NEW YORK – Everlast Worldwide has terminated its agreement to be acquired by an investment consortium headed by The Hidary Group for $146 million and instead agreed to be acquired by Sports Direct International plc’s Brands Holdings Ltd. subsidiary for 15% more.
Everlast said Thursday that it has signed a definitive agreement to be acquired by Brands Holdings for $30 a share in cash, a total of more than $168 million. The price represents a 47.2% premium to Everlast’s average closing price on the Nasdaq in the last month.
The announcement came just prior to the close of Nasdaq trading Thursday. However, Everlast shares were up heavily, rising $3.01, or 11.4%, to close the session at $29.50, with the biggest spike in price coming in the first hour of trading.
Everlast said it had paid Hidary a $3 million termination fee, in line with the acquisition agreement reached with the group on June 3.
Everlast’s board agreed to the Brands Holdings offer at a special meeting Thursday. The estate of George Q. Horowitz, the founder of Everlast’s predecessor company, entered into in agreement to vote its shares in favor of the merger.
The deal is expected to be consummated during the second half of the year, contingent upon shareholder approval and other customary closing conditions.
Seth Horowitz, chairman, president and chief executive officer of Everlast, commented, “We are pleased with the terms of this transaction and believe it is in the best interests of the company’s stockholders. We believe the strength of the Everlast brand worldwide will complement Sport Direct’s portfolio of internally recognized sports and leisure brands.”
Sports Direct is the leading sporting goods retailer in the United Kingdom and has more than 450 stores in western Europe. Its brands include LA Gear, Lillywhites, No Fear and Slazenger.
Dave Forsey, CEO of Sports Direct, commented, “The Sports Direct board is confident that this acquisition will benefit our wholesale, licensing and retail businesses, while providing us with a significant stepping stone into the important US market.”
Everlast agreed to be acquired by the Hidary group on June 1 in a deal that would have given its stockholders $26.50 for each share held in cash. There were numerous instances of opposition to the deal, including vigorous opposition from Galt Investments, which owns 4.8% of Everlast’s common stock, which called the $26.50 too low and questioned the manner in which the agreement with Hidary was reached.
“We continue to be extremely troubled by the board of directors’ agreement to sell Everlast, apparently without conducting an auction or any other meaningful process designed to obtain the highest price reasonably available for Everlast’s stockholders,” Galt stated in a letter to Everlast’s board.
With sales and royalties of about $55 million a year, New York-based Everlast owns the Everlast brand, practically synonymous with boxing, and is a licensee of Gleason’s Gym, a boxing training complex.
The late George Horowitz, who succumbed to cancer at the age of 55 in 2005, founded TI Sportswear and changed its name to Active Apparel Group after becoming Everlast’s women’s apparel licensee in 1992. It acquired the Everlast brand for about $60 million in cash and stock in 2000 and changed its corporate name soon after.
As it did on the now discarded Hidary deal, Piper Jaffray & Co. served as Everlast’s financial advisor.