The founder of Perry Ellis International, George Feldenkreis, is seeking to acquire the apparel company for $430 million with a plan to take the company private.
The Wall Street Journal reported late Tuesday that Feldenkreis sent a letter to the board of directors proposing a buyout deal.
Feldenkreis offered $27.50 per share for Perry Ellis International, an 18.6 percent premium to the stock’s closing price on Tuesday. The deal would be financed with a combination of debt and equity, and is backed by a $300 million commitment from Fortress Investment, according to a regulatory filing.
Feldenkreis owns 11.2 percent of Perry Ellis International and is its largest shareholder.
In the filing, Feldenkreis wrote, “I am not comfortable with the motivations, strategy and oversight of the existing board and believe shareholder value will suffer under this board’s stewardship. As the largest single shareholder of PERY, I am not prepared to stand by and see my economic interest mismanaged. After careful consideration and analysis, I believe the most favorable alternative for all stakeholders is a “going private” transaction that I propose herein with the financial support of Fortress Credit Advisors LLC, on behalf of itself and/or as agent on behalf of one or more funds or accounts managed by affiliates of Fortress Credit Advisors LLC (“Fortress”), which is an affiliate of Fortress Investment Group LLC, a leading alternative investment firm.
“The branded apparel and retail sector is in the midst of unprecedented disruption and competition that necessitate conviction in strategy and long-term orientation toward investment in our brands, capabilities and people. Under the current public company paradigm, PERY is constrained by short-term objectives and a risk-averse Board unprepared to underwrite the business initiatives and opportunities that will drive shareholder value. Shareholders will suffer under the status quo.
“I believe that the Company, its licensees and its employees would benefit greatly in the long run from private ownership of PERY, which would enable the Company to execute a long-term value creation strategy. Alongside my own equity roll-over contribution, Fortress is prepared to commit substantial capital resources to the Company, in the form of both debt and equity to help fund future acquisitions, new licenses and an aggressive organic growth strategy.”
Feldenkreis founded Perry Ellis’ predecessor in the 1960s and led the company for 50 years. In January 2016, he stepped down as CEO when his son, Oscar, took over day-to-day operations. In September 2017, Perry Ellis eliminated Feldenkreis’ position of executive chairman. J. David Scheiner, former president and COOr of Macy’s Florida/Puerto Rico, replaced him in a new role of non-executive chairman.
In a statement that came out Wednesday morning, Perry Ellis International confirmed that it has received an unsolicited, conditional proposal from George Feldenkreis.
The brief statement read, “The Non-Executive Chairman of the Board of Directors intends to recommend that the Board form a special committee of its non-executive, independent directors to, consistent with its fiduciary duties and in consultation with its financial and legal advisors, carefully review and evaluate the proposal and determine the course of action that it believes is in the best interest of the company’s shareholders. Perry Ellis shareholders do not need to take any action at this time.”
The company makes a wide range of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men’s and women’s swimwear. The company’s brands include: Perry Ellis, An Original Penguin by Munsingwear, Laundry by Shelli Segal, Rafaella, Cubavera, Ben Hogan, Savane, Grand Slam, John Henry, Manhattan, Axist, Jantzen and Farah. The company’s licensed collections include Nike and Jag for swimwear, and Callaway, PGA TOUR, Jack Nicklaus for golf apparel and Guy Harvey for performance fishing and resort wear.
Photo courtesy Callaway Golf
