PacSun Rejects Adrenalina’s Second Offer

NEW YORK — Pacific Sunwear of California Inc. Wednesday rejected extreme sports retailer Adrenalina’s second unsolicited bid to buy the company.

The sweetened proposal, reported early on Wednesday, raised the price to $5 a share in a cash-and-stock deal that valued the company at about $329 million.

The price represents a premium of 67 percent above the closing price of PacSun’s shares on Tuesday, or 11 percent higher than the Miami-based retailer’s original offer of $4.50 a share on Oct. 20. The first offer was rejected the next day.

“We believe [PacSun’s] board acted hastily and without full consideration in rejecting our earlier offer,” said Adrenalina CEO Ilia Lekach, who added that PacSun’s shares had declined 20 percent in value since the day before his company’s first offer.

PacSun in a statement called the higher offer “not in the best interests of the company’s shareholders.”

Adrenalina, which operates three stores and had a little more than $329,000 in cash at the end of the second quarter, said it has “identified strategic partners, wealthy individuals and institutional investors” who will provide financial support for the buyout. The company reported $3.8 million in revenue and a net loss of $5.8 million last year.

PacSun has 937 stores and $1.45 billion in revenues.

“I don’t know how they are going to do it,” said Roth Capital Partners retail analyst Liz Pierce, who noted that such a deal would be extremely difficult with tightening credit markets. “I can’t imagine the shareholders agreeing to this, but nothing is ever impossible.”

If anything, she said, this bid “draws attention to how beat up some of these retail stocks are.”

Anaheim, Calif.-based PacSun saw its shares rise 6 percent to $3.18 Wednesday.

Shares of Adrenalina closed at $1.09, flat for the day.

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