RG Barry to Go Private in $215 Million Deal

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Dearfoams slippers is one of RG Barry's best performing brands

Dearfoams slippers is one of RG Barry’s best performing brands

Pickerington, OH—After several months of speculation about whether RG Barry would go private, the accessories company today confirmed that Mill Road Capital, the private equity firm, would be taking over the company for $19 a share for an equity value of $215 million.

RG Barry’s board of directors unanimously approved the sale, which is subject to customary closing conditions and is expected to close in the third quarter. When it does, RG Barry, which owns Dearfoams, baggallini and Foot Petals, will become a wholly-owned subsidiary of a newly-formed corporation controlled by Mill Road.

“Mill Road has a clear understanding of our vision for the business,” President/CEO Greg Tunney. “As a privately-held company, we expect to continue to invest in the long-term growth and acquisition strategies that we believe will propel RG Barry brands into a true leader in the accessories marketplace. We look forward to this partnership.”

Q3 Profit Jumps 66.2%

Mill Road, which had a 9.8% stake in RG Barry, had urged the company go private to take the necessary steps to expand and/or grow.

“We have great confidence in the outstanding senior management team led by Greg Tunney and believe in their ability to successfully implement the long term strategic plan,” added Scott Scharfman, managing director at Mill Road.

In other news today, RG Barry reported a 66.2% jump in its third quarter earnings.

For the quarter ended March 31, RG Barry posted net income of $2.56 million, or 22 cents a share from last year’s $1.54 million, or 13 cents a share. The latest results included a $2.4 million non-taxable gain related to the death benefit of insurance policies on the life of former Chairman Gordon Zacks, who died Feb. 1.

Net sales grew 4.6% to $26.13 million from $25.80 million a year ago.

Gross profit as a percent of net sales at 44.1% compared to 45.9% one year ago. Selling, general and administrative expenses were up 19% to $11.4 million as a result of continuing investment in long-term growth initiatives and costs related to the merger transaction.

By divisio, footwear sales were about flat at$16.6 million compared with $16.4 million one year ago. In the Accessories segment, net sales rose 1.2% to $9.5 million.

Following RG Barry’s announcement of the Mill Road merger, several lawyers including a former Securities and Exchange Commission attorney, said they would be investigating the Mill Road merger since its $19 a share offer was below the “inherent value of the company” of at least $21 a share.



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