Zodiac Partners II is not giving up in its quest to acquire Destination XL Group.
On Tuesday, the West Palm Beach, Fla.-based acquisition entity of Camac Fund sweetened its tender offer for the men’s big and tall retailer to 84 cents a share from 82 cents. It values the company at $46.4 million, higher than its market capitalization of $37.6 million.
Zodiac’s new offer follows Friday’s expiration of its first bid and 20 days after DXL called off its planned merger with FullBeauty Brands, an inclusive-size retailer for men and women that operates under the FullBeauty and KingSize names, citing that company’s “indeptedness” and “the increasingly challenging consumer environment.”
DXL’s board unanimously rejected Zodiac’s offer at the end of May, but that didn’t deter the fund from continuing its attempt to add the retailer to its coffers.
In a Securities and Exchange Commission filing on Tuesday, Zodiac said that it had first approached DXL management in January with a written proposal to acquire the company for $1.25 a share, but was “rebuffed.” As a result of that and its other attempts being dismissed by DXL, Zodiac is now taking its message directly to the company’s shareholders.
Zodiac told stockholders that if they tender their shares, DXL will become a wholly owned subsidiary of Zodiac. It added that it has $47 million on hand to purchase all the outstanding shares as well as a $12 million binding equity commitment from Camac Fund with an indicative term sheet for a $75 million revolving credit facility.
The new offer is scheduled to expire on July 24. If the purchase is consummated, Zodiac and Camac will evaluate the DXL business and “take such actions as they deem appropriate under the circumstances then existing…with a view to optimizing development of DXL’s potential in conjunction with DXL’s existing businesses,” it said in the filing. Possible changes could include changes in DXL’s business, corporate structure, certificate of incorporation, bylaws, capitalization, board of directors and management, Zodiac said.
DXL said late Tuesday that it was “evaluating the revised offer with its independent financial and legal advisors in accordance with its fiduciary duties and will make a recommendation to stockholders in due course.” Zodiac did not respond to requests for comment on the latest offer on Tuesday.
In June, DXL reported its loss in the first quarter widened to $5.9 million from a net loss of $1.9 million the prior year. Sales were down 2.1 percent to $103.3 million from $105.5 million with comparable-store sales down 3.8. percent. The Canton, Mass.-based retailer operates more than 250 stores in the U.S. under the Destination XL and Casual Male nameplates.
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