Business

Buyers don’t see True Religion

True Religion may need to take a markdown if it wants to move off the shelf.

The denim maker’s board this week ousted founder Jeff Lubell — an eccentric entrepreneur who had been seen as an obstacle to a deal since the company announced last October it had put itself on the block.

Nevertheless, the three remaining prospective bidders circling the company have dropped out of the auction, sources said.

Gores Group, Sycamore Partners and a third private-equity firm have all “put their pencils down,” according to a financial source, because they believe True Religion’s shares have become too expensive.

“A deal around $30 a share might be realistic, but at current levels, you’d have to pay $33 to $34 to get a deal done,” according to the source.

Shares of True Religion rose 67 cents yesterday to $27.83.

Last month, the shares jumped 22 percent in a single day as the jeans maker delivered better-than-expected quarterly results and an upbeat outlook for 2013. They were trading in the low $20s before the sales process started.

But prospective buyers are skeptical whether the current management team can maintain its momentum as the outlook for spending on pricey jeans looks iffy.

“Look for a waiting game,” said one banker briefed on the situation. “The buy side [is] betting that the stock is eventually going to come back down again — then they might pounce.”

This week, speculation rose that Lubell’s departure might grease the wheels for a deal. His employment agreement included a $25 million golden parachute in the event of a sale.