Iconix Brand Group Inc. now has full control of its branded operations in China.
Iconix said it paid $56.4 million to its venture partner, Novel Fashion Brands Ltd., for the 50 percent of the venture it didn’t already own. Of the total, $40.4 million was paid in cash and $16 million in Iconix stock.
Iconix formed the 50-50 venture with Novel, owned by the family of Silas Chou, in 2008. Veronica Chou, the daughter of Silas Chou and a former private banker at Citibank, was named president of the JV shortly afterward. The collaboration was initially capitalized with $20 million from Novel and $5 million from Iconix, in addition to the rights to its brands in the markets of China, Hong Kong, Taiwan and Macao.
The transaction gives Iconix full control of the venture, which in turn owns equity stakes in two joint ventures with Shanghai La Chapelle, which recently went public; publicly traded shares in China Outfitters; equity stakes in six additional retail ventures, of which four have plans to go public in the next five years; control over a portfolio of 15 brands that have as yet not formed agreements for distribution through licensees, and an office in Hong Kong.
“We view China as a major growth opportunity,” said Neil Cole, chairman and chief executive officer of Iconix. “Through Silas and Veronica Chou’s expertise and relationships, Iconix China has successfully launched nine of our brands with more than 900 stand-alone stores, shops-in-shop and counters throughout China. Now that our business has gained sufficient scale, we have decided to acquire management and control of the business, consistent with the next phase of our international growth strategy.”
The JV’s approach to expand the Iconix portfolio has involved providing entrepreneurs with access to brands in exchange for which the JV has received an equity stake in the new venture, rather than licensing royalties or franchise fees. The Candie’s and Marc Ecko Cut & Sew brand were placed with Shanghai La Chapelle; London Fog with China Outfitters; Material Girl with Ningbo Peacebird; Ed Hardy with Landmark International; Ecko Unltd. with Xi Ha Clothing; Badgley Mischka with Eve NY; Joe Boxer with Northeast Socks, and Royal Velvet with Qingdao Hongfang.
Candie’s, which has worked with Shanghai La Chapelle since 2010, has more than 700 stores and shops-in-shop, according to Iconix, and ranks as the largest brand to emerge from the collaboration.
Iconix’s Peanuts, Umbro and Lee Cooper brands have been managed outside the JV. Peanuts, acquired by Iconix in 2010, has more than 2,000 points of distribution in China, including 20 Charlie Brown Cafés.