Shares in K-Swiss Inc reportedly surged 48% to US$4.72 on Thursday after South Korean conglomerate E.Land World said it will buy the company’s stock for US$4.75 a share. This values K-Swiss at around US$170 million.
The offer price from E.Land represents a 49% premium on K-Swiss’ Nasdaq closing stock price of US$3.19 on Wednesday.
E.Land World is a Seoul-based conglomerate. It started life as a small clothing store in 1980. Although it continues to have a strong involvement in fashion apparel and apparel distribution, it has expanded to include a diverse range of financial interests including construction, hotels, restaurants, shopping malls and theme parks.
In 2011, E. Land recorded sales of around US$7.1 billion through 200 brands and via more than 10,000 stores it operates worldwide. The company will be in a position to support K-Swiss, which has seen sales fall and profits come under pressure in recent years.
K-Swiss sales have fallen by around 50% since 2005 and the company’s shares have plunged in tandem. Yesterday’s rallying in the share price reflects the price for the US run shoe and apparel brand – with US$4.75 to be paid in cash to existing shareholders.
As noted by Reuters, the deal requires the approval of 80% of K-Swiss’ outstanding voting power. According to K-Swiss, certain Class A and Class B stockholders, who collectively hold about 75% of voting rights, have executed agreements to vote in favour of and support the transaction.
