Perry Ellis International Enters into a $437 Million Transaction to Become a Private Company
MIAMI -- Perry Ellis International (NASDAQ:PERY) ("Perry Ellis" or the "Company") today announced it has entered into a 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, will acquire all of the outstanding common shares of Perry Ellis not already beneficially owned by the Feldenkreis family for $27.50 per share in cash. Additionally, the Company and George Feldenkreis have agreed to defer the next annual meeting for the election of directors while the merger agreement is pending.
The purchase price represents a premium of approximately 21.6 percent to Perry Ellis' unaffected closing stock price on February 5, 2018, the last trading day prior to George Feldenkreis announcing his proposal to take the Company private. The transaction is valued at approximately $437 million.
The transaction was unanimously approved by the Perry Ellis Board of Directors, acting on the unanimous recommendation of a Special Committee of independent directors that was granted full authority to conduct a comprehensive strategic review and evaluate and, if warranted, negotiate the Feldenkreis acquisition proposal.
"The Special Committee and its advisors conducted a disciplined and independent process to ensure the best outcome to maximize value for shareholders. We believe, upon the closing, that this transaction delivers an immediate cash premium and is in the best interest of all Perry Ellis shareholders," said J. David Scheiner, Non-Executive Chairman of the Perry Ellis Board of Directors and Chair of the Special Committee.
"I believe this transaction will open an exciting new chapter for Perry Ellis, our customers and employees. The markets the Company competes in have undergone transformative changes and I believe that Perry Ellis' ability to invest and innovate is limited by the short-term pressures of being a public company. The transaction delivers immediate value to shareholders amid an environment of unprecedented disruption and competition. I am confident that as a private company, Perry Ellis will be best positioned to make investments in digital innovation, artificial intelligence and marketing, that support our long term strategy to grow the Company's powerful global lifestyle brands, while expanding into higher-margin businesses and channels of distribution, including international, direct-to-consumer and licensing," said George Feldenkreis, founder and Director of Perry Ellis.
"Since its founding, Perry Ellis has been a renowned influencer of fashion and a magnet for highly creative individuals and brands. The completion of this transaction will enable Perry Ellis to preserve the integrity of its infrastructure and business units across the United States and abroad. Our partners should benefit from our enhanced ability to make long term investments in brands, technology and innovation while continuing to remain focused on executing on our long term growth strategy. Perry Ellis intends to be at the forefront of the crucial digital transformation of the apparel industry from marketing to e-commerce, to applications of artificial intelligence," said Oscar Feldenkreis, Chief Executive Officer of the Company.
"Fortress is delighted to support the founding family of Perry Ellis in a transaction that positions the business for growth and success in the years to come," said Josh Pack, Managing Partner of Fortress Investment Group.
Following completion of the transaction, Oscar Feldenkreis will continue to lead the company as Chief Executive Officer. George Feldenkreis, Director and Founder, will return to an active role in the management of the Company. Perry Ellis will continue to be headquartered in Miami, Florida. Upon close, Perry Ellis will become a privately held company and Perry Ellis common shares will no longer be listed or traded on any public market.
The transaction will be financed through a Senior Secured Asset Backed Revolving Loan Facility underwritten by Wells Fargo Bank, N.A., a $282 million multi-tranche term financing facility provided by Fortress Credit Advisors LLC and equity provided by the Feldenkreis family.
The transaction, which is expected to close in the second half of calendar year 2018, is subject to the satisfaction of customary closing conditions and approvals, including approval by Perry Ellis shareholders (including a majority of the shares owned by shareholders other than the Feldenkreis family or any officers or directors of the Company), receipt of regulatory approvals and other customary closing conditions.
PJ SOLOMON is serving as financial advisor to the Special Committee, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Akerman LLP are serving as the Special Committee's legal counsel, and Innisfree M&A Incorporated is serving as the Company's proxy solicitor. SCOPE Advisors LLC is serving as financial advisor to the group led by George Feldenkreis, and Olshan Frome Wolosky LLP and Proskauer Rose LLP are serving as legal advisor to the group led by George Feldenkreis. Stearns Weaver Miller Weissler Alhadeff & Sitterson is serving as legal counsel to Oscar Feldenkreis. Kirkland & Ellis LLP is serving as legal advisor to Fortress Credit Advisors LLC and its affiliates.
About Perry Ellis International
Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories and fragrances. The Company's collection of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men's and women's swimwear is available through all major levels of retail distribution. The Company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis®, An Original Penguin® by Munsingwear®, Laundry by Shelli Segal®, Rafaella®, Cubavera®, Ben Hogan®, Savane®, Grand Slam®, John Henry®, Manhattan®, Axist®, Jantzen® and Farah®. The Company enhances its roster of brands by licensing trademarks from third parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR®, Jack Nicklaus® for golf apparel and Guy Harvey® for performance fishing and resort wear. Additional information on the Company is available at http://www.pery.com.
About George Feldenkreis
George Feldenkreis is the founder of Supreme International, which started designing and importing apparel in 1967, eventually went public in 1993, and changed its name to Perry Ellis International, Inc. upon completing the acquisition of the brand in 2000. George Feldenkreis has been an owner of the Company for over 50 years, its president, CEO, and Chairman of the Board since 1967 until September 2017, and continues to be a member of the Board.