A private equity firm, Sun Capital paid $21 a share for Kellwood in February in a hostile takeover valued at $767 million, including the debt assumed from Kellwood. At the time, Sun Capital blasted Kellwood management for badly mismanaging its brands, reducing or missing initial earnings guidance for five years running and losing half its equity value since 1988.

Sources indicate that Sun Capital is now moving to break Kellwood into four entities – American Recreation, Gerber, Hanna Andersson and a legacy Kellwood that would keep the company’s struggling women’s sportswear business.  American Recreation, Gerber and Hanna Andersson were thought to be generating most of Kellwood’s profits when it was acquired.

Kellwood lost $59.5 million on flat sales of $1.14 billion in the nine months ended Nov. 3, 2007.
American Recreation Products includes the Kelty, Sierra Designs, Slumberjack and Royal Robins brands. Kellwood was already consolidating those business at a new office building in Boulder, CO., when Sun Capital Partners launched its unsolicited bid in February.
Sun Capital specializes in investing in turnaround situations and underperforming companies with sales of $50 million to $5 billion. 

 

The company currently has $10 billion of equity capital under management, including extensive holdings in casual dining, retailing and textiles.  Sun Capital usually holds companies for three to seven years before selling them.