Blog: Leonie BarrieBauer bid rejected

Leonie Barrie | 9 February 2007

The decision by Eddie Bauer shareholders to reject a $280m sale of the company to a pair of buyout firms is a surprising one. After all, the deal on the table to take the troubled outdoor apparel company private offered US$9.25 a share, plus the assumption of about $328m in debt.

Management now have the unenviable task of continuing to operate Eddie Bauer on a standalone basis, and deciding whether to take on more debt or refinance existing debt on unfavourable terms. They’ll also have to stump up another $5m to cover the expenses of failed bidders Sun Capital Partners and Golden Gate Capital. And then there’s the small matter of performance to think about: net merchandise sales have declined since 2000, and same-store sales have fallen in 23 of the previous 27 quarters. In 2006, sales slid by 4.5%, with net merchandise sales dropping 4.5% to US$957m.

Against this background, surely a sale would have been a preferable option? Maybe shareholders still have faith in the brand and a management team that has so far failed to execute a turnaround. Or maybe the knowledge that president and CEO Fabian Mansson stood to pocket around $10.8m in stock payments and other benefits was enough to sway the vote against the new buyers.

Eddie Bauer shareholders reject takeover bid


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