LDC, the private equity unit of Lloyds TSB, has announced a recommended offer for Stirling Group, the UK-listed clothes retailer most known as a supplier of goods to the Marks & Spencer group.
LDC has formed an acquisition vehicle, Potter Acquisitions together with three of Stirling’s executive directors, Steven Bentwood, Peter Rusby and Peter Solomon. The 22 pence per share offer values the business at £18.7m and is at a 26 per cent premium to the closing price of 17.5 pence per share on 12 June 2003, when reports of a takeover offer first emerged.
The core activity of Stirling is Bentwood, a business that has been supplying clothing to M&S for over 50 years. It is the third largest adult clothing supplier to M&S.
Stirling said the group had suffered from an undervalued share price over the past three years, despite a series of strategic changes that included the acquisition of Tamarind, a Hong Kong based sourcing company and the outsourcing of production to overseas sites. “In spite of the disappointing share price performance of recent years, the board of Stirling has remained committed to considering strategic initiatives to create shareholder value, which has lead to the offer announced today,” said Stirling chairman Robert Coe.
Funds totalling £29.7m have been raised for the purposes of financing the offer, which will be used to refinance Stirling’s existing debt. Senior and mezzanine debt financing totalling £19m has been arranged by Royal Bank of Scotland. In addition, approximately £29.5m of working capital has been arranged to support the future trading of the Stirling Group.