NEW YORK — Add two more to Iconix Brand Group Inc.'s growing stable of brands: Mudd and Mossimo.
On Monday, the New York-based firm signed two separate acquisition agreements for the purchase of Mossimo Inc. for $119 million and the Mudd trademark for $88 million.
Neil Cole, chairman and chief executive officer of Iconix, said, "Mossimo is a great brand and Target [which carries the brand] is a great retailer.... The two deals for Mossimo and Mudd are very accretive to Iconix."
In addition to Mossimo and Mudd, Iconix's umbrella of consumer brands includes Candie's, Bongo, Badgley Mischka, Joe Boxer and Rampage. Cole said no "one brand accounts for more than 20 percent of our income." For the most recent year-end period, licensing and commission revenue was $30.2 million.
Cole said he'll soon start analyzing the growth opportunities for Mossimo, but he was also quick to note the "phenomenal" job Target has done in positioning the brand at its stores. The Modern Amusement brand, part of Mossimo Inc., will be sold as part of the Iconix/Mossimo transaction to some of Mossimo's owners, and will not be part of Iconix, Cole added.
Under terms of the Mossimo deal, Iconix would acquire all of the outstanding shares of Mossimo for $7.50 a share, comprising cash and Iconix stock. The price per share represents a 37.1 percent premium from Friday's close of Mossimo shares at $5.47. Iconix said the deal is expected to close in July 2006 and will generate between $20 million to $25 million in 2007 royalty revenue. Mossimo founder and chairman Mossimo Giannulli will join Iconix as creative director and continue his work in building the brand. Cole declined to provide details of Giannulli's employment agreement. Separately, Mossimo said in a release that it amended its license agreement with Target, extending the license through January 2010.
Regarding Giannulli, it seems the founder of the brand finally got what he desired: a takeover price of over $7 a share. Mossimo and Iconix were in takeover talks on and off since last summer. Giannulli, who owns about 65 percent of Mossimo, made a bid to buy back the company in April 2005, hoping to acquire the balance at $4 a share. He withdrew the offer in August and then made a new offer, the second time upping the bid to $5 a share. While Giannulli's second tender offer was pending, Iconix moved in with its $7-per-share offer, and in November the parties were about to sign an agreement when Giannulli pushed for a higher price, according to financial sources at the time. Talks between the two firms broke off last November, and Giannulli withdrew his $5-per-share tender offer.
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