Polo Ralph Lauren Corp. (RL) is a premier global player in the designing, distribution and marketing of lifestyle products. The company, which offers apparel at about 9,000 locations globally, became a public company, trading on the New York Stock Exchange on June 11, 1997.
Recently, Polo’s CEO and chairman, Ralph Lauren, announced the underwritten secondary public offering of his 9.0 million shares of Class A common stock priced at $84.17 per share. The company will not be selling shares neither will it receive proceeds from the offering.
As of May 21, 2010, there were 1,103 holders of record of Class A common stock and 15 holders of record of Class B common stock. Mr. Ralph Lauren and his family hold the entire outstanding shares of Class B common stock with a convertible option into Class A common shares at any point on a one-for-one basis.
Mr. Lauren who currently owns 39.8 million of Class B shares will be converting 9 million shares of Class B common stock into Class A shares for resale in the public markets. Class A and B units carry equal economic interest; Class B shares, however, carry increased voting power of 10 to 1. However, the investment banks as well as the underwriters JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) have been given a 30-day option to sell an additional 1.35 million shares to cover any over allotments. This public offering from Mr. Lauren is for the purpose of asset diversification. Also, the company intends to buy $1 million shares from Mr. Lauren.
As of April 3, 2010, Mr. Lauren and his family owned approximately 84% of voting rights. The transaction does not abstain Mr. Lauren’s control in the company but only changes his voting right from 84% to 80.0% or more.
Earlier on February 27, 2002, Polo filed a preliminary prospectus with the SEC to conduct a secondary offering of approximately 11 million shares of common stock.
Our View
We believe that long-term investors should look for Polo, given its global footprint, solid growth profile and diversified product region and channel.
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