Apparel giant Fifth & Pacific Companies has agreed to sell its Lucky Brand Jeans business to an affiliate of private equity firm Leonard Green & Partners, for US$225m, to focus on its popular Kate Spade label.

The apparel giant, which last month refused to be drawn on the sale, said it is a result of a process the company began last year, which included studying its resource allocation needs, capital structure, and the operating risks and opportunities associated with a multi-brand portfolio.

Of the $225m being paid for the brand, $140m will be paid for in cash at closing, while the remaining $85m will be financed through a three-year seller note. 

The transaction is subject to customary closing conditions, and is expected to close in the first quarter of 2014.

Under the ownership of Leonard Green & Partners, Lucky Brand Jeans will assume the proportionate share of Fifth & Pacific's sourcing contract with Li & Fung in addition to other obligations. 

Net proceeds from the sale, as well as the divestiture of its struggling Juicy Couture brand, which was announced last month, are expected to reach $370-380m.

"We believe that by focusing all of our resources on the huge opportunity at Kate Spade, we can deliver the strongest value creation opportunity for our shareholders. This is all about bringing Kate Spade to its full potential," said Fifth & Pacific CEO William McComb.

The Lucky Brand Jeans administrative office will continue to operate in North Bergen, New Jersey, where the majority of employees will continue employment with either Kate Spade or Lucky Brand Jeans.

"We are proud of the transformation our company has undergone: today we are a leader in digital sales and marketing; we are primarily direct-to-consumer in our channel approach; we are global in reach and focus; and we are more marketing driven than we have ever been as a company," McComb added.

"But most importantly, we are focused, and with each passing phase of our transformation, we have become more and more focused on realising this value creation opportunity."