By  on November 1, 2006

NEW YORK — Iconix Brand Group has bought itself a new baby: the Ocean Pacific brand from the Warnaco Group for $54 million.

Op is a leading global action-sports lifestyle brand that is more than 35 years old. As part of the deal, Warnaco will be granted a license from Iconix to continue to manufacture and sell women's and junior swimwear. Op has more than 30 license agreements, including footwear, kids' apparel, eyewear, fragrance, skateboards and surfboards, according to Iconix. Half the licenses are international ones.

Warnaco bought Op in August 2004 for $40 million in cash and the assumption of $1 million in debt. The agreement provided for future performance-based payments if certain business targets were met. At the time, Op had annual worldwide wholesale revenues of $210 million in 2003, and analysts estimated $3 million in net income for 2003.

"The action-sports lifestyle segment is an area that Iconix has been seeking to penetrate. Op is the original action-sports lifestyle brand with tremendous authenticity, high brand awareness and applicability to a broad variety of consumer products, including apparel, accessories and sports equipment like surf, snow- and skateboards," Neil Cole, Iconix chairman and chief executive officer, said in a statement.

Cole added that Iconix believes it can expand Op's international business further and significantly grow the brand in the U.S.

"This is a major opportunity for Op to reach its full potential as a global lifestyle brand," said Dick Baker, president of Op. "The multiple brand platform of Iconix is both a modern business model and a proven vehicle for revenue growth. In addition, the ability to partner with Warnaco in their core competency, junior swim, makes this acquisition a ‘win-win' for everyone involved. I am excited about the future for Ocean Pacific and its strategic options."

Iconix said it will pay Warnaco $10 million in cash at closing, which is expected sometime this month. The balance of the purchase price will be in the form of a short-term note from Iconix, payable in full on or before Dec. 31, through a combination of cash of not less than $17 million and shares of Iconix common stock. Iconix may at its election extend payment of the note until Jan. 31, 2007, at which time it will have paid not less than $30.5 million in cash, with the remainder in Iconix common stock."As part of our strategy to increase shareholder value, we continually assess our portfolio of brands and licenses to ensure we focus on our strongest platforms for growth," Joe Gromek, Warnaco's president and chief executive officer, said in a statement.

Gromek noted that Warnaco has made progress on the restructuring of the Op business.

In 2004, Warnaco had plans to double Op's then-$450 million worth of product at retail, with bigger plans to turn Op into a $1 billion brand.

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