Golden Gate affiliate to buy Blair for $176m

January 24, 2007 By just-style Leave a Comment Avoiding a takeover battle and creating a more than US$1bn apparel direct marketing empire, Blair Corp has agreed to be acquired by the Appleseeds Topco subsidiary of Golden Gate Capital for about US$176m.

Blair said Tuesday (23 January) that its board of directors had approved a transaction in which private-equity investor Golden Gate will pay $42.50 per share to acquire all of the outstanding stock of the publicly held company.

The agreement follows by less than a week the disclosure that Golden Gate was seeking to acquire Blair, but it calls for a sale price more than 20% above the $144m first mentioned by Golden Gate in papers it filed with the US Securities and Exchange Commission earlier this month.

The per-share price of $42.50 is approximately 23.6% above Blairs average closing selling price during the last four weeks, Blair said.

The agreement also follows by just a day the announcement that Adelmo S Lopez had been promoted to president and chief executive officer of Blair, succeeding John Zawacki, who is retiring in April.

Upon consummation of the deal, expected this spring, Blair is expected to operate as a wholly owned subsidiary of Appleseeds Topco, with the combined entity boasting annual sales of more than $1.1bn. Appleseeds brand portfolio currently has revenues of more than $650m and includes the brands Appleseeds, Drapers & Damons, Haband, Norm Thompson, Sahalie, Solutions and the Tog Shop.

Blairs annual revenues are estimated to be $450m. During the fiscal year ended 31 Dec 2005, 85% of its sales were attributed to apparel and 15% to home merchandise, according to its Form

10-K filed with the SEC. At that time, Blair said that 32% of its merchandise came from suppliers outside the US.

Golden Gate also owns Spiegel and Newport News, acquired in 2004 following Spiegel Groups bankruptcy.

It is based in San Francisco, has more than $3bn of capital under management and specialises in equity investments in situations where there is a demonstrable opportunity to significantly enhance a companys value, according to Tuesdays press release.

We have targeted this segment of the womens specialty market because it is one of the fastest growing demographic segments of the population women over 50-years-old, said Stefan Kaluzny, managing director of Golden Gate Capital.

The acquisition of Blair, a marquee brand in this space, significantly strengthens our portfolio and provides us with scale and purchasing power that none of the companies has had individually.

Craig Johnson, chairman of Blair, noted: This transaction, which will make Blair a private company, will provide greater resources to accomplish the companys long-term goals.

If approved, the sale would add Blair to the growing list of US retailers purchased by privateequity firms and no longer publicly held or owned by publicly held corporations.

That roster includes, among others, Neiman Marcus, ShopKo, Mervyns, Goodys, Burlington Coat Factory, Loehmanns and Lord & Taylor.

Neale Atenborough, chairman and CEO of Appleseeds, cited state-of-the-art distribution centre and nearly 100 years of unwavering customer service as specific assets of Blair.

The agreement is subject to the approval of Blairs shareholders and regulatory review. Blair may solicit alternative offers for 30 days.

Stephens Inc served as financial advisor and provided a fairness opinion to Blair. Patton Boggs LLP served as Blairs legal advisor. Kirkland & Ellis provided legal advice to Appleseeds. By Arnold J Karr.