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In the fall of 1988, Mr. Taylor again approached Messrs.
DeJoria and Mitchell. (At the time, JPMS’s sales were in the $65
million range.) Mr. Taylor offered $125 million to acquire all of
the JPMS stock. The proposed acquisition price assumed that: (1)
Mr. DeJoria would continue managing JPMS; (2) Mr. Mitchell would
continue promoting the products for at least 18 months to 2 years;
and (3) both Messrs. Mitchell and DeJoria would be compensated in
salary and stock at a level paid to officers of other Minnetonka
subsidiaries, such as Calvin Klein.
Mr. DeJoria did not accept Minnetonka’s $125 million offer; he
believed that Minnetonka was “just a little short every time”.
(Mr. DeJoria represented to Mr. Taylor that he had received from
the Gillette Co. (Gillette) a $150 million offer plus a royalty of
2 percent of sales for life. Mr. Taylor informed Mr. DeJoria that
he could not match Gillette’s offer.) Sales discussions with
Minnetonka thus ended.
KPMG Peat Marwick (or one of its predecessors) certified
JPMS’s audited financial statements. JPMS’s net sales and net
income after taxes for fiscal years ended July 31, 1982 through
1988, inclusive, were as follows:
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