel.
LVMH on Dec. 18 signed a definitive agreement to acquire 100 percent of Gabrielle Studio Inc., the privately owned licensor of the Donna Karan trademarks, for $450 million. Gabrielle Studio is owned by Donna Karan, the designer, and her husband, Stephan Weiss. Concurrently, LVMH submitted a proposal to the DKI board to acquire the firm for $195 million, or $8.50 a share in cash. The price per share represents a 74 percent premium over the closing stock price on Dec. 15, 2000. The stock went public at $24 a share in 1996. Shares of DKI closed Monday at $8.88, unchanged, on the New York Stock Exchange.
Idol emphasized that his priority is getting the best deal for shareholders.
“I am a major shareholder in the company and I am aligned with [other] shareholders in making sure there is maximization of value,” he said. The ceo holds 2.3 percent of the outstanding common stock of record, or 506,115 shares, at an estimated value of $4.5 million.
On Monday, DKI reaffirmed in a statement that the company’s special committee was still reviewing the proposal, as well as exploring other options. Idol said the statement was issued because of confusion about the two LVMH acquisitions. He emphasized that they are two separate transactions, and that nothing has been decided yet about LVMH’s offer to acquire DKI.
“Besides the LVMH proposal,” he said, “DKI has the option of considering other acquisition proposals, a merger for a combination with another company as well as remaining independent.”
Since LVMH would own the trademarks, the value of DKI alone could be questioned.
But according to Idol, “DKI clearly has the trademarks in perpetuity under the licensing agreement with Gabrielle Studio. Even if Gabrielle Studio is acquired by LVMH, everything that the company operates remains intact. Nothing currently changes in the way that the company operates.”
Idol declined to say whether there were any other proposals . He noted that if there were, the company isn’t necessarily required to make a formal statement.
A spokesman for LVMH said: “We have every confidence that the offer will be accepted,” and characterized the 74 percent premium as a “very generous offer.”
According to a DKI spokeswoman, since the announcement of the LVMH proposal, there have been eight stockholder lawsuits — two in New York and six in Delaware, where the company is incorporated — largely challenging the offer’s share price.
Idol said emphatically that Monday’s reaffirmation of the special committee’s role in evaluating the company’s options “had nothing to do with the lawsuits.”
The ceo also couldn’t say when the special committee would make its recommendation.
How soon a deal could be completed will determine the ultimate payment for Gabrielle Studio. According to the terms of the agreement, as an incentive to LVMH to get the deal done quickly, the price for Gabrielle drops to $400 million if the proposed merger with DKI is completed within six months of Dec. 15, and to $425 million if the merger completion date is within six to 12 months of Dec. 15.
LVMH has said that if the DKI merger is consummated, DKI and Gabrielle Studio would be combined into a single entity, with Karan as the chief designer.