Officials at apparel maker Mossimo Inc. said Tuesday they will evaluate Cherokee Inc.’s offer to acquire it $135 million, several million more than a previous offer from Iconix Brand Group.
Cherokee, a Van Nuys licensing and brand management company, on Monday offered $8.50 a share for Santa Monica-based Mossimo, an 8.8 percent premium on the April 17 closing price and a 13.3 percent premium on Iconix’ purchase price. The Cherokee deal consists of $6 per share in cash and $2.50 per share in common stock.
Mossimo shares were up 7.5 percent to $8.40 in midday trading on Tuesday. Cherokee shares rose 0.67 percent to $40.33.
“We believe Cherokee’s proposal for Mossimo is superior to Iconix’s and provides significant value to Mossimo’s shareholders,” Russell J. Riopelle, the chief financial officer of Cherokee, said in a statement.
The purchase offer is subject to the approval of both Mossimo and Cherokee boards.
Cherokee has a long-standing relationship with Mossimo. In 2001, Cherokee pinpointed Target Corp. as a licensee of the Mossimo brand and entered into a finder’s agreement with Mossimo. According to Securities and Exchange Commission filings, the agreement gave Cherokee a fixed percentage of all monies paid to Mossimo by Target and has proved to be a steady revenue generator.
The Iconix offer, announced earlier this month and valued at about $119 million, bested previous bids from Mossimo Giannulli, the company’s founder, to take Mossimo private. Last year, he proposed to pay $5 a share for the company after initially bidding $4 a share to buy the nearly 35 percent of Mossimo he didn’t already own.
After Iconix entered the fray, Giannulli seemed satisfied to put his takeover effort aside. New York-based Iconix makes and licenses clothes under various brands, including Joe Boxer, Candie’s and Rampage.
“Adding the Mossimo brand to this exciting platform is a compelling way to generate value for our shareholders and I look forward to working with the Iconix team to continue to develop Mossimo to its greatest potential both domestically and around the world,” he said in a statement at the time.
Also on Tuesday, Mossimo announced that Laborers’ Local #231 Pension Fund last week had filed a proported shareholder class action lawsuit in Los Angeles County Superior Court, alleging that Mossimo and its board of directors breached their fiduciary duties in approving the agreement with Iconix. A Mossimo spokesman said the company believes the allegations in the complaint are without merit and intends to defend the claims vigorously.
