M&A Deals to Keep Up Breakneck Pace

Don't expect a slowdown in M&A activity anytime soon, particularly after Foot Locker's $1.2 billion tender offer Friday for all the outstanding shares of...

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In the men's and women's wear segments, Betsey Johnson, Nanette Lepore and Joseph Abboud are in play, according to sources.

Sage Group is said to be financial adviser to Johnson and Lepore. Schmitt declined comment. The women's wear firms are believed to be profitable, and are considered well-recognized brands, according to industry executives.

J.W. Childs Associates L.P. bought men's wear brand Joseph Abboud in 2004 for $73 million, less debt. Investment bankers said the private equity firm was initially seeking $200 million for the company. An apparel executive, who has been eyeing the brand, said the price had been lowered to the $150 million range. The executive, who requested anonymity, said his company was not bidding since the price was still high, even at the reduced amount.

Li & Fung also is believed to have taken a look at Abboud, but supposedly walked away. Two brand management firms, NexCen and Iconix Group, are said to be circling the brand. Executives at NexCen and Iconix declined comment.

NexCen, which owns Bill Blass and The Athlete's Foot as well as the home brand Waverly, is looking at Kahala Corp., a privately held corporation focused on the franchising of quick-service restaurants, according to investment bankers. The Kahala umbrella includes Blimpie, Samurai Sams and TacoTime. NexCen recently bought Maggie Moo's, an ice cream franchise chain.

Iconix, meanwhile, is digesting its Rocawear acquisition, and has recently incorporated brand purchases Op and Danskin. It has under its umbrella Badgley Mischka, Bongo, Candie's, Joe Boxer, London Fog, Mossimo and Mudd. Sources in the home sector said it also, on and off, had made overtures to buy Pillowtex.

So what makes a company, particularly a brand, salable?

"If you have a good brand, with a strong growth profile, you'll attract both financial and strategic interest. The key is growth. Profitability is important. Everyone wants a popular brand with stability, but the most attractive feature in terms of its future is the ability to grow the brand," said Sage's Schmitt.

Robin Lewis, a consultant with his own firm, predicted that strategic acquirers would continue searching for the next hot brand, or at least one they could grow. "To grow a business organically when you are public and get the 10 percent to 15 percent growth rate Wall Street wants isn't going to happen. The only option is through acquisitions in order to deliver that kind of growth."

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