May 11, 2021 Breaking News, Latest News, and Videos

Cherokee Inc. Bids for Mossimo:

The future ownership of Mossimo, Inc., the Santa Monica-based designer, licensor and distributor of clothing, footwear and fashion accessories, was further complicated this week when it received an unsolicited proposal from Cherokee Inc. to acquire all the outstanding shares of the company for $8.50 per share, consisting of $6.00 in cash and $2.50 in Cherokee stock. Mossimo announced April 18 that, consistent with its fiduciary duties to its stockholders, Mossimo’s board of directors will meet to evaluate the Cherokee proposal received April 17.

Mossimo had announced on April 3 a merger agreement with Iconix Brand Group. Then, the company announced that on April 12 a “purported” shareholder class action lawsuit was filed alleging that Mossimo and its board of directors breached their fiduciary duties in approving the agreement with Iconix.

A Mossimo spokesman indicated that it is too early to determine whether Cherokee’s unsolicited letter constitutes a superior proposal as compared to the Iconix merger agreement, which provides for Mossimo stockholders to receive payment of $4.25 in cash and $3.25 in Iconix shares, subject to adjustments, plus, if the Iconix common stock does not trade above $18.71 for at least twenty consecutive trading days in the year following the merger, additional shares of Iconix common stock shortly following the first anniversary of the merger. These protective provisions, the company said, are designed to provide stockholders the opportunity to ultimately receive per-share consideration which represents $8.50 per Mossimo share after the merger.

The lawsuit was filed in the Los Angeles Superior Court and is entitled “Laborers’ Local #231 Pension Fund vs. Mossimo, Inc., et al.” A company spokesman indicated that the company and the directors deny all liability, believe the allegations in the complaint are without merit and intend to defend the claims vigorously. It is not known what effect the Cherokee offer and Mossimo’s response to it may have upon the lawsuit.

Mossimo president and co-CEO Edwin Lewis could not be reached for comment.

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