Perry Ellis International agreed to go private in a deal valued at $437 million, four months after George Feldenkreis, the founder and former executive chairman, made a bid for the apparel company.
Additionally, the company and George Feldenkreis, his son and CEO, have agreed to defer the next annual meeting for the election of directors while the merger agreement is pending.
The purchase price represents a premium of approximately 21.6 percent to Perry Ellis’ unaffected closing stock price on February 5, 2018, the last trading day prior to George Feldenkreis announcing his proposal to take the company private on February 5. The transaction is valued at approximately $437 million.
The transaction was unanimously approved by the Perry Ellis Board of directors, acting on the unanimous recommendation of a special committee of independent directors that was granted full authority to conduct a comprehensive strategic review and evaluate and, if warranted, negotiate the Feldenkreis acquisition proposal.
“The Special Committee and its advisors conducted a disciplined and independent process to ensure the best outcome to maximize value for shareholders. We believe, upon the closing, that this transaction delivers an immediate cash premium and is in the best interest of all Perry Ellis shareholders,” said J. David Scheiner, non-executive chairman of the Perry Ellis Board of directors and chair of the special committee.
“I believe this transaction will open an exciting new chapter for Perry Ellis, our customers and employees. The markets the company competes in have undergone transformative changes and I believe that Perry Ellis’ ability to invest and innovate is limited by the short-term pressures of being a public company. The transaction delivers immediate value to shareholders amid an environment of unprecedented disruption and competition. I am confident that as a private company, Perry Ellis will be best positioned to make investments in digital innovation, artificial intelligence and marketing, that support our longterm strategy to grow the company’s powerful global lifestyle brands, while expanding into higher-margin businesses and channels of distribution, including international, direct-to-consumer and licensing,” said George Feldenkreis, founder and director of Perry Ellis.
“Since its founding, Perry Ellis has been a renowned influencer of fashion and a magnet for highly creative individuals and brands. The completion of this transaction will enable Perry Ellis to preserve the integrity of its infrastructure and business units across the United States and abroad. Our partners should benefit from our enhanced ability to make longterm investments in brands, technology and innovation while continuing to remain focused on executing on our longterm growth strategy. Perry Ellis intends to be at the forefront of the crucial digital transformation of the apparel industry from marketing to e-commerce, to applications of artificial intelligence,” said Oscar Feldenkreis.
“Fortress is delighted to support the founding family of Perry Ellis in a transaction that positions the business for growth and success in the years to come,” said Josh Pack, managing partner of Fortress Investment Group.
Following completion of the transaction, Oscar Feldenkreis will continue to lead the company as chief executive officer. George Feldenkreis, director and founder, will return to an active role in the management of the company. Perry Ellis will continue to be headquartered in Miami, Florida. Upon close, Perry Ellis will become a privately held company and Perry Ellis common shares will no longer be listed or traded on any public market.
The transaction will be financed through a Senior Secured Asset Backed Revolving Loan Facility underwritten by Wells Fargo Bank, N.A., a $282 million multi-tranche term financing facility provided by Fortress Credit Advisors LLC and equity provided by the Feldenkreis family.
The transaction, which is expected to close in the second half of calendar year 2018, is subject to the satisfaction of customary closing conditions and approvals, including approval by Perry Ellis shareholders (including a majority of the shares owned by shareholders other than the Feldenkreis family or any officers or directors of the company), receipt of regulatory approvals and other customary closing conditions.
PJ Solomon is serving as financial advisor to the Special Committee, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Akerman LLP are serving as the Special Committee’s legal counsel and Innisfree M&A Incorporated is serving as the company’s proxy solicitor. SCOPE Advisors LLC is serving as financial advisor to the group led by George Feldenkreis and Olshan Frome Wolosky LLP and Proskauer Rose LLP are serving as legal advisor to the group led by George Feldenkreis. Stearns Weaver Miller Weissler Alhadeff & Sitterson is serving as legal counsel to Oscar Feldenkreis. Kirkland & Ellis LLP is serving as legal advisor to Fortress Credit Advisors LLC and its affiliates.
Perry Ellis International’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 also operates some brands through licensing trademarks from third parties, including: Nike and Jag for swimwear; Callaway, PGA TOUR, Jack Nicklaus for golf apparel and Guy Harvey for performance fishing and resort wear.
Photo courtesy Perry Ellis
