US: Iconix buying Rocawear for $204m
Iconix Brand Group has agreed to buy the Rocawear line for US$204m in cash and up to an additional $35m in Iconix stock.
Shawn "Jay-Z" Carter, co-founder of Rocawear, will remain with the brand as chief creative officer, and its senior management team will remain in place as part of Iconix.
Iconix said that Carter will maintain his stake in the operating company that markets Rocawear men's wear and that his two partners in that business, Alex Bize and Norton Cher, will continue to manage that firm and enter into a long-term licensing agreement with Iconix to cover young men's apparel.
Carter will be responsible for product development, marketing and licensing at Rocawear.
Iconix expects Rocawear to add $43m in royalty revenue in its first year and said that the brand currently generates more than $700m in retail sales, including its licensees' offerings.
Up to $35m in Iconix stock will be paid out if certain performance targets are met over the next three to five years.
The agreement also calls for Iconix and Carter to form a separate joint venture to acquire and develop brands based on the Iconix brand portfolio model. The first of these will be the Shawn Carter Collection, a luxury brand to debut in 2008.
"This is the largest acquisition Iconix has made, and Rocawear is a brand that is increasing in market share and has extraordinary potential for growth," said Neil Cole, chairman and chief executive officer of Iconix.
He added that the purchase, expected to close this month, "will be transformative for Iconix in terms of its scale, the diversification it brings to our portfolio of brands as well as having someone as talented as Jay-Z joining our company and the many synergies that could bring."
While Iconix has been an active acquirer since adopting its brand management model, buying labels including London Fog, Mossimo and Ocean Pacific, the Rocawear acquisition places it squarely in the middle of the important but maturing urban sportswear business.
"Iconix is pioneering a new brand management model, and by combining Rocawear with their platform, my team and I can focus on our strength in design and lifestyle marketing," said Carter.
The cash portion of the deal will be paid from proceeds of a loan made to the company by Lehman Brothers and its affiliates.
By Arnold J Karr.
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