Sun Capital remains committed to acquisition of Kellwood

By Lisa Kerner

Charlotte, N.C., Nov. 13 - Sun Capital Securities Group, LLC reaffirmed its proposal to acquire 100% of Kellwood Co.'s capital stock for $21 cash per share in a Nov. 12 letter to the company's board of directors.

The letter was included in a news release and as part of a schedule 13D filing with the Securities and Exchange Commission.

"We are very disappointed that you rejected this proposal on October 17 and have repeatedly resisted our efforts to open a constructive dialogue regarding our interest in acquiring control of Kellwood. We have carefully reviewed the strategic plan Kellwood announced on November 7 and note that it resembles the plan announced in mid-2005. The lack of execution since mid-2005 has resulted in a significant deterioration in both financial results and shareholder value," the letter stated.

Sun Capital's $21-per-share offer is a 38% premium to Kellwood's closing stock price on Sept. 18, the last trading day before Sun Capital's offer was disclosed. The offer represents a 40% premium to Kellwood's closing stock price on Nov. 7, the day after Kellwood announced its strategic plan, according to a Sun Capital new release.

Sun Capital said its "strong preference" is to acquire Kellwood in a "friendly negotiated transaction." However, the investment firm is "prepared to take all necessary steps to protect the value of our existing 9.9% ownership position in Kellwood," including taking its offer directly to the company's shareholders.

Kellwood, in response to Sun Capital, once again rejected the proposal, saying it believes the offer "significantly undervalues the strength of Kellwood's expanded portfolio of brands" as well as the "potential benefits of the execution of the company's strategic plan," a company news release stated.

The board of directors of Kellwood unanimously determined that the proposal was not in the best interests of Kellwood shareholders.

Through execution of its strategic plan, Kellwood said it is "positioned to become a brand-focused marketing enterprise, leading to sustained sales growth and double digit increases in net earnings and earnings per share."

Kellwood is a St. Louis-based marketer of apparel and consumer soft goods.

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