Iconix buying Mossimo, Mudd
Last Update: 4:44 PM ET Apr 3, 2006
NEW YORK (MarketWatch) -- Iconix Brand Group Inc. on Monday said it has agreed to buy Mossimo Inc., which makes clothes sold in Target stores, in a deal valued at about $119 million, as the company looks to expand its brand portfolio.
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New York-based Iconix also agreed to buy the Mudd brand for $88 million, and raised its earnings forecast for the year.
Iconix shares closed up 4% at $15.13, while Mossimo shares SOARED in the session to close up 40% at $7.64.
Iconix (ICON :
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ICON21.48, -1.27, -5.6% ) , which owns, licenses and markets brands like Joe Boxer, Candies and Badgley Mischka, said it would pay $7.50 a share for all the outstanding shares of Mossimo, comprised of $3.25 a share in Iconix stock and $4.25 in cash.
The total purchase price for Mossimo (MOSS :
MOSS
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MOSS0.00, 0.00, 0.0% ) is to be about $119 million, subject to a potential one-time adjustment of up to an additional $16 million in Iconix stock to be issued if the Iconix stock price does not appreciate to a level that would value the deal at $8.50 per share within one year of closing, the company said.
"This would be a nicely accretive transaction and one that we believe would be a strong driver of our earnings for many years to come," Neil Cole, chairman and chief executive of Iconix, said in a statement. "With the addition of Mossimo and Mudd, we project that the Iconix portfolio of brands would generate $3.5 billion in annual retail sales."
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Under the terms of the deal, Mossimo is to have $17 million in cash that Iconix acquires upon closing.
The Mossimo brand is projected to generate $20 million to $25 million in 2007 royalty revenue.
The deal has been approved by the boards of both companies but is still subject to shareholder and regulatory approval. It is expected to close in July.
