Fashion designer Kenneth Cole is taking the publicly traded company that bears his name private in a deal that values it at $279m.
Kenneth Cole Productions, listed on the New York Stock Exchange, sells clothing and accessories through its own retail locations, wholesale distribution and licensing agreements. Full-year revenues were up 5 per cent to $479m for 2011.
Mr Cole, who is chairman and chief creative officer of the company, already held 46 per cent of the common stock, representing about 89 per cent of voting rights. Shareholders excluding Mr Cole will receive $15.25 per share, a 17 per cent premium to the price before the announcement of his proposal in February.
Mr Cole drew on a number of sources to finance the deal, according to people familiar with the company. He is rolling over the entirety of his equity position, worth an estimated $130m, and has struck a deal with co-investors. Wells Fargo is providing debt financing, including a revolving credit facility and a term loan worth a combined $165m.
The company had $58m on hand at the end of last year and is debt free.
Mr Cole has said that quarterly reporting required as a public company put short- term pressures on the company that inhibited product innovation. While overall revenues were up last year, sales at company stores were down 15 per cent.
“Recent market challenges have created a sharply competitive landscape, and I believe it is now more important than ever to embrace a more entrepreneurial perspective where we are all incentivised to grow and develop our company’s products, brand and business with a longer term perspective,” said Mr Cole at the time of his proposal.
“I believe it is increasingly difficult to develop this type of culture in a public company context, where the public markets are increasingly focused on short-term results.”
As he assess the long-term future of his company, Mr Cole may be looking to Michael Kors, another American designer, as an example. After growing his company in private for years, Mr Kors last year took his eponymous company public in one of the most successful IPOs of the year. Michael Kors raised nearly $1bn in the offering, and shares are up 60 per cent since the December offering.
Mr Cole was advised by the Peter J Solomon Company, while Kenneth Cole’s special committee was advised by Bank of America Merrill Lynch.