Iconix Brand Group, Inc. Announces Definitive Agreement to Acquire a 51% Controlling Interest in Ecko Brands
Press Release
Source: Iconix Brand Group, Inc.
On 7:00 am EDT, Tuesday October 27, 2009
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NEW YORK, Oct. 27 /PRNewswire-FirstCall/ -- Iconix Brand Group, Inc. (Nasdaq: ICON - News; "Iconix" or the "Company"), today announced that it has signed a definitive agreement to acquire a controlling interest in the Ecko portfolio of brands, which represents over $1 billion of annual global retail sales. The Ecko portfolio includes Ecko Unlimited, Marc Ecko, the Rhino logo and Zoo York. Iconix will form a joint venture company with an affiliate of the Sellers to acquire the trademarks. Iconix will have a 51% interest in the joint venture and will control the licensing company and consolidate its results. Marc Ecko will continue in his capacity as the Chief Creative Officer of the company as he has since its inception.
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{"s" : "icon","k" : "c10,l10,p20,t10","o" : "","j" : ""} Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, "This purchase is consistent with our strategy to opportunistically acquire leading consumer brands that offer long-term growth potential when integrated into our business model. Marc and Seth have built powerful lifestyle brands and we look forward to working with them to continue to build these businesses on a global basis. The Ecko portfolio is a collection of powerful lifestyle brands some of which we believe could lend themselves easily to our direct retail model. In addition, Ecko already has strong licensing partners and a robust European platform, from which we could leverage the rest of our portfolio. Iconix and our shareholders will benefit from this accretive transaction as we are acquiring a strong portfolio of consumer brands at an attractive multiple."
Seth Gerszberg, commented, "I have always admired Iconix's brand stewardship and dynamic development of licensing opportunities. As we enter our next stage of growth and development, Marc and I are excited to benefit from Neil's market intuition and experience."
Marc Ecko, commented, "I am excited for the opportunity to partner with Iconix and have them join Seth and me on continuing this amazing journey. Ever since I have started, people have tried to marginalize streetwear as a niche business. After 15 years of consistent global retail growth and product expansion, I am excited at taking this next step. This partnership is a great fit for us. Iconix gets our passion for our brand and will support us to realize our vision for the future. This new venture provides me the bandwidth for my brand and allows me the resources and freedom to extend my professional and creative ambitions beyond my current platform of fashion, video gaming and publishing. "
For this acquisition, Iconix will pay $63.5 million of its cash, and the joint venture, of which Iconix will own 51%, will obtain $90 million of financing at an annual interest rate of approximately 7.5%, which is non-recourse to Iconix. Therefore, Iconix's effective purchase price for this acquisition will be $109 million. On a pro-forma basis for 2010, the Company expects the joint venture to generate approximately $42 - $44 million in annual net royalty revenue. Based on a pre-defined revenue and profit sharing calculation in the agreement the Iconix share of the gross royalties from the joint venture will be approximately $26 million. Iconix will control the licensing business and will therefore consolidate 100% of the results of this joint venture with minority interest being deducted below the operating income line, and only the earnings attributable to Iconix will be included in EBITDA.
Iconix Brand Group Inc. (Nasdaq: ICON - News) owns, licenses and markets a growing portfolio of consumer brands including CANDIE'S ®, BONGO ®, BADGLEY MISCHKA ®, JOE BOXER ® RAMPAGE ® MUDD ®, LONDON FOG ®, MOSSIMO ® OCEAN PACIFIC ®, DANSKIN ® ROCA WEAR®, CANNON ®, ROYAL VELVET ®, FIELDCREST ®, CHARISMA ®, STARTER ® and WAVERLY ®. In addition, Iconix owns an interest in the ARTFUL DODGER ® and ED HARDY ® brands. The Company licenses its brands to a network of leading retailers and manufacturers that touch every major segment of retail distribution from the luxury market to the mass market in both the U.S. and around the world. Iconix, through its in-house advertising, promotion and public relations agency, markets its brands to continually drive greater consumer awareness and equity.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this press release are forward looking statements that involve a number of known and unknown risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the Company, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, uncertainty regarding the results of the Company's acquisition of additional licenses, continued market acceptance of current products and the ability to successfully develop and market new products particularly in light of rapidly changing fashion trends, the impact of supply and manufacturing constraints or difficulties relating to the Company's licensees' dependence on foreign manufacturers and suppliers, uncertainties relating to customer plans and commitments, the ability of licensees to successfully market and sell branded products, competition, uncertainties relating to economic conditions in the markets in which the Company operates, the ability to hire and retain key personnel, the ability to obtain capital if required, the risks of litigation and regulatory proceedings, the risks of uncertainty of trademark protection, the uncertainty of marketing and licensing acquired trademarks and other risks detailed in the Company's SEC filings, including the prospectus supplement relating to the offering. The words "believe", "anticipate," "expect", "confident", "will", "project", "provide" "guidance" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact Information:
Jaime Sheinheit
Investor Relations
Iconix Brand Group
212.730.0030 212.730.0030
Tara Levy
Public Relations
Iconix Brand Group
212.730.0030
