Analyst: Perry Ellis Takeout Offer Will ‘Most Likely Be Consummated’

Shares of Perry Ellis International, Inc. (NASDAQ: PERY) moved notably higher after the company received a takeout offer from its founder George Feldenkreis — who was ousted less than six months ago, but remains the company’s largest shareholder.

The Analyst

DA Davidson’s Andrew Burns initiated coverage of Perry Ellis’ stock with a Neutral rating and $27.50 price target.

The Thesis

Feldenkreis offered to buy the company he founded for $27.50 per share, which represents a 22-percent premium from the prior day’s closing price, Burns said in a note. (See the analyst’s track record here.) 

With Feldenkreis’ already-existing 11.3-percent stake in the company and financial support from private equity partner Fortress Investment Group, the transaction will “most likely be consummated,” the analyst said. 

The takeout offer will dominate near-term trading while it’s pending, Burns said. As a standalone company, there are three reasons to have confidence in Perry Ellis’ growth prospects, he said:

• An improving overall retail backdrop.
• Expansion in the retailer’s international and direct-to-consumer businesses.
• Continued category expansion as the company looks to add up to 25 new license agreements annually.

Price Action

Shares of Perry Ellis were down 1.13 percent at $26.21 at the close Friday. 

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