By  on July 9, 2018

Four days after the special committee of the Perry Ellis International Inc. board reaffirmed its support for George Feldenkreis’ offer to take the company private, Randa Accessories laid out why it believes shareholders should line up behind its offer, which is slightly higher: $28 a share, as compared with Feldenkreis’ $27.50 a share.In a letter sent to the special committee this morning, Jeffrey Spiegel, Randa’s chief executive officer, wrote: “We were disappointed to read of your decision not to engage with us regarding our compelling proposal that would provide superior value to your shareholders than your existing merger agreement with George Feldenkreis (the insider transaction).” Spiegel said the deal with Feldenkreis “expressly permits the special committee to engage in discussions to clarify the terms of any unsolicited proposal it receives and, further, to engage in negotiations with regards to such a proposal that is reasonably expected to lead to a superior proposal.”Yet the committee has “not once directly contacted us or our representatives.” Instead, the committee’s decision has been delivered via press release, Randa said.As a result, Randa said it would address what it said were inaccuracies in the committee’s statement last week. That included the committee's questioning of its financing ability. Spiegel said Randa has obtained “executed debt commitment papers from world-class financial institutions” that are “more than sufficient to consummate our proposed transaction.”Additionally, Randa said it has not been granted access to key business contacts readily available to Feldenkreis and his son, Perry Ellis ceo Oscar. Once that is obtained, Spiegel wrote, a “mutually acceptable definitive merger agreement [could be executed] within 24 hours.”He said a transaction with Randa could be completed prior to that of the Feldenkreis deal and “would not require the added complexity, cost and timing associated with the shareholder litigation and SEC filings and review associated with the insider transaction.”He said Randa remains committed to pursuing the acquisition and asked again that the special committee meet “to quickly negotiate and finalize any and all documentation necessary to effectuate this transaction.”Perry Ellis’ special committee said last week that Randa’s July 1 proposal was “not solicited,” and was “substantially similar to a nonbinding $27.75 per share proposal made by Randa” during the committee’s strategic review process.Specifically, the special committee said it unanimously determined, after consulting with legal and financial advisers, that the “Randa proposal does not satisfy the requirements in the Feldenkreis merger agreement for granting due diligence access or commencing negotiation with respect to a competing takeover proposal.”It also noted that the proposal is “highly conditional, nonbinding and insufficient in terms of value and certainty of the provided debt financing commitments, as well as the lack of evidence of sufficient cash equity on hand.” Other factors of concern for the special committee were the additional timing to enter into and complete a potential transaction with Randa, as well as the “inclusion of an unprecedented 3 percent fee payable by [Perry Ellis] to Randa if shareholders vote down the transaction, versus no such penalty if shareholders vote down the Feldenkreis merger.”Unless things change, Perry Ellis will send a proxy statement to shareholders with just the Feldenkreis offer as an option and they will not be afforded the opportunity to choose between the two.However, if the committee does agree to meet with Randa and ultimately deem that offer superior, it would terminate the transaction with Feldenkreis and sign a merger agreement with Randa that would then be presented to shareholders. Given the committee’s decision not to engage in discussions with Randa, however, that seems like a long shot unless the shareholders put pressure on the committee to negotiate. 

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