Bain and Gymboree

[The Straight Story]

Bain buys them up, using another bain company for procurement (thus transferring more of the company's wealth to themselves in essence), the managers of the company stay on and cash out "without being subject to the hassles and filing requirements of running a publicly traded company. In other words, the Proposed Acquisition is essentially a management buyout, backed by Bain Capital." Thus was triggered a class action suit by the shareholders:

COMPLAINT FOR BREACH OF FIDUCIARY DUTIES

1. This is a stockholder class action brought on behalf of the holders of The Gymboree Corporation (“Gymboree” or the “Company”) common stock against Bain Capital Partners, LLC (“Bain Capital”), Gymboree, and certain of Gymboree’s officers and/or directors (the “Board”) for breaches of fiduciary duty and/or other violations of state law arising out of defendants’ efforts to complete the sale of the Company to Bain Capital pursuant to an unfair process and for an unfair price (the “Proposed Acquisition”). In pursuing the unlawful plan to sell Gymboree to Bain Capital, each of the defendants violated applicable law by directly breaching and/or aiding the other defendants’ breaches of their fiduciary duties of loyalty, due care, candor, independence, good faith and fair dealing.

3. Gymboree is well positioned to provide its shareholders with significant investment gains as a standalone entity. The Company owns an extremely strong brand franchise and generates solid cash flow, estimated at $84 million in 2010 and $95 million in 2011. The Company also carries no debt and projected its year end cash at $228 million, over $8 per share. Recognizing the Company’s strong balance sheet and significant cash-flow potential, according to Thompson/First Call, one analyst had set a target price for Gymboree’s stock at $68 per share.

4. But on October 11, 2010, Gymboree and Bain Capital announced that they had entered into a definitive merger agreement (the “Merger Agreement”) whereby Bain Capital would acquire all of the outstanding stock of Gymboree for $65.40 per share in cash, representing an approximate total deal value of $1.8 billion. This price represents just a 23.5% premium to Gymboree’s closing stock price on October 8, 2010, the last full trading day before the announcement.

5. The Proposed Acquisition is the result of an unfair process through which Gymboree’s executives and insiders sought to “cash in” their illiquid holdings. In an October 4, 2010 article in the New York Post, an unnamed insider was quoted as stating that: “Top management including CEO Matt McCauley, a 37-year-old retailing whiz, have lately been scooping up shares as they look to ‘cash in and get recognition for all the good work they’ve done.’” Indeed, as of April 5, 2010, McCauley was the beneficial owner of nearly 600,000 shares of Gymboree stock and thus stands to gain nearly $40 million from the Proposed Acquisition. According to the same New York Post report, a number of “big-name buyout firms” were “lining up” to purchase the Company. Apollo Management had recently submitted an unsolicited bid for Gymboree, and a slew of additional financial buyers, such as “Bain Capital, KKR, Apax Partners and Irving Place Capital [had] also expressed interest in acquiring” the Company. As a result, Gymboree hired Goldman Sachs “to begin a formal auction of the company.” The auction was short-lived. Soon thereafter, the Board cut the auction process short and agreed to sell the Company to Bain Capital at a lowball price.

6. While Gymboree’s shareholders are being cut out of the picture, in addition to “cashing in” their illiquid holdings, the Company’s management appears to be staying on board after the transaction. The day both companies announced the Proposed Acquisition, Bain Capital admitted that it was looking forward to working with McCauley and the rest of the Company’s management team going forward. Consequently, in being retained by Bain Capital, Gymboree’s management gets the best of both worlds: they can cash in their equity holdings, but also remain in their current positions without being subject to the hassles and filing requirements of running a publicly traded company. In other words, the Proposed Acquisition is essentially a management buyout, backed by Bain Capital.

http://sec.gov/Archives/edgar/data/786110/000119312510235329/dex99a5a.htm

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LogicSource offers services to Gymboree

San Francisco-based specialty retailer the Gymboree Corp., and Norwalk-based LogicSource Inc. announced an agreement under which LogicSource will provide procurement and management services to Gymboree. Terms of the agreement were not disclosed.

http://www.stamfordadvocate.com/news/article/Business-briefs-3680176.php

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From Bain Capital Ventures (they own LogicSource):

LogicSource is a Procurement Management Firm that focuses exclusively on the procurement of printed materials and related commodities and services. LogicSource's procurement utility enables clients to dramatically reduce costs in print and related commodities. Through the company's suite of products and services, clients cut costs and improve the effectiveness of anything they print their logo on.

http://www.baincapitalventures.com/portfolio/company/logicsource/

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Bain execs report $49M in Gymboree stock


Current and former executives of Boston-based Bain Capital Partners LLC have reported $49 million in stock, following the acquisition of kids clothing giant Gymboree Corp. by the Bain Capital Fund X.

The stock went to 41 individuals, including Managing Directors Jordan Hitch and Joshua Bekenstein and Principal Marko Kivisto. Also named in the transaction is former Managing Director Robert Gay, and the former CEO of Gymboree, Matthew McCauley. The stock was acquired by the exercise of warrants and/or options, according to the filing. A spokeswoman for Bain said the stock windfall was part of the original Gymboree deal.

Gymboree was acquired by Giraffe Acquisition Corp and Giraffe Holding, inc., both controlled by Bain Capital, in a deal worth $1.8 billion which closed in Nov. 2010. Gymboree stopped trading on the Nasdaq Nov. 26.

http://www.bizjournals.com/boston/news/2011/02/22/bain-execs-net-49m-in-gymboree-stock.html

[nc4bo]

1. Ok, I'm so dizzy I can't keep up anymore.

Thanks for more info TSS

[NYC_SKP]

2. Screw Bain, and Screw Gymboree, his CEO, and the horses they rode in on.

http://randomhandprints.blogspot.com/2011/04/gymboree-someone-else-mother-earth-wont.html

[1KansasDem]

3. Looks like the suit was filed Oct. 2010

Was the lawsuit successful?

[nc4bo]

4. I'm not so much concerned about whether they won a suit or not

what I am concerned about is that Bain continues to savage, devour and reap the rewards.

Bain represents the ugly side of capitalism.

Job creators

My arse.

[The Straight Story]

5. You can read the settlement (they settled)

http://www.gilardi.com/GYMBOREE/pdf/GYMBOREE_Web_Notice.pdf

[railsback]

6. Interesting

My wife works at corporate. Before the Bain acquisition, she, as a manager, got hefty bonuses at least twice a year. After all, Gymboree was making good money and spread the wealth. Once Bain took over, the bonuses shriveled up to almost nothing.