TowerBrook acquires True Religion for 835 million dollars

TowerBrook Capital Partners LP has acquired True Religion for circa 835 million dollars, as announced by both parties earlier this weekend. The 32-a-share offer is 8.7 percent more than True Religion’s closing price on May 9. Under the terms

of the “definitive merger agreement”, TowerBrook will acquire all of the outstanding shares of True Religion common stock for 32.00 dollars per share in cash. This represents a premium of approximately 52 percent to True Religion’s share price on October 9, 2012, the day before the Company announced that it had begun to explore strategic alternatives.

“The Board of Directors of True Religion unanimously approved the merger agreement and recommends that True Religion shareholders vote in favour of the transaction,” announced the company in a statement released on May, 10.

"At this critical inflection point in our business, global growth and product development effort, TowerBrook's support and experience will be a true differentiator," Lynn Koplin, the interim CEO and president of True Religion, said in a statement.

Andrew Rolfe, Managing Director of TowerBrook commented, “True Religion is an established, high-end brand with a strong retail network and a loyal following. We are excited to combine our retail and apparel expertise with Lynne and the True Religion team to help the company with brand building and international opportunities.”

Deal values the company at 835 million dollars

According to data compiled by FactSet, True Religion has approximately 25.8 million outstanding shares which means that the deal's total value will come at about 835 million dollars.

“It’s probably worth a little more, somewhere between the mid- to high 30 dollars, but they’re buying them, and it is a valuable brand,” said in an interview with Bloomberg Ivan Feinseth, Chief Investment Officer at Tigress Financial Partners LLC, an asset manager and merger adviser in New York. “We are in an upswing in the economy, and the time to buy things is when things are recovering.”

True Religion hired Guggenheim Partners in October to evaluate a possible sale. In March, its CEO Jeff Lubell stepped down and was named chairman emeritus and a creative consultant.

As advanced by the high-end denim brand, the deal is expected to be completed in the third quarter. True Religion's board unanimously approved the transaction. It still needs approval from the company's stockholders.

TowerBrook is a New York-based private-equity firm founded by Ramez Sousou and Neal Moszkowski, both co-CEOs. Its previous retail investments include the Jimmy Choo Ltd luxury brand, which it sold in 2011 to the German fashion company Labelux Group.

As highlighted by 'The New York Times', Andrew Rolfe, the TowerBrook partner leading the True Religion deal, is a former president of Gap International and Chief Executive of Pret a Manger.

On the back of the news, the shares rose 8.1 percent to 31.82 at the close in New York on May, 10. They have gained 25 percent so far in 2013, with the stock closing at an all-time high of 37.29 dollars on Feb. 7, 2012. A week earlier, it reached a 52-week high of 31.85 dollars a share.

Investigations on best possible value for shareholders

Meanwhile, law firm Rigrodsky & Long, P.AU has announced they're undertaking investigation on the terms of the agreement, in virtue of which public shareholders of True Religion will receive 32.00 dollars per share in cash for each share of True Religion they own.

“The investigation concerns whether True Religion’s board of directors failed to adequately shop the Company and obtain the best possible value for True Religion’s shareholders before entering into an agreement with TowerBrook. According to Yahoo! Finance, at least one analyst has set a price target for True Religion stock at 38.00 dollars.”