Struggling apparel maker Kellwood advised its shareholders not to act on a hostile buyout bid from Sun Capital, saying its board will review the $544 million cash offer with the help of bank advisers.
Confirming an exclusive Jan. 3 report by The Post, Sun Capital this week took a $21-a-share offer for Kellwood – which makes Phat Farm, Baby Phat, Sag Harbor and other mid-price clothing brands – directly to shareholders, bypassing the board that had rejected its advances twice before.
Sun Capital, which currently owns 9.9 percent of Kellwood, said that if an agreement isn’t reached in the near term, it will nominate its own slate of directors to the company’s board this spring.
The news sent shares of Kellwood soaring $1.61, or 9.8 percent, to $18.12.
In a statement, Kellwood noted that Sun Capital’s latest offer is at the same price as its previous two rejected offers in September and November, which it said were “not in the best long-term interests of Kellwood and its shareholders.”
In a letter this week to Kellwood, Sun Capital Vice President Jason Bernzweig said the Florida-based private-equity shop is “disappointed that Kellwood’s board is unwilling to enter into a constructive dialogue.” He charged that Kellwood’s board has embraced a “highly speculative strategic plan” to turn around the company’s brands.
Sun also said its $21-a-share offer will be cut to $19.50 if Kellwood doesn’t terminate a recent $60 million tender offer for senior debt due July 2009. Sun Capital said it has requested access to certain records from Kellwood to gauge the impact of the debt tender on shareholders.