Mossimo Giannulli, founder and majority shareholder of clothing maker Mossimo Inc., made an offer Tuesday to buy up its outstanding shares for $4 each and take the company private, but the move was already being opposed.
Giannulli, also chairman and chief executive, owns 10.3 million shares, or 65.3 percent of the company. His bid values the remaining 5.5 million shares at a 20 percent premium above Monday’s closing price of $3.32. The bid would value Mossimo Inc. at $63.2 million.
Mossimo shares rose 82 cents, or 24.7 percent, on the news, to close at $4.14 in afternoon trading on the Nasdaq.
On news of the offer, New York-based firm Wolf Popper LLP filed a purported class-action lawsuit Tuesday on behalf of a group of shareholders to stop the proposed buyout. The suit, filed in Delaware, cited “inadequate consideration,” or an insufficient price per share.
In a document filed with the Securities and Exchange Commission Tuesday, Giannulli said he expects Mossimo’s board to form a special committee of independent directors to review his offer and negotiate the specific acquisition structure. Giannulli also told the board that he would not consider any other transaction involving his interest in the company.
Mossimo’s sales have suffered in recent quarters, in part because the company has worked to overhaul its operations at Target Corp. stores as customers turned away from its clothing and accessories. Mossimo’s sales hit $6.2 million in the first quarter, but were down to $3.2 million in the fourth quarter, compared to $3.0 million for the fourth quarter a year ago.
The company’s net income also slumped throughout 2004, from $1.2 million in the first quarter to $629,000 in fourth quarter, compared to $693,000 in the fourth quarter a year ago. Annual net income dropped to $2.7 million in 2004, compared to $4.6 million a year ago. It was off even more from 2002 when net income hit $13.7 million.
Sales at Target accounted for 79 percent of Mossimo’s total revenues in 2004, down from 88 percent in 2003, according to a March SEC filing.
