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Kenneth Cole gains controlling stake in namesake company

NEW YORK — Kenneth Cole, chairman and chief creative officer of Kenneth Cole Productions will now be the holder of approximately 46% of the company's common stock and will have 89% of the voting power. The deal was made possible through an agreement between Kenneth Cole Productions and Cole's controlling entity KCP Holdco.

Under the agreement, the company's shareholders, excluding Cole and his affiliated entities, will receive $15.25 per share in cash upon completion of the transaction. The price represents a premium of 17% to the closing price of the company's shares on Feb. 23, the last trading day before the announcement by Cole of his proposal, and a premium of 28% over the average closing price of the company's Class A common stock for the 45 trading days prior to that date, and implies a total enterprise value of approximately $245 million.

A special committee of the board of directors, comprised of all of the directors of the company other than Kenneth Cole and Paul Blum, was formed in February to review the proposal from Cole, with the assistance of independent legal and financial advisors.  The special committee completed a thorough review of the proposal, considered alternatives, and unanimously concluded that the transaction with Cole was in the best interests of the company's shareholders other than Cole and his affiliates and associates. Based on the unanimous recommendation of the special committee, the agreement was also approved by the full board other than Cole, who abstained.

Completion of the transaction is subject to certain closing conditions, including receipt of shareholder approval and other customary conditions. The merger agreement contains a non-waivable condition that a majority of the outstanding shares of the company not owned by Cole and his affiliates and associates vote in favor of the adoption of the merger agreement.

In addition, Wells Fargo Bank, N.A., part of Wells Fargo & Company (WFC), and certain other parties have entered into a binding commitment letter to provide debt financing in the event the closing conditions have been met, and Cole Family Holdco, LLC, an entity formed by Cole, and another third party have entered into binding commitment letters to provide equity financing in the event the closing conditions have been met.

BofA Merrill Lynch is acting as financial advisor to the special committee, and Sidley Austin LLP is acting as legal advisor to the special committee.

Peter J. Solomon Company is acting as financial advisor to Cole, and Willkie Farr & Gallagher LLP is acting as legal advisor to Cole.

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