M&A News: VF Sells Majestic, Delta Sells JunkFood and Velvet Gets Japanese Owner
The latest round of acquisition sees licensed brands changing hands and a large international retailer gaining access to the American market.
VF Puts Majestic on the Block
VF Corporation, a global leader in branded lifestyle apparel, footwear and accessories, today announced it has entered into a definitive agreement to sell its Licensed Sports Group (LSG) to Fanatics, Inc.
The LSG business includes the Majestic brand, which creates apparel and fan gear through licensing agreements with professional sports leagues and teams.
The transaction is expected to close in the second quarter. Terms of the agreement were not disclosed.
Fanatics, which sells official fan merchandise, operates more than 300 online and offline/in-venue stores, including the e-commerce business for all major professional sports leagues, including NFL, MLB, NBA, NHL, NASCAR, MLS and PGA, major media brands, and more than 200 collegiate and professional team properties. The company also designs and manufactures gear across leagues in its domestic manufacturing locations.
Fanatics was recently awarded the license to make and sell Major League Baseball fan gear, beginning in 2020.
Delta Steps Further Out of the Licensed Business
Delta Apparel, Inc. announced the sale of its vintage-inspired, licensed-graphics tee business, Junkfood Clothing Company, to JMJD Ventures, LLC for approximately $28 million.
The asset sale proceeds include $25 million in cash at closing, with promissory note payments due between June 30, 2017, and March 30, 2018.
The transaction does not include the sale of accounts receivable and certain other assets, or the assumption of trade payables and certain other liabilities. The approximately $35 million total value of the business sold exceeds its book value and represents approximately 80% of Junkfood’s revenue. Net of selling expenses, Delta Apparel expects to realize a pre-tax gain of approximately $1.0 million on the sale, which would be recorded in its 2017 fiscal second quarter.
“The Junk Food brand has broadened its consumer reach and awareness, and more than doubled its revenue since we acquired it in 2005. While we have enjoyed nurturing this brand over the years, the changing retail environment has made it more challenging to be a niche player in the licensed-graphics space,” said Delta Apparel’s Chairman and Chief Executive Officer, Robert W. Humphreys, adding the company would use the proceeds from the sale to lower debt levels, continue its share repurchase program and provide capital for strategic growth opportunities.
Humphreys said the sale of Junk Food allows the company to reduce its reliance on licensed properties.
California Brand Velvet Gets a Japanese Owner
Multi-brand apparel company Adastria has entered into a definitive agreement to acquire Velvet LLC, makers of the Velvet by Graham and Spencer label.
Adastria is one of the largest apparel companies in Japan with revenue of $1.8 billion. Adastria operates 1,400 stores and e-commerce operations throughout Japan and Asia. Velvet is the company’s second U.S. investment. In April, it acquired a minority share of Marine Layer, Inc.
“Velvet is a distinguished brand in the US contemporary market, and we are delighted to welcome Velvet to the Adastria group. This latest acquisition allows us to establish a strategic presence in North America and in the world of contemporary fashion, as we seek to transform Adastria into a leading global apparel company,” said Masa Matsushita, Representative Director and Chief Operating Officer, Adastria Co., Ltd.
Matsushita says Adastria plans to use its strong value-chain management strategy to strengthen the direct to consumer channels for Velvet, which sells through eight company stores in the U.S. as well as department and high-end specialty retailers internationally.