Kenneth Cole is tired of investors nosing around his business — and that means potential acquirers, too.
The 57-year-old clothing and footwear designer yesterday offered $15 a share to take his struggling fashion firm private. While that price tag equates to $280 million, shares in Kenneth Cole Productions surged as high as $16 — meaning investors were none too impressed by the offer.
The shares yesterday closed at $15.49, up 18.5 percent.
Nevertheless, Cole — who owns 47 percent of the company’s stock and controls 89 percent of its voting power — made it clear in a letter to the company’s board that he wouldn’t support any rival bids, regardless of price.
“I am convinced that private ownership is in the best interests of the business and the organization and that this proposal is in the best interests of the shareholders,” Cole wrote in the letter, which was sent to the company’s board late Thursday.
Some shareholders appeared to disagree, as more than a half-dozen law firms promptly announced they would challenge the deal.
“Analyst targets are above the proposed buyout price, with at least one analyst setting a target of $17 per share,” the law firm Brower Piven said in a statement yesterday.
At least one shareholder did sue the company.
Cole’s refusal as controlling shareholder to entertain rival bids puts the company’s board in an awkward position. Typically, directors are obligated to seek the highest bid they can find.
Indeed, the situation echoes the controversial takeout of J. Crew last year, in which CEO Mickey Drexler refused to work with any prospective buyers apart from private-equity giant TPG. J. Crew was taken private for $3 billion after a slew of legal tussles.
Cole, who said he plans to raise funds from third-party investors, took the company public in 1997 after founding it in 1982.