Mossimo received an unsolicited proposal from Cherokee Inc. to acquire all the outstanding shares of Mossimo, Inc. for $8.50 per share, consisting of $6.00 per share in cash and $2.50 per share in Cherokee stock. Consistent with its fiduciary duties to Mossimo's stockholders, Mossimo's board of directors will meet to evaluate Cherokee's proposal. A Mossimo spokesman indicated that it is too early to determine whether this offer constitutes a superior proposal to the proposed merger of Mossimo with Iconix Brand Group, Inc. announced on April 3, 2006.
The Iconix agreement provides for Mossimo stockholders to receive payment of $4.25 in cash and $3.25 in Iconix shares, subject to adjustments, plus, if the Iconix common stock does not trade above $18.71 for at least twenty consecutive trading days in the year following the merger, additional shares of Iconix common stock shortly following the first anniversary of the merger. These protective provisions are designed to provide Mossimo, Inc. stockholders the opportunity to ultimately receive per-share consideration which represents $8.50 per Mossimo share after the merger.
In addition, Mossimo announced that on April 12, 2006, a purported shareholder class action lawsuit was filed in the Superior Court of the State of California for the County of Los Angeles entitled Laborers' Local #231 Pension Fund vs. Mossimo, Inc. et al. The lawsuit alleges that Mossimo and its board of directors breached their fiduciary duties in approving the agreement with Iconix. A Mossimo spokesman indicated that the company and the directors deny all liability, believe the allegations in the complaint are without merit and intend to defend the claims vigorously.
