Marquee Brands LLC has acquired the Ben Sherman brand and its related intellectual property assets for $63.7 million.
The brand management firm acquired the assets from Oxford Industries Inc. Marquee set up Ben Sherman UK Acquisition Ltd. And Ben Sherman US Acquisition LLC as the holding companies for the Ben Sherman’s assets.
Michael DeVirgilio, Marquee’s president, said, “The current management team under Oxford’s leadership has done a great job building on the core essence of the brand. We’ve received supportive messages from retailers across the globe that share our view of the growth opportunity ahead.”
The London-based label, which began in 1963, has its roots as a young men’s edgy, “Mod”-inspired shirt line. Ben Sherman has since evolved into a British lifestyle brand targeting men between ages 25 and 40. Atlanta-based Oxford Industries acquired the privately held company in June 2004 for $146 million from 3i, Europe’s leading venture capital firm, and Enterprise Equity. The latter two firms made investments in Ben Sherman in 1993. In 2009, Oxford made the decision to exit women’s and kids to focus on men’s wear, Ben Sherman’s strongest-performing division. After a long struggle to return it to profitability, Oxford said in March when it disclosed fourth-quarter results that it was looking for a buyer for the business.
Ben Sherman failed to achieve an operating profit in the fourth quarter and for the full year, but Oxford’s president and chief executive officer Thomas Chubb 3rd said then that the business made “great progress in 2014 and left the year with positive momentum, which we believe now positions it as an attractive acquisition target.”
Thomas C. Chubb, III, Oxford’s chairman and chief executive officer, said, “We truly appreciate the efforts of our Ben Sherman associates. Their dedication and enthusiasm for this iconic brand was clearly communicated to potential buyers, and was a critical component of this successful sales process.”
Oxford said it expects to receive net cash proceeds of $58 million, after transaction fees and expenses. It also expects to incur a one-time, non-cash loss on the sale of discontinued operations.
Sellling Ben Sherman allows Oxford to focus on the strength of its larger, profitable Tommy Bahama and Lilly Pulitzer brands.
In an interview, DeVirgilio said Marquee’s plan initially is to bring the brand “back to the position it was in when Oxford acquired the firm. The performance of the business is roughly half today of what it was then.” Marquee will focus first on adding more distribution via doors and accounts, and eyeing additional territories for the brand. Options Marquee is reviewing include bringing more of the lifestyle products to department stores on the wholesale level. Current department store distribution has been focused primarily on the sportswear line.
Areas ripe for expansion include Latin America and parts of Asia, such as South Korea and Japan.
Most of the new category extensions Marquee envisions aren’t likely to hit retail until mid- to-late 2016, given the production cycle, according to DeVirgilio. He’s currently in London meeting with the management team at Ben Sherman to review expansion options and put in place a long-term strategy. For now, the brand’s existing management team operates on a “business-as-usual” basis, although the plan for actual management of the brand going forward will be at the Marquee level.
Financo advised Oxford, while Ropes & Gray advised Marquee.
Marquee is one of the latest entrants in the category of brand management firms, a business model that has become a competitor for branded assets in the mergers and acquisitions game. Brand management firms work the licensing component of the IP assets to build out merchandise categories to build a brand’s business, as well as eye new sales channels — particularly in the overseas markets — for growth.
Cory Baker, Marquee’s chief operating officer, said his company targets brands with a “deep heritage and iconography.”
According to Baker, “Ben Sherman remains a uniquely classic British brand with a loyal following across five continents and a smartness that’s ageless.” He noted that the brand’s heritage, style and authenticity fit Marquee’s criteria for brands that it wants to add to its portfolio.
Looking down the road, Baker sees opportunity to bring back the kids line, noting that the “customer has asked for it. That’s an area we will be redeveloping and relaunching on a global basis.” Another area that’s on the agenda is bringing back the women’s offering.
A relatively new company, Marquee’s first acquisition was Bruno Magli in February. Marquee’s financial sponsor is Neuberger Berman.
Baker sees the firm staying active on the mergers and acquisitions front. “There’s no shortage of great brands. We’re not focused only on fashion, nor on the better or luxury categories. We are looking for meaningful brands that matter to the end consumer, whether in health and beauty or fitness and wellness. We are agnostic to the brands we look at, [provided] they have a strong history and opportunity for product expansion.”
DeVirgilio said an ideal mix for brands under Marquee’s umbrella would be between 10 to 15 across a number of industries and targeting different price points.
Zachary Sigel, a principal at Neuberger and a Marquee director, said, “We look forward to building on the success of Ben Sherman as we extend the brand by product, geography and channel.”