NEW YORK — Iconix Brand Group Inc. said on Thursday that it has entered into a letter of intent to purchase the high-profile Joe Boxer underwear brand.
Iconix, which had been known as Candie’s Inc. until last month, said it was negotiating a definitive purchase agreement, subject in part to the company’s ability to obtain financing, among other contingencies.
The announcement came after WWD reported that the sale of Joe Boxer to a New York-based brand management firm specializing in footwear and apparel was imminent.
Financial sources said the deal was expected to close today.
The deal “is a good one for Iconix because it is accretive to earnings,” said a financial source with knowledge about licensing and the Boxer brand.
Neil Cole, chief executive officer of Iconix, could not be reached for comment.
Shares of Iconix hit a 52-week high in over-the-counter trading on Thursday to close at $8.04, up 18 cents. Its former 52-week high was $7.95. Shares rose to as much as $8.25 in intraday trading. The average trading volume is 213,633 shares; more than 760,000 shares changed hands in Thursday trading.
Windsong/Allegiance Apparel Group bought Joe Boxer from founder Nicholas Graham in March 2001 after the underwear firm found itself near bankruptcy following a $3.15 million judgment that was awarded to a former licensee. Windsong inked an exclusive distribution deal with Kmart in 2001, with the launch of Joe Boxer in time for back-to-school in 2002.
Sears Holdings Corp. carried over the agreement when Sears Roebuck & Co. and Kmart Holding Corp. merged this year.
Institutional investors, particularly hedge fund players, have taken active positions in the stock, another financial source said.
There was speculation in the marketplace that Iconix is arranging for a loan to help pay for the deal, one that would require the company to pay between 4 and 5 percent interest. The collateral for the loan was said to be the licensing fees derived from the Joe Boxer product lines.
A hedge fund player, who asked not to be identified, said the acquisition has little risk to Iconix since the licensing fees represent a steady flow of income.
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