Destination XL Group (DXL), the owner of DXL Big + Tall, DXL Men’s Apparel, and Casual Male XL, reported that its board rejected a revised 84-cent-per-share unsolicited buyout offer from Zodiac Partners II, charging that the offer is “opportunistic” and significantly undervalues the retailer’s long-term worth.
On June 23, Zodiac, an acquisition entity of Camac Fund, raised its all-cash tender offer to 84 cents per share, up from an initial mid-May bid of 82 cents per share. The revised offer valued the big-and-tall menswear retailer at approximately $46.4 million. Prior to Zodiac’s first bid on May 11, DXL’s share price was 65 cents a share, valuing the firm at $37.6 million.
DXL said its Board “believes the upgraded offer still undervalues the company, adding that it believes Zodiac’s bid deliberately exploits market dislocation to undervalue the menswear retailer.”
“The DXL Board of Directors remains committed to maximizing stockholder value and acting in the best interests of all DXL stakeholders,” said Lionel Conacher, chairman of the Board of DXL, in a press release. “After careful review of Zodiac’s revised proposal, the Board unanimously concluded that the modest increase in consideration still undervalues DXL and is not in the best interests of our stockholders. The Board reiterated its belief that Zodiac’s repeated offers are highly conditional, opportunistic,and seemingly timed to deliberately exploit a period of market dislocation. We therefore recommend that stockholders reject the Revised Offer and do not tender their shares.”
Zodiac’s proposal comes as DXL announced on June 3 that it was pausing and re-evaluating its planned “merger of equals” with FullBeauty, first announced last December. The board of directors cited the increasingly challenging consumer environment and FullBeauty’s indebtedness as reasons why the original deal was no longer in the best interests of DXL stockholders.
FullBeauty operates a portfolio of plus size and inclusive apparel brands across men’s and womenswear, including KingSize, Catherines, Eloquii, Roaman’s, and Dia, alongside its flagship FullBeauty platform.
Under the deal, FullBeauty was to be folded into a newly created Destination XL subsidiary, which was to remain the listed entity under the ticker DXLG. Under the agreement, FullBeauty shareholders would own 55 percent of the merger entity group, with existing Destination XL investors holding the remaining 45 percent of equity.
Image courtesy Destination XL Group (DXL)
