Danish fashion group IC Companys has entered into a deal to sell its mid-market division to DK Company.

DK's acquisition price for the division, which includes the InWear, Matinique, Part Two and Soaked in Luxury brands, includes DKK50m (US$9.2m) in cash and 203.6m shares. Based on the closing price on 26 March, the market value of the shares amounted to DKK126m.

The divestment forms part of IC Companys' strategic plan to focus completely on the premium segment under which its Tiger of Sweden, Peak Performance and By Malene Birger brand operate. Combined, the brands have had an average revenue growth rate of 8% for the last three financial years and an EBIT margin of 8.2% for the financial year 2012/13.

The mid-market division generated revenue of DKK891m and suffered an operating loss of DKK37m for the financial year 2012/13.

Group CEO Mads Ryder said he believes the company will achieve better results by focusing on operating fashion and sports brands in the premium segment.

"This is an attractive market with strong growth rates and good earnings opportunities, which in particular Tiger of Sweden and By Malene Birger have experienced during the past few years.

"All three premium brands have generated solid earnings and continue to hold large international growth potentials. At the same time we believe that the future potential of the mid-market segment is better realized by DK Company as the owner."