Perry Ellis (PERY 27.30, -0.67, -2.4%) moves slightly
lower after news out Saturday that the company come to an agreement with
shareholder/founder George Feldenkreis.
The definitive merger agreement, under which a newly formed entity controlled by George Feldenkreis, Perry Ellis’ founder and member of the company’s Board of Directors, would acquire all of the outstanding common shares of Perry Ellis not already beneficially owned by the Feldenkreis family for $27.50/share in cash is valued at around $437 mln.
The purchase price represents a premium of about 21.6% to Perry Ellis’ unaffected closing stock price on February 5, 2018, which was the last trading day prior to Mr. Feldenkreis announcing his initial proposal to take the company private.
As mentioned the deal talks that first began in early February at which time Mr. Feldenkreis confirmed press reports from the prior day of his intention to take the company private via a $27.50 per share offer. As detailed in an Acquisition Proposal made by Mr. Feldenkreis, the Acquisition Proposal was directly in response to Mr. Feldenkreis not feeling comfortable with the motivations, strategy, and oversight of the existing Board, a concern he believed would only allow shareholder value to suffer. Mr. Feldenkreis intended to communicate with the Issuer's management, Board, and other stockholders about the Acquisition Proposal and a broad range of other strategic and operational matters, as a means of enhancing stockholder value.
Toward the end of February, Perry Ellis formed a special committee to evaluate Mr. Feldenkreis’ proposal. The committee then updated investors in mid-March, stating only that the committee was continuing to evaluate the proposal. The stock saw a muted reaction to the company’s fourth quarter results, which were released the day after the 'update.'
Another such ‘update’ would be announced in early April with no concrete evidence that a deal would be done. Then in a likely attempt to speed along the evaluation by the committee, in mid-May Mr. Feldenkreis announced his nomination of four individuals to the board. Less than one calendar week later Mr. Feldenkreis put the pressure on management, threatening to withdraw his offer were the committee to refuse to commit to an expedited conclusion of the sales process. Management quelled investor concern ahead of the next quarterly results, which were due the following week, stating it was still engaged in ‘good faith’ with Mr. Feldenkreis.
After getting their ducks in a row Perry reported first quarter results on May 31. The stock traded in a wide range the following session, and the stock has traded in a range of about one dollar since that time.
Additionally, the company and Mr. Feldenkreis have agreed to defer the next annual meeting for the election of directors while the merger agreement is pending.
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