MOSS ADAMS CAPITAL: Apparel and foowear market monitor highlights notable deals, stock prices and results.
Details on Industry Insight.
I'll summarize what they said the challenges are:
Financing: At a time when credit conditions may be the tightest they have ever been, it will likely be difficult for Adrenalina to raise the $250 million to $300 million needed to purchase PacSun, analysts say.
Size: Adrenalina is small compared to PacSun. The company currently operates three stores. PacSun operates 938.
During the fiscal year ended December 31, 2007, Adrenalina had revenues of $3.3 million and incurred a net loss of $5.8 million. PacSun had $1.4 billion in net sales and net income of $39.6 million.
Valuation: Though the $4.50 offer is above PacSun's trading price of $3.78 this morning, analysts said it doesn't take into account the value of PacSun's large stores base and retail infrastructure.
Bloomberg quoted an analyst along those lines. From the Bloomberg story:
"Amy Noblin, an analyst at Pali Research, was skeptical.
"We think this particular deal is unlikely to happen given the low price,' she wrote in a research note Monday. Pacific Sunwear's value is closer to $10 a share," she said.