Bandera Partners LLC, a New York-based investing firm, has built a 5.7 percent stake in Kenneth Cole Productions Inc. and said a buyout offer from its founder is “inadequate” given the company’s potential growth.
Bandera delivered a letter to a special committee of Kenneth Cole’s board on May 2 to express its concern that the shares remain undervalued and regarding the “low per share” offer from founder Kenneth Cole, it said in a regulatory filing today. Bandera said it owns 584,221 shares and Managing Partner Jefferson Gramm owns 5,000 shares in Kenneth Cole.
Cole, who is chairman and 47 percent owner of the clothing and shoe retailer, offered $15 a share in February to buy the remaining stake of the company he founded, which was 18 percent higher than stock price’s price in the 20 days before the announcement. Cole needs majority approval from remaining shareholders to complete the purchase.
Bandera said the Cole’s bid is “inadequate given the low valuation of the company and its ample growth opportunities,” according to today’s filing. “Bandera Partners communicated its hope that all shareholders will be protected as the independent Board of Directors evaluate the going forward proposal” and determine the company’s future.
Kenneth Cole slid 2.2 percent to $14.42 at the close in New York today. The stock closed below the proposed buyout price yesterday for the first time since the offer was made on Feb 24. The shares have gained 36 percent for the year.