Shareholder Seeks Halt to St. John Knits Sale
A St. John Knits Inc. shareholder today will seek a court order halting a plan by Chief Executive Robert E. Gray and his family to buy the upscale women’s clothing company and take it private.
Shareholder Kenneth O. Hill also will ask Orange County Superior Court Judge William F. McDonald to allow his attorneys to gather information from the Irvine-based St. John so they can determine how the Grays arrived at their $30-a-share offer.
The $522-million buyout by the founding Gray family and Vestar Capital Partners was approved by independent directors on the company’s board last week. The Grays initially offered $28 a share, but they sweetened the bid to win approval.
“Our clients allege this decision was made and sugar-coated by a bunch of insiders,” said Darren Robbins, an attorney with Milberg Weiss Bershad Hynes & Lerach LLP, the nation’s leading practitioner of shareholder lawsuits.
Gray said Wednesday afternoon he was unaware of the latest legal maneuver. St. John has been hit with at least five lawsuits tied to the buyout proposal since it was announced in December.
Hill’s suit, which seeks class-action status, was filed in December and charged the Grays with self-dealing and breach of fiduciary duty. Another client of Milberg Weiss sued St. John and the Grays earlier last year after the company’s shares dropped sharply when St. John warned that its quarterly profits would not meet expectations.
Gray has said both suits are meritless.
Henry Rossbacher, whose Los Angeles law firm Rossbacher & Associates is assisting with lawsuits, said the attempt to get a temporary restraining order is the first step in a process that aims to halt the purchase while the attorneys gather information to determine what they think is a fair price for the company. He said some analysts have suggested that it could be $35 a share “and probably much more.”
St. John appointed an independent committee to weigh the buyout proposal. The company said it received opinions from Merrill Lynch & Co. and Wasserstein Perella & Co. that the $30 per share offer is fair.
The hearing will be in Department C20 at 1:30 p.m.
