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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Everlast: Expect a Scuffle by Kopin Tan

Summary: On June 1, Boxing equipment maker Everlast Worldwide Inc. (EVST) announced it would sell the company to one of its licensees, Hidary Group, for $26.50/share ($146 million) -- a 14.5% premium over the previous day's close and 30% higher that its average May price. But shareholders say management is low-balling the company, which has seen its shares skyrocket 560% over the past 19 months. A fund with a 2.3% stake says it will oppose the offer, and another with a 4% stake asks why logical bidders like Nike Inc. (NYSE:NKE), Under Armour Inc. (NYSE:UA), Adidas and Puma weren't contacted. Barron's calls the 30-day "go shop" clause insincere due to its hefty $4.5M breakup fee, and notes that CEO Seth Horowitz (who promises to vote his 19.2% stake in favor of the bid even if a better offer comes in) recently removed buyout compensation limitations from his contract. Everlast has new growth vehicles lined up, including launching a new footwear line, and pacts to start selling its wares in China in 2008. In a letter to the board, a shareholder argues that with assumed 20% revenue growth, 10x 2008 Ebitda [earnings before interest, taxes, depreciation and amortization] gives shares a $40 value.

Related Links: Everlast Worldwide: Aquamarine Capital Calls Buyout Offer Under-PricedEverlast Worldwide: Burlingame Asset Concerned About Stock OfferingEverlast: Small-cap Punching To Industry Lead

Everlast 17 06 2007

Source: Everlast's $26.50 Buyout Price Is Too Low - Barron's