Brand management firm Bluestar Alliance is said to be eyeing two more labels for its portfolio: Rachel Roy and Brian Atwood.
Both Roy and Atwood are part of The Jones Group Inc. Jones has a 50 percent stake in fashion brand Rachel Roy, which resulted from a joint venture formed in 2008 between the designer, her then-husband Damon Dash, Jones and investment firm TSM Capital, which acquired its minority stake in 2007. Jones in 2012 acquired a majority stake in the Brian Atwood footwear brand, with Atwood serving as creative director.
Sources said the discussions between Bluestar and Jones were ongoing before Jones inked its deal last month to be acquired by private equity firm Sycamore Partners for $2.2 billion. It was unclear whether the Roy and Atwood brands were carved out of Sycamore’s acquisition before that deal was reached or whether Bluestar now has the task of negotiating with Sycamore.
Financial and market sources said talks have been ongoing and that a transaction could be forthcoming shortly. One individual said the discussions are fluid and cautioned that talks “could still fall apart.” Another source, a financial contact, said there have been queries in the last few weeks, particularly on the financials of the Rachel Roy operation. One other source said any agreement could fall apart or see delays due to financing. Bluestar is believed to rely on syndicated financing for many of its deals, particularly from family and friends.
Specifics of a proposed deal, such as ownership structure and dollar amount, weren’t immediately available.
A spokeswoman for Jones declined comment; Joey Gabbay, one of Bluestar’s founders, could not be reached for comment.
Rumblings surfaced last month that Roy was trying to buy back her company. In addition to the Rachel Roy designer line, there’s the more affordable Rachel Rachel Roy contemporary fashion brand that is an exclusive for Macy’s.
In the case of Atwood, Jones produces the designer’s contemporary B Brian Atwood collection via a licensing agreement. While under the Jones umbrella, Atwood’s first shop opened in October 2012 at 655 Madison Avenue in Manhattan, and that ownership also resulted in the launch of e-commerce site brianatwood.com. The fastest growing markets for the brand are South America and Russia.
Financial sources didn’t believe the purchase price would be that high given that both Roy and Atwood are considered relatively small businesses.
Brand management firms own the intellectual property of the brand, but aren’t operators. They build relationships with licensees to leverage the brand equity and expand into other categories to grow the consumer base.
Bluestar, founded in 2006 by Gabbay and Ralph Gindi, has been successful in moderate midtier distribution, but in the last year has been making a bigger push for firms higher up on the fashion food chain.
Bluestar acquired the Catherine Malandrino brand and IP assets in August and also reached out to other designers last summer, such as Charlotte Ronson, to see if any might be interested in pursuing talks.
Financial sources speak highly of Gabbay and Gindi, noting that they’ve done a fine job building the firm from scratch.
Although once believed to be limited to smaller deals, that perception changed when Bluestar in 2012 joined forces with Carlyle Group, the world’s second-biggest private equity firm, to bid for bankrupt men’s firm HMX Group. It lost to another brand management firm, Authentic Brands Group.
In addition to Malandrino, Bluestar’s umbrella of brands includes English Laundry, Kooba, Kensie, Mac & Jac and Harvé Benard. It also once owned a stake in Liz Lange Maternity, sold in 2012 to Cherokee Inc., and Ron Chereskin Studio, sold in 2010 to J.E.M. International Inc.
Since the company was formed, Bluestar has acquired brands exceeding $1.5 billion in retail volume. It also manages more than 200 licensees who distribute the different brands’ products throughout North America, Europe, Australia, South America and Asia.