Blair Corp. finds resistance to proposed buyout

On January 24th Blair Corp. (AMEX:BL), a catalog retailer of clothing and apparel, announced that it had agreed to be acquired by Appleseed Fund (APPLX) for $42.50 per share -- a 23% premium to the stock's average closing price over the four weeks leading up to the announcement. Writing on BloggingStocks, I discussed how I had contemplated investing in the company before because it was undervalued, but decided not to because I didn't see a catalyst on the horizon. On January 25th, investor Seymour Holtzman announced that he also thought the stock was undervalued, even after the proposed buyout.

In a press release that accompanied the 13-D that he filed reporting a 5.1% stake in the company, Mr. Holtzman wrote that "The events of the past week are startling. We saw an initial offer by Appleseed's, which we view as a lowball bid, followed three business days later by a definitive merger agreement at $42.50 per share. This is only fifty cents more than the $42.00 per share the Company paid in July 2005 in a self-tender for 4.4 million shares at a total price of $184.8 million. We believe the Appleseed's transaction was pursued in a closed process without involving other potential suitors, and is punctuated with Blair giving Appleseed's an unnecessary breakup fee with an inadequate window of time for other potential suitors to express their interest and perform due diligence."

I had a chance to speak with Mr. Holtzman, who is the Chairman of the Casual Male Retail Group (NASDAQ:CMRG), a leading catalog retailer of clothing for big and tall men. When asked whether there was any connection between his interest in Blair and CMRG, Mr. Holtzman emphasized that he was acting on his own behalf with his investment in Blair, and that an acquisition of Blair is "not something that Casual Male would consider."