Founders of St. John Knits Plan Buyout

The founders of St. John Knits Inc., saying they’re tired of trying to satisfy Wall Street’s insatiable demand for rapid growth, announced plans Tuesday to buy all the shares of the upscale clothing maker and take it private.

“We wanted to slow the growth down, and Wall Street doesn’t like slow growth,” Chief Executive Robert E. Gray said. “We feel the best way to do that is by being private.”

The Gray family is offering to buy the shares it doesn’t already own for $28 per share, or about $490 million in cash. The offer is about 28% more than Tuesday’s price of $21.94. The stock had ended up 94 cents on the New York Stock Exchange. The bid was announced after the stock market closed.

Currently, Gray, his wife, Marie St. John Gray, and their daughter Kelly Gray, the company’s president, own 13.6% of St. John.

The Irvine-based company said Tuesday that its board has formed an independent committee to evaluate the proposal.

With the company’s stock now trading at less than half of its 52-week high of $48.31, Wall Street analysts have suggested that St. John has been ripe for takeover. Indeed, last month the company adopted a “poison pill” plan designed to thwart a hostile bid.

But Gray said Tuesday that the company has not received any acquisition offers in the last six months.

This is the second move this month by a high-profile Orange County entrepreneur to take a company private. Last week, billionaire developer Donald L. Bren offered to buy the shares of Irvine Apartment Communities Inc. that he doesn’t already own for $540 million. Bren said he took the action because Wall Street and banks have written off real estate investment trusts.

St. John’s stock has been pummeled this year after the company issued warnings that its earnings wouldn’t meet analysts’ expectations in the second and third quarters. The company this year also admitted to quality-control problems that resulted in a recall of some imperfect garments. The company blamed those problems, in part, on an attempt to grow too quickly.

Gray said the family decided to try to reclaim the company that he and his wife founded 35 years ago because it wants to run the business based on what’s best for the company, without the pressures of Wall Street.

Specifically, Gray said he would like to trim the company’s sales growth rate to 10%, rather than its historic growth rate of 25%.

Under the family’s ownership, the company would continue producing the same clothing lines, jewelry and other accessories--with one exception, he said. St. John is planning to drop its less expensive SJK line, which was launched last year to appeal to younger customers. The line will be discontinued regardless of who owns the company, he said.

Gray said he has received a commitment from Vestar Capital Partners to provide equity financing for the purchase.