Kellwood Company
(NYSE: KWD) shares spiked today after a private investment firm is
taking its $542.3 million cash offer for the company straight to
shareholders. Sun Capital Securities Group offered $21 per share for
the apparel maker today, which represents a premium over the stocks
$16.51 closing price on Monday. Clearly, many shareholders are bullish
on the news as shares rose over 10 percent today.
Sun Capital failed in its two previous attempts to take a buyout bid
to the board of directors. “We are disappointed that Kellwood’s board
is unwilling to enter into a constructive dialog with us regarding
what we believe is a very compelling transaction,” said Jason Bernzweig
of Sun Capital.
Sun Capital, which already owns 9.9% of the Kellwood, values its
direct tender offer at $762 million but noted that it hinged on
Kellwood ending its $60 million debt tender offer which destroys the
company’s value. Otherwise, the firm will drop its buyout price to
$19.50 per share.
Sun Capital also announced that it would be nominating its own slate
of directors for election to Kellwood’s board at the 2008 annual
meeting if the company fails to reach an agreement soon. Indeed, this
may be their only option after two failed traditional attempts and a
failed tender offer placed directly to shareholders.
So, will they be successful this time by going straight to the
shareholders? Well, clearly shareholders are bullish on the idea of a
direct tender offer, so it will be interesting to see what kind of
response rates they are able to obtain. And even if they do not
succeed, they may have built up a substantial enough stake to make a
real run at the board of directors. Combined, these factors make KWD a
stock worth watching!
Related Companies
Liz Claiborne, Inc. (LIZ)
Jones Apparel Group, Inc. (JNY)
Polo Ralph Lauren Corporation (RL)