Private-equity fund Sun Capital Partners may be readying a new weapon in its battle to acquire the beleaguered apparel maker Kellwood.
The Florida-based buyout fund – whose $544 million offer for the Missouri-based manufacturer of labels like Phat Farm and Sag Harbor was rejected in October and again in November – is mulling a hostile conditional tender offer for the Kellwood shares it doesn’t already own, The Post has learned.
The key condition of the offer, which would match Sun Capital’s previous offers of $21 a share, would be the removal of a poison pill in Kellwood’s shareholder rights plan that prevents any one holder from owning more than 20 percent of the company, according to a source who spoke on the condition of anonymity.
Such conditional tender offers – extreme moves taken by hostile bidders to circumvent uncooperative boards – also are typically conditioned on a certain majority percentage of shareholders accepting the offer.
The conditional percentage in Sun Capital’s possible tender for Kellwood – which would be made in the next couple of weeks – wasn’t immediately clear.
But while Kellwood currently requires 75 percent of the shareholder vote for any takeover instead of the usual simple majority, that percentage could potentially fall with the board’s cooperation, sources say.
Given the broad weakness seen by retailers this holiday season, some industry insiders speculate that Kellwood’s board may be more amenable to making a deal this spring than they were in the fall.
Still, with its offer of $21 a share having been rebuffed twice last year, Sun Capital isn’t necessarily betting that its talks with the board will warm up, according to one source familiar with the buyout firm’s thinking.
Instead, Sun Capital would be banking on a healthy majority of shareholders to accept its tender. While Kellwood’s board could still block the tender, a convincing show of shareholder support might compel the board to reconsider Sun Capital’s offer ahead of the company’s annual meeting, which is slated for March.
“Clearly, the more people that vote for it, the bigger message it is to the board,” the source told The Post.
A conditional tender by Sun Capital would make good on its tough talk in a November letter to Kellwood, in which it said it is “prepared to take all necessary steps to protect” its stake in Kellwood, which it said amounted to 9.9 percent of the company at the time.
Kellwood has taken a number of steps to protect its board members. A vote of at least 75 percent is required to remove a director, and only half of its board comes up for reelection in a given year.
Kellwood shares rose $1.14, or 6.9 percent, to $17.78 yesterday.