St. John Knits Accepts $522-Million Offer

St. John Knits Inc. said Wednesday it has accepted a sweetened offer from the founding Gray family to buy the maker of upscale women’s clothing and take the firm private.

The Irvine company accepted a bid from Chief Executive Robert E. Gray, his family and Vestar Capital Partners to acquire the bulk of the company for $30 a share, or $522 million. In December, the Grays had offered $28 a share.

The stock closed Wednesday at $27.56 a share, up $1.56 on the New York Stock Exchange.

If the deal is accepted by shareholders, the private investment firm Vestar will claim a 77% stake in St. John, a family-operated business launched 36 years ago by Robert Gray and his wife, Marie St. John Gray. The Grays would continue to run the business.

The Grays and their daughter Kelly, the company’s president and signature model, would own about 16% of the financially restructured company, slightly more than their current 13.6% stake.

Gray has said he moved to take St. John private because he wants to slow its growth, a concept that generally doesn’t thrill Wall Street. The repurchase would also allow the company to explore long-term growth options without fretting over short-term financial results, Vestar said.

The original St. John proposal drew criticism from analysts and investors. And on Wednesday, some also said the higher offer is still too low. “It’s still way under its true value, in my opinion,” said Jerome Dodson, president of Parnassus Fund, one of St. John’s largest shareholders.