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​Lillian Vernon Catalog Corporation Sold to Investment Firm

The Journal News, 04.17.03
Allan Drury

RYE - Lillian Vernon Corp., the catalog and Internet company named for the woman who founded it more than a half-century ago, will be sold to an investment firm for $60.5 million, the parties said yesterday.

The sale to Ripplewood Holdings LLC, a Manhattan firm that manages more than $4 billion in capital, ends Vernon's tenure as head of one of Westchester's signature companies, though she will retain a 5 percent stake. Ripplewood Holdings is the financial backer of ZelnickMedia, which will manage the acquired company. The company will retain the Vernon name but be taken private.

Strauss Zelnick, who will be chairman, said the owners plan to capitalize on the Internet to bring in greater revenues. Currently, the Internet accounts for about 25 percent of the company's sales, with nearly all the rest being through the catalog, he said. He said Ripplewood and ZelnickMedia also plan to take advantage of chances to sell products on television home shopping programming. Only a small amount of the company's sales come from television now, he said.

Zelnick said he expects the deal to close in two to three months. Since Vernon and her son, David Hochberg, own 40 percent of Lilian Vernon's shares, it appears almost certain the company will get the shareholder approval it needs to consummate the deal. Though Zelnick is enthused about the chance to build on Vernon's legacy, he will be running a company that has performed poorly in recent years. Lillian Vernon lost $9.1 million on sales of $259.63 million last year, following a loss of $1.38 million in 2001. Vernon, 75, will serve as what the parties called a non-executive chairman and company spokesperson. Vernon and Hochberg will receive $24 million from the sale. Lillian Vernon has about 1,000 employees most of the year, including 165 at its headquarters in Rye. Temporary holiday hires swell the payroll to about 5,000. Lillian Vernon relocated an outlet store from Yonkers to Hartsdale about five years ago. The Hartsdale outlet was closed Feb. 15 when its lease ended.