Express, Inc. and WHP Global Enter into Mutually Transformative Strategic Partnership, Leveraging a Platform to Build a Portfolio of Brands and Accelerate Long-Term Growth
December 08 2022 - 06:01AM
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Capitalizes on Strength of EXPR as a Fully Integrated Omnichannel Platform and WHP Expertise in Acquiring and Growing Global Consumer Brands to Drive Growth
WHP to Invest $25 Million to Acquire 5.4 Million Newly Issued Shares of EXPR at $4.60 Per Share, Representing an Approximate 7.4% Pro Forma Ownership
EXPR and WHP Form Intellectual Property Joint Venture Valued at Approximately $400 Million with WHP to Invest $235 Million for 60% Ownership, EXPR to Own 40%
EXPR Will Continue to Advance EXPRESSway Forward Strategy; Partnership with WHP Will Scale Express Brand Through Category and Global Licensing Expansion
Fashion apparel retailer Express, Inc. (NYSE: EXPR) ("EXPR") and WHP Global ("WHP"), a leading global brand management firm, today announced that they have entered into a mutually transformative strategic partnership to advance an omnichannel platform which is expected to drive accelerated, long-term growth through the acquisition and operation of a portfolio of brands. EXPR and WHP will also form an intellectual property joint venture intended to scale the Express brand through new domestic category licensing and international expansion opportunities.
"Our EXPRESSway Forward strategy has reinvigorated our brand and rebuilt the foundation of our company, paving the way for this bold next chapter in our transformation," said Tim Baxter, Chief Executive Officer at EXPR. "Our partnership with WHP will drive greater scale and profitability of the Express brand through their category licensing and international expertise and strengthen our balance sheet. We expect to accelerate our growth by acquiring multiple brands in partnership with WHP and operating them on our platform. Both of these are expected to drive shareholder value."
This transaction is expected to provide the following significant financial and operational benefits:
Capitalizes on strength of EXPR as a fully integrated omnichannel platform. EXPR will be ideally positioned to participate in anticipated retail industry consolidation and pursue acquisitions with WHP and is expected to expand its brand portfolio to accelerate growth and profitability. Through synergistic M&A, EXPR will leverage its platform to drive cost savings and margin expansion.
Scales existing multi-billion-dollar Express brand through intellectual property joint venture. We expect this partnership to accelerate growth for the Express brand through licensing in non-core categories and international expansion by leveraging WHP’s expertise.
Strengthens EXPR balance sheet by providing capital to acquire brands and reduce debt. EXPR will maintain its disciplined approach to capital deployment and is working with WHP to identify compelling, accretive brand acquisition opportunities.
Accelerates WHP growth. The strategic partnership is expected to provide WHP with a best-in-class operating platform to broaden its M&A pipeline.
"The global growth potential of the Express brand and the EXPR omnichannel platform will give our company a distinct competitive edge as we look to acquire more consumer brands," said Yehuda Shmidman, WHP Global Chairman and Chief Executive Officer. "We are excited to partner with Tim and his management team and view this partnership as a huge win for both of our companies."
Baxter continued, "By scaling the Express brand and identifying opportunities to expand our portfolio, we will leverage our platform to accelerate growth, generate operating margin expansion and drive profitability. We have found the right partner in WHP and look forward to welcoming Yehuda to our Board of Directors."
Transaction Details
The partnership will be effectuated through a multifaceted transaction. EXPR will form an intellectual property joint venture with WHP, which will acquire certain intellectual property of EXPR. Concurrently, EXPR will transform into an omnichannel platform company, managed and run by its current leadership upon closing of the transaction. All other aspects of the existing EXPR business remain unchanged.
Under the terms of the transaction, WHP will also make a common equity PIPE investment to acquire 5.4 million newly issued shares of EXPR at $4.60 per share, representing an approximate pro forma ownership of 7.4%.
The intellectual property joint venture implies a total value of the Express brand’s intellectual property at approximately $400 million and will be 60% owned by WHP and 40% owned by the EXPR platform company. WHP will invest $235 million for its stake in the intellectual property joint venture and EXPR will contribute certain of its intellectual property assets in exchange for cash consideration. EXPR will enter into an exclusive long-term license agreement with multiple renewal options with the intellectual property joint venture to use the contributed intellectual property for EXPR’s existing business and will pay a royalty fee to the intellectual property joint venture. Cash earnings in the intellectual property joint venture will be distributed quarterly to both parties on a pro rata basis.
The transaction is expected to close in EXPR’s fourth fiscal quarter of 2022, subject to lender consent, regulatory approvals and customary closing conditions.
Management and Board of Directors
The existing Express, Inc. management team and Board of Directors will continue to lead the company with Mr. Baxter serving as a director and CEO and Mylle Mangum serving as Chairman of the Express, Inc. Board of Directors. U
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