Differential Brands Group has a new name and operating structure now that it has finalized the acquisition of a significant portion of the North American licensing business of Global Brands Group Holdings. The combined business will be called Centric Brands, and Jason Rabin, former president of GBG North America, has been named chief executive officer, succeeding Michael Buckley, who left the company Monday.
Differential last June signed a $1.38 billion agreement with the Hong Kong-based GBG to acquire the kids businesses, which include Fishman & Tobin and Kids Headquarters; the “core” brands, which are BCBG, Bebe, Buffalo and Joe’s, and all the accessories businesses with the exception of footwear.
The new Centric Brands is expected to have $2.3 billion in annual revenues and will join Differential’s legacy brands of Hudson, Robert Graham and Swims. Centric will be listed on the Nasdaq exchange under the ticker symbol CTRC. It will be headquartered in New York with offices in Greensboro, N.C., Los Angeles and Montreal.
In addition to Rabin, William Sweedler, managing partner of Tengram Capital Partners, which was instrumental in making the deal, will serve as chairman of the board of directors. Other directors will include members from the management team, Tengram and GSO Capital, which was also intimately involved in the acquisition deal.
“With the closing of the acquisition and structuring of the new Centric Brands platform, we have brought together best-in-class operating capabilities with a strong portfolio of brands across areas of core expertise including kids, women’s and men’s accessories and apparel,” Sweedler said. “Centric Brands looks forward to building a relationship with Li & Fung, and its global sourcing networks.”
Sweedler said he was attracted to the “significant talent pool” that came along with the deal. “Second, scale is important in today’s world. This merger adds important scale as well as incremental operating expertise and growth opportunities for both businesses. A combination of people, amazing brands and scale, along with the combined leadership drove the decision to create this new brands collective platform.”
He was especially attracted to Rabin, whose 25 years of experience should allow him “to seize the white space opportunity ahead for Centric Brands in an impactful way that drives growth and creates long-term shareholder value.”
“I’m excited to finally be working with Jason,” Sweedler added. “I’ve known him for close to 20 years as a licensing partner and have always admired his tenacity, work ethic and ability to grow consumer businesses. I believe our combined skills of brand management, licensing and operating multiple consumer businesses will be a strong foundation for the future growth of Centric Brands.”
Rabin said changing the name of the business was “critical” in order for employees to “fully grasp the magnitude of the change we are embarking on today, as we create a new combined company. We’re bringing together best-in-class operating capabilities with a strong portfolio of brands and talented people that will drive our future. Therefore, we wanted a new name that would symbolize the creation of our company and reflect our position as a leading lifestyle brands collective platform.”
He said he’s eager to bring his expertise in both owned and licensed brands to Centric Brands as the company navigates through the changes taking place in the market today.
“I’m excited to have the opportunity to lead Centric Brands as we solidify our position in the market as a world-class lifestyle brands collective,” Rabin said. “With an unmatched sourcing network, industry expertise and a large-scale platform, we have the ability to expand organically through brand, category and channel growth, as well as the potential to add brands to our portfolio through new licenses and acquisitions across strategic verticals.”
Rabin said bringing together Differential, which is “really good at focusing on the core capabilities of its brands and licensing out the non-core categories” and GBG, which is a leader in kids’ wear and accessories, “makes us more of a vertical operation with the ability to share knowledge, best practices, infrastructure and talent across the entire organization, so the two businesses are accretive to each other when combined.”
He said the focus over the next several months will be on integrating the businesses, but in the future, Centric will “look for ways to opportunistically add brands to our portfolio through new licenses and acquisitions across strategic verticals.”
The purchase price for the transaction was paid in cash. Financing was provided by Ares Capital Management LLC, HPS Investment Partners LLC and GSO Capital Partners LP, along with members of GBG’s existing management team.