Differential Brands Group Inc, a portfolio company of Tengram Capital Partners, has agreed to acquire a “significant” part of Global Brands Group‘s North American licensing business, comprised of licensed brands such as Disney, Star Wars, Calvin Klein, Under Armour, Tommy Hilfiger, Michael Kors, Cole Haan and Kenneth Cole. The price of the transaction is $1.38 billion. The deal is expected to close in the third quarter of this year. Goldman Sachs (Asia) L.L.C. provided financial advice to GBG on the deal.
LOS ANGELES–(BUSINESS WIRE)–Differential Brands Group Inc. (the “Company” or “Differential”) (NASDAQ:DFBG), a portfolio of global consumer brands comprised of Hudson, Robert Graham and SWIMS, today announced that it has entered into a definitive purchase agreement with Global Brands Group Holding Limited, a Hong Kong listed company (SEHK Stock Code: 787) (“GBG”), to acquire a significant part of GBG’s North American licensing business (the “GBG Business”), comprised of licensed brands such as Disney, Star Wars, Calvin Klein, Under Armour, Tommy Hilfiger, BCBG, bebe, Joe’s, Buffalo David Bitton, Frye, Michael Kors, Cole Haan and Kenneth Cole, for a purchase price of $1.38 billion, subject to adjustment (the “Transaction”). It is anticipated that upon closing, DFBG will have in excess of $2.3 billion in pro forma annual revenue comprised of branded men’s, women’s, and kid’s apparel, along with accessories that will be distributed to a diversified base of consumers across all retail and digital channels. The acquisition is expected to close in the third quarter of 2018.
William Sweedler, Chairman of the Board of Directors of Differential Brands Group (the “Board”) and Managing Partner of Tengram Capital Partners LP (“Tengram”), which played a pivotal role in bringing the parties together and getting the Transaction to signing, stated, “On behalf of the Board, I am thrilled that we were able to structure a transaction with the Fung family to acquire one of the leading branded consumer soft goods companies in North America with a world class management team led by Jason Rabin.” Mr. Sweedler continued, “Jason and his team plan to invest significant capital into this Transaction, which will transform Differential into a large scale North American branded platform.” Jason Rabin, current President of GBG North America stated, “We are thrilled to join Differential Brands Group and lead our combined platform by leveraging our expansive infrastructure, distribution and sourcing networks to drive growth, and we look forward to working with the Differential management team and Tengram to help support the Company’s growth as it capitalizes on promising market opportunities. We are proud of what we have accomplished since joining Li & Fung in 2009, judiciously expanding the GBG platform and driving profitability, and thank them for their long-standing support and partnership.” Mr. Sweedler added, “Mr. Rabin has a proven track record of successfully growing numerous world class brands since inception. We are confident this Transaction will create tremendous value for our stockholders, as well as provide enhanced opportunities in North America for our brands and business partners.”
The purchase price for the Transaction will be paid in cash. Fully committed debt financing for the Transaction is being provided by Ares Capital Management LLC, HPS Investment Partners, LLC and GSO Capital Partners LP. Relatedly, certain members of GBG’s existing management team, co-investors and lenders will be making an equity investment in the common stock of DFBG (the “Equity Issuance”). Upon the closing of the Transaction, Tengram Capital Partners, LP will convert all of its Series A and Series A-1 Convertible Preferred Stock into common stock of DFBG.
The closing of the Transaction is subject to satisfaction or waiver of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, the approval of the GBG’s stockholders under applicable Hong Kong listing guidelines and the approval of DFBG’s stockholders in connection with the Equity Issuance pursuant to NASDAQ listing requirements and regulatory approvals. As part of the Transaction, certain stockholders of the Company, namely Tengram Capital Partners, LP and its affiliates, have agreed to vote in favor of such Equity Issuance, and certain stockholders of GBG, namely, Fung Holdings (1937) Limited, have agreed to vote in favor of the Transaction.
Dechert LLP acted as lead counsel to DFBG and Richards, Layton and Finger acted as Delaware counsel to DFBG. Freshfields Bruckhaus Deringer LLP acted as lead counsel to GBG and Reed Smith LLP also advised GBG on the Transaction. Goldman Sachs (Asia) L.L.C. acted as financial advisor to GBG on the Transaction.
About Differential Brands Group:
Differential Brands Group Inc. (NASDAQ:DFBG) is a platform that focuses on branded operating companies in the premium apparel, footwear and accessories sectors. Our focus is on organically growing our brands through a global, omni-channel distribution strategy while continuing to seek opportunities to acquire accretive, complementary, premium brands.
Our current brands are Hudson®, a designer and marketer of women’s and men’s premium, branded denim and apparel, Robert Graham®, a sophisticated, eclectic apparel and accessories brand seeking to inspire a global movement, and SWIMS®, a Scandinavian lifestyle brand best known for its range of fashion-forward, water-friendly footwear, apparel and accessories. For more information, please visit Differential’s website at: www.differentialbrandsgroup.com.