NexCen Brands Inc has agreed to buy Bill Blass Holding Co and its affiliates in a stock and cash transaction that could net the sellers more than US$70m.

NexCen will pay Blass's chairman, Haresh Tharani, and its president, Michael Groveman, $54.6m, at closing, with 28% of the amount, or $15.5m, coming in the form of NexCen stock.

The sellers can also earn an additional $16.2m in cash or stock if gross royalties attributable to the Bill Blass mark during calendar 2007 reach certain targets. NexCen expects royalties of $10m next year, as well as benefit to earnings per share of 7 cents.

As part of the transaction, expected to close next month, Designer Licensing Holdings LLC will take over the license for Bill Blass men's and women's denim in autumn 2007, and an affiliate of the new licensee will acquire a 10% stake in the Blass trademark operation.

The denim license is currently held by Resource Club Ltd., of which Tharani is also chairman.

Robert D'Loren, president and chief executive officer of NexCen, said: "Bill Blass is a lifestyle brand that represents the best of timeless and classic American design. We could not think of a more suitable brand for our portfolio that we expect will be a fashion icon for years to come."

D'Loren was personally involved in the last sale of Blass name seven years ago. He was principal of CAK Universal Credit Corp in November 1999 when CAK financed Tharani and Groveman's $50m acquisition of the company from Blass through asset-backed securities based on the future earning value of the Blass business and trademarks, including the royalties generated by the name.

The structure of the deal was unprecedented in apparel industry history. The bonds paid interest and would have liquidated next November. The intellectual property basis of the earlier deal foreshadowed the "IP-centric" basis for D'Loren's current company.

Blass died on 12 June 2002 at the age of 79.

"This is a mutually beneficial opportunity for Blass and for our couture designer, Michael Vollbracht," Groveman said in a statement.

"We've spent years working with Bob D'Loren and looking forward to working with him at NexCen. We anticipate a very successful endeavour, and one that will help to further enhance the Bill Blass brand."

Groveman and Vollbracht will continue their involvement in the Blass couture business, Bill Blass Limited.

Although Blass is the first designer name to enter the NexCen portfolio, the company in October acquired The Athlete's Foot, which franchises athletic footwear and apparel stores.

Just last week, the company announced that it had hired Charles Zona as executive vice president of licensing and brand management.
 
By Arnold J Karr.