FASHIONMALL REBUFFS BID

Byline: Peter Braunstein

NEW YORK — Fashionmall.com Monday resisted an offer made by Internet holding company Sitestar Corp. to acquire all the outstanding shares of the fashion portal for $3 per share in cash. Upon initial news of the offer, shares of Fashionmall.com rose 47 cents, or about 22 percent, to $2.63. At a conference call timed after the market had closed, Fashionmall.com president and chief executive officer Ben Narasin expressed his disinterest, and subtle contempt, for Sitestar’s $22.5 million offer.
“We are not currently looking to sell the company,” he said, “and even if we were, we would not be receptive to an offer below book value.”
Narasin, who owns about 46 percent of Fashionmall’s outstanding common stock, estimated the book value of the stock at slightly higher than $5 per share, based solely on outstanding shares and cash-on-hand. If Sitestar actually chooses to engage in a tender offer, Fashionmall will advise its stockholders of its position in respect to a Sitestar offer no later than 10 business days from the date Sitestar files a tender offer Statement with the Securities and Exchange Commission.
Aside from the low-ball offer, Narasin expressed an array of concerns about whether Sitestar’s offer was even serious.
“They do not appear to have a meaningful amount of cash at their disposal,” he said, “and it’s interesting that this offer came so close on the heels of our acquisition and relaunch of Boo.com, scheduled for next week.”
Narasin added that the proposed buy-out, as presently framed, did not contemplate any payment to the holders of Fashionmall.com’s convertible preferred stock. In summation, Narasin dismissed the Sitestar offer as “far below the most pessimistic valuation of the company.”
Fashionmall is the second dot-com to get a buyout offer from Sitestar. Last week, the Encino, Calif.-based holding company announced an expansion of its corporate focus to “include the acquisition of undervalued Internet and technology companies.” Sitestar last week made a $17.4 million offer for all the outstanding shares of online retailer MotherNature.com, which was withdrawn after MotherNature.com principals rejected the takeover bid.
In phrasing the offer to Fashionmall.com, Sitestar president and ceo Clinton Sallee said in a statement: “Considering the value in Fashionmall.com assets and business, and in light of the deep discount its shares are trading at, we are prepared to tender for all the shares at a significant premium to the current market price.” In fact, Sitestar’s offer represents a 40 percent premium from Fashionmall’s closing price of $2.06 per share on the day the offer was made. Fashionmall.com shares, which had seen a 52-week high of $8.25, closed the day at $2.44, up 13 percent.

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