Most Recent Articles In Mergers and Acquisitions
Latest Mergers and Acquisitions Articles
- Joe’s Jeans Completes Hudson Jeans, Robert Graham Merger
- Think Tank: Douglas Hand on the Challenge Of M&A for Namesake Brands
- Damiani Family Buys Venini
More Articles By
NEW YORK — HMX Group is fielding interest from potential buyers — and Iconix Brand Group Inc. is among the strongest suitors.
This story first appeared in the September 19, 2012 issue of WWD. Subscribe Today.
This isn’t the first time Iconix has shown interest in the financially troubled men’s wear company, according to market sources. But its interest is said to have “intensified” in recent weeks, with the firm now seeking partners it can work with to complete a deal. Iconix is a brand-management company and would need a partner or partners to manage the operations of HMX.
Sources said that in any Iconix-led transaction, the company and its partners would share HMX’s equity, although Iconix would most likely own the trademarks. The new owners would continue to operate all of HMX’s current brands, which include Hart Schaffner Marx, Hickey Freeman, Bobby Jones and Coppley.
A spokeswoman for Iconix declined comment Wednesday.
Doug Williams, chief executive officer of HMX, said, “The company doesn’t speculate on market rumors. SKNL, management and its advisers are completely focused on ensuring the future of HMX and its brands.”
HMX’s history originated from the now-defunct Hartmarx Corp., which was acquired out of bankruptcy by Indian firm S. Kumars Nationwide Ltd. in August 2009 and renamed HMX. London-based Emerisque Brands holds a minority stake in HMX.
While Williams and Joseph Abboud, president and chief creative officer of HMX, have been working to turn the group around, the men’s wear firm has had issues this year regarding its financial structure. In August, the company closed on a new financing facility with Salus Capital Partners. The new one replaced the facility HMX had with its former lending group, led by Wells Fargo and J.P. Morgan.
Approval of the new facility was finalized in June but hit a roadblock due to a required cash infusion from SKNL that never arrived. The initial glitch was resolved as continued negotiations centered around a timetable through which SKNL would provide funding via installments.
But market sources indicate that SKNL might be unwilling to continue to fund HMX, increasing the pressure on the firm to find a new owner. One source familiar with the financial structure of HMX acknowledged that “timing is critical” in connection with any acquisition of the firm. If SKNL does not provide its agreed funding, that could jeopardize the availability of HMX’s new facility with Salus Capital.
Sources said that more than two dozen firms have looked at HMX, although Iconix seems to be the most interested. Rumblings over the future of HMX and its funding first surfaced at the MAGIC show in Las Vegas in August. There were also rumors that a management-led buyout might be in the works. While the accuracy of the speculation could not be determined, sources said any new owner would likely keep Williams and Abboud on board, given their efforts in overhauling the business and updating the collections.
There are major hurdles to any possible acquisition of HMX, namely the status of the unions and the North American factories that are part of its operations. HMX operates three factories — in Chicago, Rochester and Hamilton, Ontario.
Market sources believe that discussions may have already included union feedback, and that the unions are already on board with a possible sale of the company. One source familiar with the discussions said “there’s been no discussion or intent to shut down any factory.” The source concluded that the unions see a sale with continued factory production as a “commitment to American manufacturing,” and as a result, the factories would not be an issue in any transaction currently under discussion.