Blair Responds to Loeb: No Thanks

Warren, PA-based cataloger Blair Corp. has rejected New York-based investment fund Loeb Corp.’s May 10 offer to buy the company for $36 a share. Instead, on May 26, Blair’s board of directors said it intended to buy back approximately 4.4 million shares of its outstanding common stock for $42 per share, or approximately $185 million. The directors have agreed not to participate in the tender. The tender will begin by Aug. 1 and will be completed shortly thereafter.

“Blair will not accept Loeb’s recent offer to acquire the company,” Blair president/CEO John Zawacki said in a statement, “but will instead go forward with the repurchase of more than half of our shares.”

For the transaction, Blair will obtain a credit facility of up to $200 million, which will be used in part, together with $40 million of Blair’s cash reserves, to fund the stock tender. Blair intends to pay down the portion of the credit facility used to finance the stock tender with the proceeds received from the previously announced sale of its credit portfolio to Alliance Data Systems Corp. The closing of the Alliance Data transaction remains on target for the fourth quarter of 2005.

As a result of this tender offer, two of Blair’s major shareholder groups, Loeb and Santa Monica Opportunity Fund, have agreed to enter into “standstill” agreements with Blair and tender all of their shares. As part of the standstill agreements, the two groups will not try to exercise any control over management of Blair, will vote in accordance with the board and management of Blair, and will not acquire any additional shares of Blair for a period of five years.

Loeb Partners currently owns 6.7% of the apparel and home decor cataloger’s outstanding common stock.

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