Destination XL Rejects $46 Million Go-Private Offer from Zodiac Partners

✴︎

5.31.2026

Quick Facts

Destination XL rejected a $46 million take-private offer from Zodiac Partners at $0.82 per share
The board called the offer opportunistic and said it doesn’t reflect the company’s underlying value
DXL is pursuing a merger with FullBeauty Brands expected to close in Q2 2026

Destination XL’s board of directors unanimously rejected a $46 million go-private offer from Zodiac Partners on May 26, just two weeks after the proposal was made.

The offer of $0.82 per share represented a 26 percent premium above DXL’s closing price of 65 cents on May 11. However, the board determined the bid undervalued the struggling plus-size retailer.

“The offer is also highly conditional and opportunistic, seemingly timed to deliberately exploit a period of market dislocation,” said Board Chairman Lionel Conacher.

DXL faces significant headwinds. Fourth-quarter sales declined 6 percent year-over-year to $112.1 million. The company posted a net loss of $29.6 million, or 54 cents per diluted share, compared to a $1.3 million loss in the prior year period.

Comparable-store sales fell 7.3 percent, with brick-and-mortar sales down 8.6 percent and online volume declining 4.3 percent.

CEO Harvey Kanter cited multiple market challenges on the company’s Q4 earnings call. “Whether it is tariffs, the impact of GLP-1 drugs, which we believe is having an impact in terms of the customer’s weight and how they are thinking about clothing, or the price of gas, food, groceries, going out to eat — all those variables are affecting the sector,” he said.

The rejection comes as DXL pursues a merger with FullBeauty Brands expected to close in the second quarter of 2026. The combined company would generate approximately $1.2 billion in net sales over the last twelve months.

Under the merger terms, FullBeauty shareholders would own 55 percent of the combined entity, while DXL shareholders would hold 45 percent. The transaction is expected to generate $25 million in annual cost synergies by 2027.

DXL questioned Zodiac’s financing capacity in SEC filings. The company noted that Zodiac’s committed equity totals only $10 million from sponsor Camac Fund, representing less than 25 percent of the $46 million total consideration required.

“The offer is subject to a financing condition, and offeror has not obtained committed financing sufficient to consummate the offer,” DXL stated.

DA Davidson lowered its price target for DXL to $1.50 from $2.00 while maintaining a Buy rating. The firm cited revenue meeting expectations but margins falling below estimates due to higher markdowns and fixed cost deleverage.

DXL’s stock currently trades at $0.73, giving the company a market capitalization of approximately $41 million.