Kenneth Cole Takes His Company Private

Kenneth Cole

New York–Kenneth Cole, chairman and chief creative officer at his namesake apparel and accessories company, will now have total control of his company’s stock, making it a private corporation once again.

In a deal worth an estimated $245 million, the company’s board of directors Wednesday approved the designer’s offer to buy the rest of the company’s shares at $15.25 a share. That’s up from his initial offer in February for $15 a share and represents a 17% premium on the company’s stock price before his first bid.

Previously Cole held about 46% of Kenneth Cole Productions outstanding common stock and controls 89% of its voting power. Cole will acquire the company through KCP Holdco, Inc., an entity formed for the purposes of the acquisition.

Cole founded the company in 1982 and it has expanded to sell footwear, handbags, apparel and accessories under brands including Kenneth Cole New York, Kenneth Cole Reaction, Unlisted and Le Tigre.

‘Private Ownership in the Company’s Best Interest’

But in recent quarters the company has been under pressure, with sales declines in the last two quarters.

In a letter to the board in February, Cole indicated that the company’s future growth would be easier as a private entity.

“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. I am convinced that private ownership is in the best interests of the business and the organization and that this proposal is in the best interests of the shareholders,” Cole wrote to the board.

The company, which is debt free and has some $58 million in cash, formed a special committee in February consisting of all its board members, save Cole and Paul Blum, ceo, to review Cole’s offer.

“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,” the company said in a statement.

 

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