Iconix Brand Group Inc has again dipped its toes into the waters of the West Coast with its agreement to acquire the Ocean Pacific brand from the Warnaco Group for total consideration of about $54m.

Iconix, increasingly operating as a brand portfolio manager with labels including Candie's, Joe Boxer and London Fog, had previously entered into an agreement to purchase Mossimo, the Los Angeles-based designer brand with exclusive US distribution in Target stores.

Under terms of the OP agreement, announced late Tuesday (31 October), Warnaco will continue to manufacture and sell women's and junior swimwear under the OP label, although it will do so as a licensee.

Upon consummation of the transaction, expected in November, Warnaco would be paid $10m in cash and a short-term note payable in full by year's end.

Payment of the note would consist of at least $17m in cash with Iconix common stock making up the balance. Iconix has the option to extend payment through 31 January of next year, at which time the cash portion of the payment would rise to $30.5m or more, with the remainder in Iconix common stock.

"The action sports lifestyle segment is an area that Iconix has been seeking to penetrate," said Neil Cole, chairman and chief executive of Iconix.

"OP is the original action sports lifestyle brand with tremendous authenticity, high brand awareness and applicability to a broad variety of consumer products, including apparel, accessories and sports equipment like surf, snow and skate boards.

OP has a large global footprint with 15 different international licensees, and Iconix believes it can expand OP's international business further and significantly grow the brand's penetration in the US."

OP also has about 15 domestic licensees.
In the same statement, Joe Gromek, Warnaco's president and CEO, said that Warnaco's managers "continually assess our portfolio of brands and licenses to ensure we focus on our strongest platforms for growth.

"While we have made significant progress in restructuring the OP business, the sale will allow us to increase our attention on our core brands and on our international opportunities, which are the key drivers of our growth strategy."

Meanwhile, he added, the firm is "pleased" that its association with brand can continue as a licensee.

Warnaco and Iconix made no mention in their joint announcement of whether Richard Baker will continue as CEO of the brand. Baker was out of the country on vacation and phone calls to Warnaco and Iconix weren't returned.

Warnaco's swimwear and sportswear brands include Speedo, Cole of California, Catalina, Chaps, Nautica, Michael Kors and Calvin Klein.

By Arnold J Karr.