Kellwood Company will go private as early as this week after shareholders of the company overwhelmingly accepted an offer from private equity firm Sun Capital Securities Group, LLC. Sun Capital said 70.8% of the shareholders of Kellwood Co. tendered their shares to its affiliate Cardinal Integrated, LLC by a midnight deadline Tuesday.
When added to Sun Capitals existing 11.4% stake, that represented nearly 82% of Kellwoods total outstanding shares. Additional shares to be delivered by today (Feb. 18) will push the total to 90.0%, Sun Capital said. Sun Capital is paying $21 a share for Kellwood, or $542 million a 38% premium over KWD's closing price Sept. 18, a day after the investment management firm announced its interest in acquiring the company.
Sun Capital laid out a 15-page critique of Kellwood's restructuring plan to win over investors, but will not disclose its own plans for the company, a Sun Capital spokesman said. Kellwood will in be transition this week and any developments will be announced directly by Kellwood, the spokesman said.
Kellwood disclosed Thursday that five of its directors had resigned from the board of directors effective Wednesday to make way for four Sun Capital designees, including Sun Capital partner Jason Bernzweig, who led the assault on Kellwood.
Speculation last week was that business would continue as usual at Kellwood, although the new board is expected to move quickly to replace top corporate executives. It could take Sun Capital months to review Kellwood's portfolio of 36 brands. Of the company's nearly dozen divisions, four have consistently performed well. They include the children's apparel divisions Hanna Andersson and Gerber Childrenswear, as well as American Recreational Products, a coalition of outdoor brands that includes Kelty, Royal Robbins, Sierra Designs, Slumberjack and Wenzel. Although relegated to Kellwood's “Other Soft Goods” segment with Gerber, ARP is said to have the second highest return on capital of any KWD division. Gerber has been the star performer, but is considered risky because of its reliance on Wal-Mart.
Some Kellwood executives are said to be welcoming the takeover, because they think it will allow the company to move faster without the second guessing by analysts and investors that can hamstring a public company.
