U.S. Shoe Corp. on Thursday rejected a $1.1-billion takeover bid from Italy's Luxottica Group and said it will instead sell its footwear division to Nine West Group Inc. for about $600 million.
The Cincinnati-based company, which also owns the Lenscrafters optical chain and women's clothing stores, said its directors rejected Luxottica's offer as inadequate and recommended that shareholders not sell their stock.
Luxottica said late in the day that it was "extremely disappointed" by the decision of U.S. Shoe's board, and it urged the company to negotiate with it on its $24-a-share offer.
The Italian eye wear maker said when it made its offer March 3 that it would prefer to keep Lenscrafters and sell U.S. Shoe's women's clothing and shoe operations.
Nine West agreed to pay $560 million in cash plus warrants on Nine West stock for the company's footwear manufacturing and retailing operations, U.S. Shoe said.
U.S. Shoe manufactures Pappagallo and Capezio footwear and operates 277 shoe stores under the Easy Spirit and Banister names. It also operates leased shoe departments in the SteinMart and Burlington Coat Factory chains. U.S. Shoe's women's clothing chains include Casual Corner, Petite Sophisticate and August Max Woman.
Industry analysts said the sale of the footwear group is probably the first step in a piecemeal sale of U.S. Shoe, whose businesses are worth more on their own.
U.S. Shoe shares rose $1 to $25.75 on the New York Stock Exchange, indicating that investors expect a breakup or sale of the company to yield more than Luxottica has offered so far.
Shares of Stamford, Conn.-based Nine West, a leading designer of women's footwear, jumped $2.25 to $30.50 on the NYSE.
In its statement, U.S. Shoe noted that Luxottica's offer was conditional, among other things, on its ability to finance the transaction.
"Before Luxottica made its bid, the company had announced its intent to evaluate strategic alternatives and that it had initiated discussions with other parties," U.S. Shoe said.