Fabrikant Purchases Part of Lazare Kaplan

M. Fabrikant and Sons recently purchased 5% of Lazare Kaplan.

The deal involves 17.7% of the company’s outstanding stock—1,305,000 shares—which the Fifth Avenue Group, a Fabrikant affiliate, bought at $9 each. At press time, LKI’s stock traded at $8.20; its 52-week low was $3.90.

Although the acquisition gives Fabrikant a stake in its fellow sightholder, LKI’s statement explicitly ruled out any chance of an outright acquisition or merger in the near future. It noted that Fifth Avenue Group and its affiliates have agreed not to purchase more than 24.9% of the outstanding shares of LKI or participate in any proxy dispute involving the company for 10 years.

LKI management will control the proxy vote for the recently sold shares.

“It’s a good investment, but for right now, that’s all it is—an investment,” says Marcee Feinberg, LKI’s marketing director. She doesn’t expect anything different from the purchase. “From what I know, it’s all just status quo,” she says.

Analysts said the two companies complement each other well: Fabrikant is a polished powerhouse, and LKI is known for its ability to source rough. Both companies are DTC (De Beers) sightholders. Matthew Fortgang, president of M. Fabrikant and Sons, did not return phone calls from JCK for comment.

Lazare Kaplan says it will use the investment to pay down bank debt and for other corporate purposes.