Sweetened Deal Approaches $3 Billion : West Point-Pepperell Accepts Farley Inc. Offer
Farley Inc. won a four-month battle for West Point-Pepperell Inc. Thursday as the textile giant accepted a sweetened buyout bid of nearly $3 billion by the Chicago-based conglomerate.
Pepperell and Farley said in a joint announcement that Farley will pay $1.53 billion, or $58 per share, in cash for Pepperell’s outstanding stock and refinance Pepperell’s debt.
Farley will contribute about $300 million in equity, with the remaining being financed by high-yield bonds and bank loans, Chairman William Farley said.
He said the resulting company would be the world’s largest textile and apparel firm.
Farley, manufacturer of Fruit of the Loom underwear and Acme boots, initially offered $48 a share, or $1.4 billion, for Pepperell on Oct. 24, and later raised the bid to $52 per share, or a total of $1.54 billion.
Pepperell’s board turned down both offers as inadequate during an often bitter struggle with Farley.
Terms Called Fair
However, Thursday’s announcement said Pepperell’s directors “determined that the terms of the offer and the merger are fair” to shareholders.
Pepperell stock closed Thursday at $57.25 a share, up $1.25 in New York Stock Exchange trading.
At an Atlanta news conference, Farley said there would be no production line layoffs. But he said Pepperell Chairman Joseph L. Lanier Jr. and President Donald J. Keller will leave the company after the merger is completed, within 30 days.
Asked if he would need to sell parts of the company to pay off the debt, Farley said: “I love all the company and I haven’t made any decision on what part, if any, I would sell.”
But he later identified Saturday’s, a high-fashion line produced by Pepperell subsidiary Cluett-Peabody, as a likely candidate to be sold.
The companies said they agreed to cancel a special shareholders meeting set for March 2.
The meeting had been called at Farley’s request in a bid to unseat the Pepperell directors and replace them with a board more sympathetic to the conglomerate’s bid.
Farley said it has received commitments from Wells Fargo & Co., Bankers Trust Co. and Drexel Burnham Lambert Group Inc. for financing necessary to complete its tender offer for Pepperell stock.
Pepperell, founded in 1886, became the nation’s largest publicly traded textile company last year through the acquisition of most of J. P. Stevens & Co. It was left with about $1.1 billion in debt from that deal. Pepperell has 41,000 employees and 22,000 stockholders. For the fiscal year ended Sept. 24, the company had revenue of $2.15 billion and earnings of $84.36 million.
