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Deal Book: Kenneth Cole’s Board Approves Management Buyout

Date: 07-Jun-2012

By MICHAEL J. DE LA MERCED

Kenneth Cole Productions is ready to put Kenneth Cole solely in charge of Kenneth Cole.

The board of Kenneth Cole Productions said Wednesday that it had accepted a takeover offer by the company’s founder, who plans to take it private.

The announcement caps a lengthy review by a special board committee, which was tasked in February with evaluating Mr. Cole’s proposal. At the time, the clothing magnate argued that his company had lost focus on creating innovative new products, something that he said he would rectify.

Mr. Cole, who is executive chairman, chief creative officer and the biggest shareholder, has said that the pressures of the public markets had caused the company to focus on short-term earnings at the expense of long-term innovation.

The company, known for its slogans that incorporate wordplay often based on news events, has been public since 1994.

The bid, which values Kenneth Cole at about $279 million, or $15.25 a share, represents a 17 percent premium to the clothing maker’s stock price on the day before the management-buyout proposal was disclosed.

Under the terms of the deal, shareholders other than Mr. Cole will be paid $15.25 a share in cash. The financing will be led by Wells Fargo.

“The special committee completed a thorough review of the proposal, considered alternatives, and unanimously concluded that the transaction with Mr. Cole was in the best interests of the company’s shareholders other than Mr. Cole and his affiliates and associates,” the company said in a news release.

The management buyout isn’t complete yet; it is contingent on receiving approval by Kenneth Cole shareholders.

Shares in the company began climbing soon after the board’s decision was announced, hitting $15.04 by midday on Wednesday.

Kenneth Cole’s special committee was advised by Bank of America Merrill Lynch and the law firm Sidley Austin. Mr. Cole was advised by the Peter J. Solomon Company and the law firm Willkie Farr & Gallagher.

Copyright 2012 The New York Times Company