NEW YORK — Iconix Brand Group is deepening its ties to Wal-Mart.
On Thursday, the company said it had entered a definitive agreement to purchase the Starter brand from Nike Inc. for $60 million in cash. The deal is expected to close next month.
Starter, which began in 1971, is known for its branded and licensed league apparel, and currently has licensed several manufacturers and wholesalers that sell primarily to Wal-Mart in the U.S., Canada and Mexico.
Nike bought the Starter properties in August 2004 for $43 million as part of a plan to tap into the mass channel. Starter became part of Nike’s Exeter Brands Group, which also includes Shaq/Dunkman and Tailwind, and generates about $40 million in wholesale and licensed revenues. Starter accounts for the bulk of the sales. In the past year, Nike pulled back its Starter footwear, and focused more on apparel.
Nike will continue to manage the Shaq business until the master license expires in September, and Nike has mutually agreed with Payless not to continue the Tailwind business beyond spring, according to a Nike spokesman.
Nike said it decided to sell Starter since it had less growth prospects than its other subsidiaries, such as Converse, Cole Haan, Hurley and Nike Golf.
Iconix, which is headed by Neil Cole, chairman and chief executive officer, forecasts that Starter’s 2008 royalty revenue will be about $18 million worldwide. Cole pointed out that the acquisition of Starter diversifies Iconix’s portfolio into athletic apparel, team sports and athletic footwear. He said the company is working on a multifaceted strategy, including signing several major professional sports figures.
Dottie Mattison, senior vice president and general merchandise manager for Wal-Mart, said in a statement, “Our customers have responded very positively to our athletic apparel and footwear brands at value price points. Starter is one of our most powerful brands, both in terms of its heritage and the range of different categories it covers.”
Among Iconix’s holdings are Danskin Now and OP, both of which are licensed to Wal-Mart.