A Los Angeles-based group of investors led by Andrew G. Galef and former Max Factor & Co. President Linda J. Wachner announced Monday an offer to purchase apparel maker Warnaco Inc. for $375 million.
The offer from W Acquisition Corp., a new Delaware corporation formed for the purpose of acquiring Warnaco, took analysts by surprise. Warnaco shareholders had been scheduled to vote April 18 on a merger proposal from Warnaco executives that was accepted in December.
A spokeswoman for Bridgeport, Conn.-based Warnaco said the company would not comment on the latest offer.
Warnaco's clothing line includes Hathaway men's shirts, Warner's intimate apparel and White Stag women's sportswear.
Citing the management experience of her group, Wachner said she did not expect serious opposition to develop to WAC's offer. The WAC group includes former Coca-Cola Bottling Co. executive Frank A. Grisanti and Jeffrey S. Deutschman, a vice president at Spectrum Group, Galef's Los Angeles investment firm.
"We would think that they (Warnaco) would feel comfortable with our offer, which is substantially higher than management's," Wachner said. In addition, she said, "we would consider providing an equity position for management as well."
In trading on the New York Stock Exchange, Warnaco rose $2.125 a share to close at $37.50.
WAC has offered Warnaco stockholders $36 per share for all of the company's 10.5 million outstanding shares. WAC officials said they expect to line up $500 million in capital and intend to begin buying tendered Warnaco shares April 5.
Under the management offer received last October, each Warnaco common share would be exchanged for a package of $27 cash and $13 principal amount of subordinated debentures.
The debentures would have a term of 20 years. No interest would be paid during the first five years; starting the sixth year, interest would be paid at a rate of 15% annually.
Goldman, Sachs & Co., the financial advisers to the investors, has valued the debentures at about $6.30 each, which would make the market value of the entire package about $338 million.
In a letter to Warnaco's board, WAC Chairman Galef asserted that the management offer allows "Warnaco to entertain competing offers . . . and to terminate the management merger agreement upon receipt of a satisfactory competing acquisition offer."
The WAC letter also asserted that its $36-a-share cash offer "is not only greater in value than management's offer, it is also more attractive in terms of certainty of realization of value" because WAC's offer is all cash.
WARNACO AT A GLANCE
Millions of dollars Net Year Revenue Income 1985 $591.26 $22.52 1984 561.39 20.47 1983 497.3 28.3
Assets: $271.7 million Employees: 10,560 Shares outstanding: 10.14 million 12-month price range (NYSE): $20.875 - $37.50 Monday's close: $37.50 Assets: $271.7 million Employees: 10,560