Bid to Block St. John Knits Sale Rejected

A disgruntled St. John Knits Inc. shareholder lost his initial legal attempt Thursday to block a bid 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, one of several stockholders who have filed lawsuits challenging the buyout effort, had asked Orange County Superior Court Judge William F. McDonald to issue a temporary restraining order blocking the company’s sale.

But with shareholders not expected to vote on the deal until May or June, the judge denied the motion and scheduled another hearing on Feb. 24.

The judge also rejected Hill’s request to allow his attorneys to gather information from Irvine-based St. John so they can determine how the Grays arrived at the $30-a-share purchase price.

Hill’s attorney said he will ask the judge to reconsider both motions at the next hearing.

Five lawsuits have been filed since the Grays initially offered $28 a share for the company. Later, the family sweetened the bid to $30 a share, or $522 million.

Hill’s suit, which seeks class-action status, accused the Grays of self-dealing.

The higher bid by the Grays and Vestar Capital Partners was approved last week by independent directors on the company’s board.

St. John said it received opinions from Merrill Lynch & Co. and Wasserstein Perella & Co. that the $30 price was fair.

But attorneys for shareholders described the latest, $30-a-share bid as a “bargain-basement price” for the company.

They say they need information from the company to determine how the Grays arrived at that figure and to decide what they think is a fair price. Hill’s attorneys say some financial analysts put the company’s value at $35 a share or higher.