In 1999, one of Sawaya Partners’ principals represented the estate of Perry Ellis in the sale of Perry Ellis International Inc. (“Perry Ellis”) a privately held men’s clothing designer, to Supreme International (“Supreme”). At the time of the transaction, Miami-based Supreme, a publicly traded apparel company, designed and sold men’s and boy’s sportswear under the Crossings, Natural Issue, Munsingwear, Andrew Fezza and Ping brand names. The acquisition of Perry Ellis was the first step in the strategic transformation of Supreme from a manufacturer of private label apparel to a designer, manufacturer and marketer of branded apparel. Following the acquisition, Supreme changed its corporate name to Perry Ellis.
“The acquisition of Perry Ellis International from his Estate in 1999 and acquisition of publicly traded Salant Corp. in 2003 completely transformed the nature of our company. When we were looking for advice for the Salant transaction, we selected Sawaya Partners because we were impressed with the acumen of one of its principals during the former. They proved to be instrumental in the success of a timely and well-executed acquisition.”
GEORGE FELDENKREIS CHAIRMAN AND CHIEF EXECUTIVE OFFICER, PERRY ELLIS INTERNATIONAL INC.
Salant Corporation (“Salant”) was a leading designer, marketer and distributor of menswear with approximately $287.4 million in sales of menswear at the time of the transaction, and Perry Ellis’ largest licensee. Salant licensed the categories of Perry Ellis men’s sportswear, dress shirts and accessories, and derived approximately 70% of its revenues from the sale of Perry Ellis brands. The acquisition of Salant would allow Perry Ellis to exercise greater control of the brand’s most successful categories, and complete the strategic transformation of the business.
Perry Ellis announced the acquisition of Salant on February 4, 2003. Sawaya Partners advised Perry Ellis on the transaction. Perry Ellis agreed to buy all of the outstanding shares of Salant for $ 9.37 per share for an aggregate consideration of $91 million. This value represented a multiple of Salant’s latest twelve months sales through September 30, 2002 of 0.32x and multiple of latest twelve months EBITDA through September 30, 2002 of 7.8x. For the estimated fiscal year 2003 sales and EBITDA, the value of the transaction represented multiples of sales and EBITDA of 0.26x and 3.7x, respectively. The acquisition closed on June 19, 2003.
The market responded favorably to Perry Ellis’ acquisition of Salant. Perry Ellis’ stock price increased over 40% from $13.59 before the announcement to $19.49 on October 3, 2003, six months after the announcement.