NEW YORK — Aether Holdings has signed a $51.5 million cash and stock deal to acquire The Athlete’s Foot.

The Athlete’s Foot is one of the world’s largest athletic footwear and apparel franchise operations, with more than 575 locations in 40 countries. Aether’s purchase includes The Athlete’s Foot brand, along with the global retail franchise operation.

Under the terms of the deal, Aether agreed to an earn-out arrangement that will entitle the seller to receive up to an additional $8.5 million of cash and stock, if The Athlete’s Foot’s financial results for the year ended Dec. 31, 2006 meet certain specified targets. The deal is expected to close by the end of 2006.

The purchase also represents the first deal for Aether president and chief executive officer Robert D’Loren, who joined the firm in June when Aether bought UCC Capital. That acquisition now allows Aether to implement an intellectual property strategy focused on brand management and acquisition, spearheaded by D’Loren. According to D’Loren, the acquisition of The Athlete’s Foot is the first step toward building a diverse portfolio of consumer brands and franchise-related properties.

Separately, to identify and align the business with its new focus, Aether said it will start doing business as NexCen Brands Inc. Aether plans to exit the mortgage-backed securities business, its core focus prior to acquiring UCC.

“The Athlete’s Foot is a retail brand that is recognized by consumers worldwide,” said D’Loren in a statement.

“This franchise system will provide us not only with a historical and growing revenue stream, but also a flexible distribution channel for additional consumer brands that we plan to acquire in the future,” he added.

Aether said that Robert J. Corliss, president and ceo of The Athlete’s Foot, will continue with Aether as president and ceo of Aether’s retail franchise division, NexCen Franchise Brands Inc.

“Our longstanding relationship with Bob D’Loren and UCC has served The Athlete’s Foot well over the past several years,” Corliss said in a statement.

In the fall of 2003, The Athlete’s Foot and UCC completed a private placement transaction that involved a whole company securitization, backed by The Athlete’s Foot’s intellectual property. The deal was the first to securitize franchise revenues for a brand. The retailer issued long-term, asset-backed notes that were backed by franchise fee revenues generated by its stores and related trademarks.

This story first appeared in the August 23, 2006 issue of WWD. Subscribe Today.

Robert and David Lando opened the first The Athlete’s Foot store in 1971 in Pittsburgh. Shortly thereafter, The Athlete’s Foot began franchising domestically, with the first franchise store opening in Oshkosh, Wis. The first international franchise store opened in 1978 in Adelaide, Australia.