Judge to Rule on Bid to Buy St. John Knits
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A judge could rule as early as today on whether to temporarily block the sale of upscale women’s clothier St. John Knits Inc. of Irvine to the family that founded it.
Disgruntled shareholders are asking Orange County Superior Court Judge William F. McDonald to issue a preliminary injunction that would stall the sale of the upscale women’s clothing company until the case goes to trial or is settled.
Shareholders maintain that the purchase price of $30 per share, or $522 million, is too low and does not reflect St. John’s actual value. They say appropriate steps were not taken to get the best deal for the shareholders.
St. John Chief Executive Robert E. Gray and his family intend to buy the shares they don’t already own, along with Vestar Capital Partners. They hope to hold a shareholders’ meeting in late May or early June to vote on the matter.
In a lively hearing Wednesday that drew 13 attorneys, McDonald expressed concern about two issues raised by the shareholders’ attorneys: the repricing of stock options owned by two St. John board members after the stock price slumped, and the “apparent favoritism” shown to the Grays when the transaction was structured.
McDonald did not indicate which way he was leaning. He said he probably would make a ruling today or Friday.
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