Men’s accessories company Randa Accessories submitted a $28-a-share bid for Perry Ellis that could upend Perry Ellis founder and former executive chairman George Feldenkreis’s $27.50-a-share deal to take the apparel company private.

The offer, which translates to about $444 million in equity, represents a 3 percent premium to Perry Ellis’ closing price on Friday.

Perry Ellis in June agreed to be taken private for $437 million by Feldenkreis. He and his son Oscar Feldenkreis, the chief executive officer, together are the company’s biggest investors.

Randa, which houses licenses for popular brands such as Levi’s, Timberland and Tommy Hilfiger, said the deal would be an all-cash transaction as opposed to Feldenkreis’ offer, which would be financed with a combination of debt and equity. The company had both an asset based loan from one of the major banks and a term loan commitment to fund the all-cash deal.

Jeffrey Spiegel, chief executive officer of Randa Accessories, said, “Randa believes we are the right acquirer of Perry Ellis, and that our compelling proposal provides shareholders with a superior alternative to the previously agreed insider transaction. We are excited by the opportunity to grow our portfolio of brands through the addition of globally recognizable names such as Perry Ellis and Original Penguin. With our long, successful history as a licensee for, among others, Levi’s, Dickies, Tommy Hilfiger, Chaps, Columbia Sportswear and Timberland, we believe we can continue and grow the relationships with Perry Ellis’ inbound licensors for the benefit of all stakeholders in those relationships.”

In a letter to Perry Ellis’ shareholders, Spiegel wrote, “Randa is keenly interested in growing its portfolio of owned and licensed brands—ideally, by acquiring and licensing brands with global appeal. In Perry Ellis, Original Penguin and others within the company’s portfolio, Randa sees brands with such potential.

“Randa has the resources and expertise to consummate the proposed transaction quickly, with limited disruption to the business of the company. Further, Randa has significant experience in closing complex transactions, having completed numerous acquisitions over the past 20 years, including that of a publicly-traded company.”

In response, the special committee of Perry Ellis International’s board of directors, which is composed of the independent directors, reaffirmed its intention to recommend that all Perry Ellis shareholders vote for the Feldenkreis transaction.

The committee noted that the purchase price of the Feldenkreis transaction 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.

The committee considered, in relation to a 1.8 percent potential price increase from Randa’s unsolicited proposal, among other things, that:

  • the proposal is highly conditional, non-binding and insufficient in terms of value and certainty of the provided debt financing commitments, as well as the lack of evidence of sufficient cash equity on hand;
  • the additional timing to enter into and complete a potential transaction with Randa;
  • the inclusion of an unprecedented 3 percent fee payable by the company to Randa if shareholders vote down the transaction, compared to no such penalty if shareholders vote down the Feldenkreis merger and
  • a number of other terms affecting shareholder value or certainty are inferior, including termination fees, additional risks to closing and the lack of appraisal rights for shareholders.

Perry Ellis wrote, “Based on the totality of the circumstances considered in comparison to the potential for a slight price improvement, the Special Committee concluded that re-engaging with Randa at the price offered was not in the best interest of shareholders. The Special Committee continues to unanimously believe that the Feldenkreis merger agreement is in the best interest of all.”