Mill Road Capital Seals Deal With RG Barry

After nearly eight months of negotiations, Mill Road Capital has finalized the acquisition of R.G. Barry Corp. in a deal that values the company at roughly $215 million.

The private equity firm launched a $20-a-share offer for the firm on Sept. 11, 2013, marking the second time Mill Road has attempted to acquire R.G. Barry in the past six years.  R.G. Barry rejected a $77.8 million offer to take the business private in 2009.

Mill Road, which holds at 9.8 percent stake in R.G. Barry, will acquire the remaining portion for $19 a share in cash, or a 5 percent premium over Thursday’s closing price.

The private equity firm lowered its bid by $1 following the due diligence process. The stock is trading near the $19 mark, which suggests the market thinks it is a fair valuation of the company.

R.G. Barry will become a wholly owned unit of a newly formed corporation controlled by Mill Road, although it is able to solicit alternative acquisition proposals from third parties through the end of May.

The deal is expected to close in the third quarter.

“As a privately held company, we expect to continue to invest in the long-term growth and acquisition strategies that we believe will propel R.G. Barry Brands into a true leader in the accessories marketplace,” R.G. Barry CEO and President Greg Tunney said in a statement.

Scott Scharfman, managing director of Mill Road, added, “We have been a shareholder of R.G. Barry for many years and are pleased to increase our existing 9.8 percent stake in this great company.  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.”

Separately, R.G. Barry reported net earnings per diluted share of 22 cents for the third quarter, versus 13 cents year-on-year.

Revenue for the period was $26.1 million, up from $25.8 million in the prior corresponding period.

On the quarterly result, Tunney said, “The greatest test our business faces continues to be identifying and retaining profitable top-line growth in existing segments while adding new, category-appropriate drivers in other parts of the accessories universe.”

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