Buyout Bids Likely for “Bargain Priced” Collective Brands?

Easter at Payless ShoeSource

Topeka, KS—Collective Brands Inc., parent to Payless ShoeSource, Sperry Top-Sider and Stride Rite, may be purchased for a bargain amount this month if prospective bids for the company come through.

According to a report by Bloomberg News, Collective Brands is seeking final offers by the end of the month from South Korea-based E-Land Group and Brown Shoe.

Although final offers haven been received, reported bids would have the company at $20 to $22 a share, or about $1.33 billion. That’s about a 62% discount to sales, less than any of the company’s publicly traded rivals, Bloomberg reported.

Last year, faced with growing losses (its debt may exceed $500 million) and plans to close 475 under-performing Payless and Stride Rite stores, Collective launched a new strategy that included working with Perella Weinberg Partners LP and Kurt Salmon to explore strategic options.

Out of an original pool of 10 potential buyers, only a handful still remain interested, Bloomberg said.

According to Maeil Business Newspaper in South Korea, E-Land offer a $1.8 billion joint bid, or even a solo bid. And Brown Shoe may make its bid with with Cerberus Capital Management LP. Other private equity firms who may be interested include Golden Gate Capital Corp. and Leonard Green & Partners LP.

 

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