This news doesn't pass the smell test. Tiny Adrenalina, a Miami-based sports gear and clothing retailer that trades on the Pink Sheets, is making a $293 million bid for teen clothing retailer Pacific Sunwear
While the surf-and-skatewear company could use a lift -- its stock is off about 80% from its 52-week high -- this looks like little more than a publicity stunt or a bid to boost Adrenalina's own stock price. That's because its chairman and CEO is Ilia Lekach, who has a rich history of playing such games.
Back when he was running Parlux Fragrances
In 2003, he announced his intention to take the fragrance maker private using a company called Quality King, which was ultimately unable to come up with financing. The bid was dropped.
Two years later, Lekach announced he was seeking "strategic alternatives" for Parlux -- typically code for selling a company that often sends a stock's price higher on expectations of a premium being achieved. No buyer ever came forward.
Then in 2006, Lekach again announced he was going to take Parlux private, this time in connection with one of his operations called PF Acquisitions, but even his board of directors wasn't buying it. Board members were so concerned that another failed bid to go private would seriously harm Parlux's outside shareholders, they demanded that Lekach post $1 million in earnest money. Without any financing lined up ahead of time, he dropped his quixotic bid yet again.
Parlux played the role of drama queen so often under Lekach that it could have been considered a diva. In fact, two years in a row, former MarketWatch columnist Herb Greenberg bestowed the title of worst CEO of the year on Lekach, who beat out Patrick Byrne of Overstock.com
There's nothing to suggest he would be any more successful in integrating PacSun into Adrenalina.
Pacific Sunwear isn't having any of Lekach's antics. He said he was going directly to shareholders with his bid because PacSun CEO Sally Kasaks has repeatedly declined his offers to make a deal. Perhaps she's all too familiar with his game.
Consider that Adrenalina has all of $10.8 million in assets, $329,000 in cash, lost $5.8 million in 2007, and is down $7.8 million over the past 12 months -- and once again doesn't have financing lined up to do the deal. No matter, Lekach says he's "highly confident (the deal) can be done."
As a shareholder I'm enjoying the boost the offer has given PacSun's stock today. However, increasing shareholder value has a far better chance of succeeding under Kasaks' turnaround plan, now under way, rather than in the sandbox in which Lekach is playing.
The latest on PacSun: