Sun Capital Threatens to Make Kellwood Bid Hostile

Sun Capital Partners is threatening to take its $544 million buyout offer for Kellwood Co. to the company's shareholders unless the apparel maker's board reconsiders its rejection of the bid, the online Wall Street Journal reported Tuesday. "Our strong preference is to acquire Kellwood in a friendly negotiated transaction, but we are prepared to take all necessary steps to protect the value of our existing 9.9% ownership position in Kellwood, including making a $21 per share offer directly to Kellwood's shareholders," Sun Capital wrote to Kellwood's board on Monday. Last month, Kellwood's board rejected the offer -- featuring a 38% premium over the company's previous closing share price -- arguing that it undervalued the company's assets. The offer followed a $66 million second-quarter loss that sent Kellwood shares to a seven-year low. Meanwhile, Kellwood's board has implemented a number of rules that could complicate matters if Sun Capital decides to pursue a hostile tender or proxy contest. These include a "poison pill" that could be deployed to block a tender, a 75% shareholder vote for approval of a takeover, and the company has staggered board elections to make it impossible for shareholders to dismiss a majority in any given year.

Sources: Wall Street Journal, Reuters
Commentary: Sun Capital Offers to Acquire Kellwood Company • Kellwood Company: A Share Price in Tatters • Kellwood Company: Sun Capital Discloses 8% Stake
Stocks to watch: KWD. Competitors: RL, WRNC

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