Analysts: Kenneth Cole Buyout A Positive Move

Analysts said Wednesday they were confident Kenneth Cole Productions Inc. would fare better as a private company than a public one.

Sterne Agee analyst Sam Poser, speaking from the Kenneth Cole showroom Wednesday, said it was business as usual.

But he was upbeat about the firm’s new path. “They couldn’t grow the business as a public company the way people thought they could,” he said. As for the price, “it ended up 25 cents higher. Could it have been higher? It is what it is.”

The New York-based firm said Wednesday it has entered into a definitive merger agreement under which Kenneth Cole, chairman and chief creative officer, will acquire the shares he does not already own, through KCP Holdco Inc., an entity he formed for the purposes of the acquisition.

Cole first offered on Feb. 23 to buy the company he founded for $15 a share. After analysts said the firm could be worth up to $17 a share, the company’s market cap rose to $16 a share in March and April.

Eventually, a special committee of the board of directors, composed of all the directors of the company other than Cole and CEO Paul Blum, unanimously voted for the deal for $15.25 a share. Cole abstained from the vote.

The offer price still values the company at a premium of 17 percent to its closing price on Feb. 23. The firm’s stock shot up in trading Wednesday to $15.05, from $14.60.

Jeff Van Sinderen, analyst at B. Riley & Co., said, “I thought Kenneth could’ve offered a dollar more. He and [CEO] Paul [Blum] are going to do very well, having vested interests in the company. Paul is a really good brand manager.”
He added, “This should’ve happened years ago and now that it has, it’ll work out very well for Kenneth, having bought it at this price. At the end of the day I wouldn’t be surprised to see the company taken public again one day — and at a much higher valuation.”
In the event the closing conditions have been met, Wells Fargo Bank N.A., part of Wells Fargo & Co., will provide debt financing, while Cole Family Holdco, an entity formed by Cole and an unnamed third party, will provide equity financing.

AGL Sponsored By AGL

Differentiating Through Data and Design

Footwear brand AGL puts forth a contemporary and cool aesthetic rooted in quality and Italian craftsmanship.
Learn More

Access exclusive content