Sun Capital affiliate to offer $544m for Kellwood

Sun Capital's public securities arm has offered $544 million for apparel marketer Kellwood.

Sun Capital Securities Group, the public securities arm of US distressed specialist Sun Capital Partners, has made an unsolicited offer to acquire apparel marketer Kellwood in a transaction valued at approximately $544 million (€386 million). 

The $21 per share offer represents a 38 percent premium to Kellwood's $15.17 stock price Tuesday, the day the offer was made, and is subject to the completion of due diligence.

Kellwood, which markets clothing brands including Nautica and Baby Phat, said in a statement that it will “carefully evaluate the Sun Capital proposal, and other alternatives available to the company”.

Broadpoint Capital analyst Randall Scherago downgraded his rating on Kellwood from “buy” to “neutral” on Tuesday, according to Reuters.

“The company's strategy to reverse sales declines, the erosion of its operating margins, costs associated with the reorganization of women's sportswear business and a possible downgrade of debt could impair Kellwood's acquisition strategy,” Scherago said in a research note.

Kellwood had revenues of $2 billion in 2006. 

Sun Capital Securities' parent is very active in the apparel sector. The private equity firm acquired a 75 percent stake in Limited Stores from Limited Brands in July for $125 million. Last November, Sun Capital teamed with Golden Gate Capital to acquire sportswear retailer Eddie Bauer for $614 million.