Destination XL Group has turned down the sweetened tender offer from Zodiac Partners II.
As reported, at the end of June, the West Palm Beach, Fla.-based acquisition entity of Camac Fund increased its offer for the men’s big and tall retailer to 84 cents a share from 82 cents. The offer values the company at $46.4 million, higher than its market capitalization at the time of $37.6 million.
On Wednesday, the retailer said that “following a review with external legal and financial advisers,” it is “unanimously” recommending that shareholders reject the “revised, unsolicited tender offer” and not tender their shares.
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“The DXL board of directors remains committed to maximizing stockholder value and acting in the best interests of all DXL stakeholders,” said Lionel Conacher, chairman of the board of DXL. “After careful review of Zodiac’s revised proposal, the board unanimously concluded that the modest increase in consideration still undervalues DXL and is not in the best interests of our stockholders. The board reiterated its belief that Zodiac’s repeated offers are highly conditional, opportunistic and seemingly timed to deliberately exploit a period of market dislocation. We therefore recommend that stockholders reject the revised offer and do not tender their shares.”
The company added that any stockholders who had already tendered their shares could withdraw them up until the expiration of Zodiac’s offer at 5 p.m. ET on July 24.
Zodiac made an initial bid in mid-May to acquire the retailer for 82 cents a share but DXL rejected that offer two weeks later. A Zodiac spokesperson said it had no comment on the latest rejection and did not say whether it would attempt to raise its offer a second time.
Zodiac’s first offer came as the Canton, Mass.-based DXL was finalizing a merger with FBB Holdings Inc., an inclusive-size retailer for men and women that operates under the FullBeauty and KingSize names, among others. That deal was revealed in December but in June, DXL said it was reevaluating the merger, citing that company’s “indeptedness” and “the increasingly challenging consumer environment.”
DXL did not respond on Wednesday on whether it has reconsidered its position on the FullBeauty merger or will continue to operate independently.
In June, DXL reported its loss in the first quarter widened to $5.9 million from a net loss of $1.9 million the prior year. Sales were down 2.1 percent to $103.3 million from $105.5 million with comparable-store sales down 3.8. percent. The retailer operates more than 250 stores in the U.S. under the Destination XL and Casual Male nameplates.
