The special committee of the Perry Ellis International Inc. board on Thursday reaffirmed its intent to recommend that shareholders vote in favor of the $437 million offer from George Feldenkreis to take the company private, rejecting a $444 million offer for the company made by Randa Accessories Leather Goods LLC.
The reaffirmation confirms a WWD story Tuesday night that the company was electing to stick with its earlier commitment. That article also noted that Randa’s public disclosure of its offer on Tuesday was the proverbial “second bite at the apple” for the company, since a story last month said there had been a men’s accessories firm in discussions with the special committee while it was evaluating the Feldenkreis deal. Randa executives declined to comment on Thursday, but the special committee confirmed that the accessories firm was indeed Randa.
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Perry Ellis last month, on the special committee’s recommendation, inked an agreement with founder George Feldenkreis. On Monday, Randa submitted a nonbinding competing offer of $28 a share that was 50 cents higher than the $27.50 offered by Feldenkreis. The inked purchase price at $27.50 a share in cash represents a premium of 21.6 percent to the shares’ closing price on Feb. 5, the last trading day prior to Feldenkreis revealing his proposal to take the company private.
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Investors are still hoping for more. Shares of Perry Ellis fell 3 percent Thursday to $28.40, or 40 cents ahead of Randa’s offer and 90 cents above Feldenkreis’ terms.
Perry Ellis’ special committee noted that Randa’s July 1 proposal was “not solicited,” and said it was “substantially similar to a nonbinding $27.75 per share proposal made by Randa” during the committee’s strategic review process.
Specifically, the special committee said it unanimously determined, after consulting with legal and financial advisers, that the “Randa proposal does not satisfy the requirements in the Feldenkreis merger agreement for granting due diligence access or commencing negotiation with respect to a competing takeover proposal.”
It also noted that the proposal is “highly conditional, nonbinding 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.” Other factors of concern for the special committee were the additional timing to enter into and complete a potential transaction with Randa, as well as the “inclusion of an unprecedented 3 percent fee payable by [Perry Ellis] to Randa if shareholders vote down the transaction, versus no such penalty if shareholders vote down the Feldenkreis merger.”
The special committee also noted that there were other terms that impacted shareholder value or certainty that it deemed “inferior,” which include additional risk to closing as well as termination fees.
“Based on the totality of the circumstances considered in comparison to the potential for a slight price improvement, the special committee concluded that reengaging with Randa at the price offered was not in the best interest of shareholders,” it said.
Executives at Randa said at press time that they were preparing a response, and that one would be forthcoming.