George Feldenkreis, former chief executive officer and chairman of Perry Ellis International, has made an offer to acquire the company with the financial backing of Fortress Investment Group LLC, according to a Securities & Exchange Commission filing.
The proposal includes purchasing all of the company’s stock for $27.50 per share in cash, representing a premium of about 22 percent over Monday’s closing price, the SEC filing said. Perry Ellis International shares were trading at $27.05 Wednesday morning on NASDAQ. For the nine months through Oct. 29, Perry Ellis had revenues of $656.9 million.
Feldenkreis, the leading shareholder of Perry Ellis International, said he submitted the acquisition proposal as he’s not comfortable with the motivations, strategy and oversight of the existing board and believes stockholder value will suffer under its stewardship.
In connection with the proposal, Fortress said it would consider committing $300 million of debt and/or equity financing toward the proposed acquisition.
In a letter to the board, Feldenkreis said, “As you know, I am the largest stockholder of Perry Ellis International Inc. owning approximately 11.3% of the company’s outstanding common stock. I am also the founder of Supreme International, which started designing and importing apparel in 1967, eventually went public in 1993, and changed its name to Perry Ellis International Inc. upon completing the acquisition of the brand in 2000. I have been an owner of the company for over 50 years, its president, CEO, and chairman of the board since 1967 until September 2017, and continue to be a member of the…board of directors. Accordingly, I care deeply about the long-term health and growth of the company.”
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“As the largest single shareholder…I am not prepared to stand by and see my economic interest mismanaged,” he continued. “After careful consideration and analysis, I believe the most favorable alternative for all stakeholders is a ‘going private’ transaction that I propose herein with the financial support of Fortress Credit Advisors LLC.”
The branded apparel and retail sector is in the midst of unprecedented disruption and competition, Feldenkreis said, adding that it necessitates “conviction in strategy and long-term orientation toward investment in our brands, capabilities and people,” and under its current status as a public company, Perry Ellis is “constrained by short-term objectives and a risk averse board unprepared to underwrite the business initiatives and opportunities that will drive shareholder value. Shareholders will suffer under the status quo.”
Perry Ellis International is a designer, distributor and licensor of a broad line of men’s and women’s apparel, accessories and fragrances. The company owns a portfolio of brands, including 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 enhances its roster of brands by licensing trademarks from third parties, including Nike and Jag for swimwear, and Callaway, PGA Tour and Jack Nicklaus for golf apparel, and most recently Guy Harvey for performance fishing and resort wear.
Under private ownership, Feldenkreis said the company, its licensees and its employees “would benefit greatly in the long run” and enable Perry Ellis “to execute a long-term value creation strategy,” Feldenkries said.
Perry Ellis said its non-executive chairman intends to recommend that the board form a special committee of its non-executive, independent directors to evaluate the proposal and determine the best course of action.
Feldenkreis was executive chairman of the company he founded until September, when he was ousted by the board. His son, Oscar Feldenkreis, is the current CEO.
Feldenkreis has engaged SCOPE Advisors LLC as financial advisor and Olshan Frome Wolosky LLP and Stearns Weaver Miller Weissler Alhadeff & Sitterson as legal counsel. Fortress has hired Kirkland & Ellis LLP as its legal counsel.
In his letter, Feldenkreis added, “To the extent I fail to hear a favorable response from the board to my proposal by March 10, 2018, I intend to evaluate all of my options as a stockholder of the company and take appropriate action with respect to my investment.”