True Religion is selling out.
On Friday, the Vernon, Calif.-based jeans maker announced that it has signed an agreement to be acquired by private equity firm TowerBrook Capital Partners L.P. in a transaction valued at $835 million.
TowerBrook has made similar investments in the past, and has a special interest in high-end fashion brands, having made "control-oriented investments" in companies including Jimmy Choo, Odlo, BevMo! and Phase Eight in the past.
Assuming that shareholders approve the deal, TowerBrook will pay $32 cash for each share of True Religion outstanding, a price the company' board says is 52% above where the shares traded back on October 9, just before it announced it was seeking a buyer.
The purchase price on offer values True Religion at about 1.7 times sales, and 17.6 times earnings -- somewhat short of the valuations at rival firms such as PVH Corp. and V.F. Corporation Yet, even so, investors today bid up the shares by only 8.1%, to $31.82 -- a price just short of TowerBrook's offer, and indicative of lack of belief that a better bid will emerge.
The article True Religion Sells Out originally appeared on Fool.com.Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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