US: Hidary-led group to acquire Everlast for $146m
Everlast Worldwide Inc on Friday (1 June) agreed to be acquired and taken private by an investment consortium headed by The Hidary Group for US$146m.
Under terms of the agreement, shareholders would receive $26.50 in cash for each share held, a 14.5% premium to the closing price of the stock on the Nasdaq on 31 May.
The board of New York-based Everlast approved the acquisition in a special meeting Friday. It is subject to approval by shareholders and is expected to be consummated during the third quarter. A special meeting of Everlast shareholders will be announced shortly, the parties said.
Everlast generates about $55m a year in sales and royalties. It owns the Everlast brand, iconic in the world of boxing, and is also the licensee of Gleason's Gym, a veritable boxing shrine in Brooklyn.
Hidary is the lead sponsor of the investment group, which also includes Gracie Capital, Ore Hill Partners and Seneca Capital. All of the investors manage in excess of $1bn.
An affiliate of Hidary, M Hidary & Co, has been Everlast's men's and boys' apparel licensee for about two years, a spokesman for Hidary said.
"We are pleased with the terms of this transaction and believe it is in the best interests of the company's stockholders," said Seth Horowitz, chairman, president and CEO of Everlast.
"The Hidary Group has been an excellent licensing partner and, as such, has not only embraced the Everlast brand but also our strategic direction and long-term vision."
Jack Hidary, managing partner of the Hidary organisation, said: "We have tremendous respect for Seth Horowitz and his team and look forward to our partnership with Everlast Worldwide. We have a long history in the sports and athletic apparel marketplace, including a strong relationship and knowledge of the Everlast brand as one of Everlast Worldwide's licensees."
Officials wouldn't comment on the stakes held by the various investors or plans for management and staff alignment following the transaction.
News of the agreement sent shares of Everlast skyward in Nasdaq trading Friday, peaking at $26.61, a 52-week high and above the sale price, in midday trading. More recently, shares were quoted at $26.36, up $3.21 or 13.9%. The stock's 52-week low had been $11.23 as of 1 June 2006.
An acquisition of Everlast by Hidary and its partners - in effect, a licensee buying a licensor - would represent a repetition of history for the brand. The late George Horowitz, Seth's father and a lifelong boxing enthusiast, founded TI Sportswear and changed its name to Active Apparel Group following the company's acquisition of the Everlast license for women's apparel in 1992.
After building a successful business in women's activewear despite the overwhelmingly male personality of boxing at the time, Active Apparel bought its licensor in 2000 for about $60m in cash and stock and soon after changed the corporate name.
George Horowitz succumbed to cancer at the age of 55 in 2005 and was succeeded by his son, who has continued to expand both Everlast's breadth as a brand and the company's range of products and promotions.
Piper Jaffray & Co served as financial advisor to Everlast in the transaction. Clarence Schwab, managing partner of C Schwab LLC, has served as financial advisor to Hidary and also works with a number of the firms in Hidary's portfolio.
By Arnold J Karr.
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