(Adds True Religion's quarterly results, details on value of
deal, background on TowerBrook and denim industry, share price)
By Esha Dey and Olivia Oran
May 10 Premium jeans maker True Religion Apparel
Inc said on Friday it has agreed to be acquired by
investment management firm TowerBrook Capital Partners LP in a
deal worth about $835 million.
TowerBrook will pay $32 per share in cash, representing a
premium of about 9 percent to True Religion's closing price on
The offer price is 52 percent above True Religion's closing
share price on Oct. 9, 2012, the day before the company
announced that it was exploring strategic alternatives.
The company, known for its high-priced jeans sold at
specialty boutiques and upscale department stores like Saks Inc
and Nordstrom Inc, said in October that it might
sell itself after attracting interest from potential buyers.
The deal represents a multiple of seven times earnings
before interest, tax, depreciation and amortization for the last
12 months. That compares to a multiple of 10 times for other
recent deals in the consumer and retail sector, according to
investment bank Harris Williams.
True Religion has been struggling with weak demand as
customers switch to lower-priced denim.
The deal is a bright spot amid a slew of failed sales
processes in the premium denim sector.
Auctions within the last year for private denim companies
NYDJ and Hudson Jeans failed to yield buyers, sources previously
The sales process for True Religion took seven months, the
The company's board unanimously approved the deal and
recommended that shareholders vote in favor of the transaction,
which is expected to close in the third quarter.
"TowerBrook's long-term approach toward investment and brand
stewardship will best enable True Religion to maintain its
leadership position in the marketplace," said Lynne Koplin, True
Religion's interim chief executive.
Shares of True Religion were trading up 7 percent at $31.63
near midday on Friday.
TowerBrook's experience with retail brands includes Jimmy
Choo, the maker of luxury footwear and accessories, which
TowerBrook sold in 2011 after having acquired it in 2007. It had
also owned Odlo Sports Group, a European sportswear maker that
it acquired in 2006 and sold in 2010.
True Religion's founder, Jeffrey Lubell, stepped down as
chairman and chief executive in March to "seek new creative
True Religion announced first-quarters earnings on Friday,
reporting a 13.1 percent increase in net sales to $120.8
million. Its operating margins, however, shrunk to 2.5 percent
from 16.1 percent.
TowerBrook said it has committed financing from Deutsche
Bank, Jefferies, UBS Investment Bank and Macquarie Capital.
Guggenheim Securities served as the financial adviser to
True Religion, while Greenberg Traurig and Akin Gump Strauss
Hauer & Feld were legal advisers.
Deutsche Bank, Jefferies and UBS Investment Bank acted as
financial advisers to TowerBrook, and Wachtell, Lipton, Rosen &
Katz was the legal adviser.
(Reporting by Esha Dey in Bangalore and Olivia Oran in New
York; Editing by Saumyadeb Chakrabarty and Leslie Adler)