Vancouver women’s fashion retailer Aritzia Inc (TSX: ATZ), which went public last year, announced that Berkshire Partners and other investors will sell additional shares in the company for $17.45 per share. The secondary deal will generate gross proceeds of up to $403 million. With the close of the initial $351 million offering and another trade, Berkshire will own about 28.7 percent of Aritzia’s issued and outstanding subordinate voting shares and multiple voting shares and about 51.1 percent of the related voting power. Berkshire, a U.S. private equity firm, acquired Aritzia in 2005.
Aritzia Announces $382 Million Secondary Offering of Subordinate Voting Shares and Concurrent Block Trade
VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jan. 10, 2017) –
Aritzia Inc. (TSX:ATZ) (“Aritzia”), an innovative design house and fashion retailer of exclusive brands, announced today that an investment vehicle managed by Berkshire Partners LLC, a Boston-based private equity firm (the “Berkshire Shareholder”), an entity controlled by Brian Hill, Aritzia’s Founder and Chief Executive Officer (the “Hill Shareholder”) and Sweet Park Holdings Inc., an entity indirectly controlled by Aldo Bensadoun, a director of Aritzia (the “Bensadoun Shareholder” and together with the Berkshire Shareholder and the Hill Shareholder, the “Selling Shareholders”), have entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets, BofA Merrill Lynch and TD Securities Inc. (the “Underwriters”), pursuant to which the Underwriters have agreed to purchase on a bought deal basis an aggregate of 20,100,000 subordinate voting shares held by the Selling Shareholders at an offering price of $17.45 per share (the “Offering Price”) for total gross proceeds to the Selling Shareholders of $350,745,000 (the “Offering”). Aritzia will not receive any proceeds from the Offering.
The Underwriters have also been granted an over-allotment option (the “Over-Allotment Option”) to purchase up to an additional 3,015,000 subordinate voting shares from the Berkshire Shareholder and the Bensadoun Shareholder at the Offering Price for additional gross proceeds of $52,611,750 if the Over-Allotment Option is exercised in full. The Over-Allotment Option can be exercised at any time, in whole or in part, for a period of 30 days from the closing date of the Offering, which is expected to occur on or about January 26, 2017 and is subject to certain customary closing conditions.
A preliminary short form prospectus relating to the Offering will be filed by no later than January 12, 2017 with Canadian securities regulating authorities.
In a separate transaction that is expected to close concurrent with the Offering, a group of employees of Aritzia, not including Brian Hill, will be selling an aggregate of 1,788,366 subordinate voting shares, on a block trade basis, at the Offering Price for total gross proceeds of $31,206,987 (the “Concurrent Block Trade”). The Concurrent Block Trade is expected to close on or about January 26, 2017. The completion of the Offering is not conditional upon the completion of the Concurrent Block Trade.
Upon completion of the Offering and the Concurrent Block Trade and assuming no exercise of the Over-Allotment Option, the Berkshire Shareholder and its affiliates and the Hill Shareholder will, directly or indirectly, own or control approximately 28.7% and 22.6%, respectively, of the issued and outstanding subordinate voting shares and multiple voting shares (collectively, the “Shares”), and approximately 51.1% and 40.2%, respectively, of the voting power attached to all of the Shares. As a result, the Hill Shareholder will have met its previously disclosed long-term target equity ownership of between 20% to 25% of the aggregate issued and outstanding Shares.
In connection with the Offering, Aritzia will release certain optionholders from lock-up arrangements in order to permit the employee group to complete the Concurrent Block Trade. Aritzia will also release from lock-up certain other employees in order to permit them to sell up to an aggregate of 968,210 subordinate voting shares following completion of the Offering, provided the market price of Aritzia subordinate voting shares is at or above the Offering Price at the time of such sale.
No securities regulatory authority has either approved or disapproved of the contents of this news release. The subordinate voting shares have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws. Accordingly, the subordinate voting shares may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities of Aritzia in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Aritzia is an innovative design house and fashion retailer of exclusive brands. We design apparel and accessories for our collection of exclusive brands and sell them under the Aritzia banner. Our expansive and diverse range of women’s fashion apparel and accessories addresses a broad range of style preferences and lifestyle requirements. We are well known and deeply loved by our customers in Canada with growing customer awareness and affinity in the United States and outside of North America. We aim to delight our customers through an aspirational shopping experience and exceptional customer service that extends across our more than 75 retail stores and eCommerce business, aritzia.com.
About Berkshire Partners
Berkshire Partners, a Boston-based investment firm, has made over 115 investments since its founding in 1986 through nine private equity funds with more than $16 billion in aggregate capital. Berkshire has developed industry experience in several areas including consumer and retail, communications, business services, industrials and healthcare. Berkshire has a long history of partnering with management teams to build market leading growth companies. Prior investments in the retail sector include Bare Escentuals, Carter’s and Party City.
Media Contact: ICR, Inc.
Photo courtesy of Aritzia Inc