Perry Ellis Men's Fall 2018

AT WHAT COST:  Perry Ellis International’s Special Committee on Wednesday reiterated its intention to proceed with George Feldenkreis’ $437 million offer to take the company private, a transaction that was inked on June 16. That dashed the wishes of Randa Accessories, which had hoped for a second, third and fourth chance to at least engage in talks over its nonbinding $444 million offer.

Randa has maintained that it intends to continue pursuing a purchase of Perry Ellis, but it doesn’t have many options left. According to the Special Committee on Wednesday, regulatory authorities already granted early termination of the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, clearing the way for the filing of the preliminary proxy last week. All that’s left is determining the date for the special shareholders’ meeting so investors can vote yay or nay on the planned deal.

Randa could elect to do a proxy fight, but at what cost? A banker not connected to the Perry Ellis-Randa battle — he’s requested anonymity because of his work with corporate clients in connection with proxy fights from activist investors — said, “A proxy fight is very expensive, and I’m not sure what it achieves here. If a deal actually is fully financed and finalized, the next step really is to move to closing. Where a shareholder vote is required, a proxy fight is an option but [one goes into it knowing] it will cost several million. Can Randa afford it and, more importantly, will they win?”

A retired retail executive, who has lived through a proxy battle and won, said, “The cost is very high, in the millions. The one bringing on the battle will have to hire lawyers and an outside investor relations firm that specializes in this work. In my experience, the fees for the IR firm were even higher than the legal fees.”

In hindsight, Randa — or any other acquirer — had the option of making a play for Perry Ellis since 2015, a financial source said. This individual noted, “Perry Ellis effectively has been for sale since 2015, when activist investors first got involved in the company.”  That involvement led to the splitting of the chairman and chief executive officer roles.

Executives at Randa declined comment.

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