Collective Brands Inc., owner of the Payless ShoeSource chain, is reducing the pool of suitors for all or part of its business ahead of the second round of bidding, said people familiar with the matter. The stock rose.
The company began yesterday notifying the 20 bidders from the first round whether they would move on to the next, which will comprise about 10 parties, said the people, who declined to be identified as talks are private. Based on bids so far, Collective Brands could get at least $20 a share if the entire business is sold, said one of the people. That would value the Topeka, Kansas-based retailer at about $1.2 billion.
Collective Brands got initial offers from buyout firms TPG Capital and Leonard Green & Partners LP, as well as from rivals such as Wolverine World Wide Inc., Columbia Sportswear Co. and Deckers Outdoor Corp., the people said. The retailer is keeping at least 10 suitors to have greater choice in a sale, two of the people said.
Collective Brands rose 6 percent to $18.24 today at the close in New York. Before today the stock had gained more than 70 percent since Aug. 23, the day before the company announced its review.
Collective Brands, whose sales were projected to reach $3.4 billion in the year ended in January, disclosed the strategic review in August, with Perella Weinberg Partners LP and Kurt Salmon advising the board. At that time, the company also reported a $35 million loss and said it planned to shut 475 stores in the next three years.
The company is open to selling itself piecemeal, shedding parts such as the Payless chain or the Performance + Lifestyle Group, or as a whole, these people said.
Other first-round bidders included Brown Shoe Co. and private-equity fund Golden Gate Capital Corp., which bid on the Payless unit, said these people. Collective Brands will probably ask for final bids toward the end of March to close the deal before early April, one person said.
A representative at Collective Brands declined to comment, as did those at Wolverine, Golden Gate, Leonard Green and TPG. Spokesmen at Columbia, Deckers and Brown Shoe didn’t respond to calls seeking comment.
Some of the private-equity funds may team up with retailers or other strategic bidders to put in combined bids for the whole retailer, these people said. Bidders in the next round will receive management presentations and access to a second data room, they said.
Payless ShoeSource Inc. became Collective Brands after acquiring Stride Rite Corp. in August 2007. The company operates almost 4,500 Payless stores in 34 countries and owns the Keds and Saucony brands.