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Kenneth Cole board approves CEO's buyout
07
Jun '12
Kenneth Cole Productions Inc. announced that it has entered into a definitive merger agreement under which Kenneth D. Cole, Chairman and Chief Creative Officer of the Company and the beneficial holder of approximately 46% of the Company's outstanding common stock (representing approximately 89% of the voting power), will acquire the Company through KCP Holdco, Inc., an entity he controls that was formed for the purposes of the acquisition.

Under the agreement, the Company's shareholders, excluding Mr. Cole and his affiliated entities, will receive $15.25 per share in cash upon completion of the transaction.

The price represents a premium of 17% to the closing price of the Company's shares on February 23, 2012, the last trading day before the announcement by Mr. Cole of his proposal, and a premium of 28% over the average closing price of the Company's Class A common stock for the 45 trading days prior to that date, and implies a total enterprise value of approximately $245 million.

A special committee of the board of directors, comprised of all of the directors of the Company other than Kenneth Cole and Paul Blum, was formed in February 2012 to review the proposal from Mr. Cole, with the assistance of independent legal and financial advisors.

The special committee completed a thorough review of the proposal, considered alternatives, and unanimously concluded that the transaction with Mr. Cole was in the best interests of the Company's shareholders other than Mr. Cole and his affiliates and associates. Based on the unanimous recommendation of the special committee, the agreement was also approved by the full board other than Mr. Cole, who abstained.

Completion of the transaction is subject to certain closing conditions, including receipt of shareholder approval and other customary conditions. The merger agreement contains a non-waivable condition that a majority of the outstanding shares of the Company not owned by Mr. Cole and his affiliates and associates vote in favor of the adoption of the merger agreement.

In addition, Wells Fargo Bank, N.A., part of Wells Fargo & Company, and certain other parties have entered into a binding commitment letter to provide debt financing in the event the closing conditions have been met, and Cole Family Holdco, LLC, an entity formed by Mr. Cole, and another third party have entered into binding commitment letters to provide equity financing in the event the closing conditions have been met.

BofA Merrill Lynch is acting as financial advisor to the special committee, and Sidley Austin LLP is acting as legal advisor to the special committee.

Peter J. Solomon Company is acting as financial advisor to Mr. Cole, and Willkie Farr & Gallagher LLP is acting as legal advisor to Mr. Cole.

Kenneth Cole Productions, Inc. designs, sources, and markets a broad range of footwear, handbags, apparel and accessories under the brand names Kenneth Cole New York; Kenneth Cole Reaction; and Unlisted, as well as footwear under the proprietary trademark Gentle Souls.

Kenneth Cole Productions Inc


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