St. John Knits Plans to Add 2 Members to Board
St. John Knits Inc. Chairman Robert E. Gray said Thursday that the company hopes to add two directors to its board early next week to help weigh the $490-million buyout offer made by Gray’s family and other investors.
The board of the Irvine maker of upscale women’s apparel consists of two directors who aren’t employed by the company: Merrill Lynch executive Richard A. Gadbois III and prominent Orange County attorney David Krinsky.
But Robert Gray said Thursday that they were considered “too friendly” to the company to be able to effectively evaluate the offer.
Gray and his wife, Marie, who founded St. John, and their daughter Kelly together own about 13% of the company.
On Tuesday, they teamed up with the New York investment firm Vestar Capital to make a $28-a-share bid to buy the remaining shares of St. John. That offer represented a 28% premium over the company’s stock price. It closed Thursday at $26.31, down 43 cents, in New York Stock Exchange trading.
On Wednesday, St. John and the Grays were hit with two shareholder lawsuits, both of which contend that the buyout offer is unfair and comes at the expense of St. John shareholders. Both suits seek class-action status.
One of the suits was filed by Milberg, Weiss, Bershad, Hynes & Lerach LLP, the nation’s leading practitioner of shareholder suits. Its complaint, on behalf of shareholder Kenneth O. Hill, charges the Grays with self-dealing and breach of fiduciary duty.
Milberg attorney Darren Robbins said his firm is considering filing a motion to halt the offer.
The law firm sued St. John and the Grays earlier this year after the company’s shares fell sharply when the company warned that its quarterly profits would not meet expectations.
Robert Gray said both suits were without merit.
“First they sue me because I’m trying to drive the stock up. Now they’re suing me because I’m trying to drive the stock down,” Gray said Thursday. “Which way do they want it? You can’t have it both ways.”
The second suit, filed on behalf of shareholder Mishel S. Tehrani, makes similar accusations. Among the defendants it lists is former St. John director Rick Rozar, who died earlier this year.
