Is The Former Owner of Jimmy Choo Buying Steve Madden?

Deal Reporter writes in the FT that two groups are looking at buying shoe brand Steve Madden. One is said to be the Brown Shoe Company and the other, curiously enough, is the private equity group Lion Capital. Lion sold the Jimmy Choo shoe brand to TowerBrook Partners earlier this year.

Steve Madden, the man, is currently consulting for Steven Madden the brand, as he is banned from working as a company officer until June 2008. Why? Because Madden spent three years in jail when was found guilty of conspiracy to commit money laundering and securities fraud (but still owns about 8 percent of the shares outstanding). The man has chuptzah. Before Madden was sentenced, he signed a contract with his own company to earn $700,000 a year as a creative consultant. A wage he earned the entire time he was in jail. And when he was due to get out, he ran a ad campaign signaling the fact, "A new meaning for the word springtime. Steve Returns. Spring 2005"

The company is traded on the Nasdaq exchange and the stock is currently at $23.47. Deal Reporter says that the price would likely be $30 to $32 per share. Steven Madden's stock price has declined 45 percent in the last year because of weakness in the shoe sector at large.

When Lion Capital sold Jimmy Choo, it got 13.5x EBITA (earnings before interest, taxes and appreciation) for the company. But Madden is expected to sell for 10xEBITA because it is an older brand and not in the luxury arena. Lion is said to thinks the expertise it gained in the shoe market with Jimmy Choo will help it run Madden. Steve Madden is a very different brand in just about every way -- from the stores it sells to, to the places in produces.