Fifth & Pacific Companies, Inc announced that it has entered into a definitive agreement to sell the intellectual property of the Juicy Couture brand. Consummation of this transaction is subject to customary closing conditions and is expected to occur in November.
William L. McComb, Chief Executive Officer of Fifth & Pacific Companies, Inc., said: "We announced that we have signed an agreement to sell the intellectual property of the Juicy Couture brand to Authentic Brands Group (ABG) for $195 million, payable in cash. With this sale, we have also entered into a short-term licensing agreement with Authentic Brands Group that allows us to transition the business in an orderly fashion through the first half of 2014, with a $10 million guaranteed minimum royalty payable to Authentic Brands Group.
"In the coming weeks and months, we anticipate that Authentic Brands Group will announce licensees and affiliates that will work to take over elements of the operating business, including many of the company's talented associates, retail stores, wholesale, international, and certain components of the ecommerce site. We plan to work closely with these entities to ensure a smooth and orderly transition that is seamless to consumers and our business partners."
Jamie Salter, Chairman and Chief Executive Officer of Authentic Brands Group commented: "Juicy Couture is a leading lifestyle brand that is recognized worldwide. We are honored and excited to build upon Juicy Couture's unique heritage and to realize the brand's significant global potential."
Mr. McComb continued: "This decision is the result of a process we began last year - studying our resource allocation needs, our capital structure, and the operating risks and opportunities associated with a three brand portfolio while still maximizing shareholder value. While working hard to accelerate the turnaround of Juicy Couture and continue the expansion of Lucky Brand Jeans, we also initiated processes to assess the market values of each of these assets.
"Despite our conviction and faith in the portfolio as a whole, we concluded that the best way to increase shareholder return would be by monetizing the value of Juicy Couture's powerful trademarks today to further de-risk our company and its ability to execute over time. Ultimately, this is all about bringing Kate Spade to its full potential."
Mr. McComb concluded: "We will have much more to say in the coming weeks about the transition of the operating components of the business, the associated restructuring costs and key impacts on our financial outlook.
"While the restructuring and other transition costs and charges will likely be significant (including costs associated with the assignment or termination of leases, severance, impairment charges and other associated transition activities), now that the transaction has been announced, we will seek to minimize these costs through discussions among us, ABG, its licensees and our landlords, employees and other providers regarding the transition plan for the Juicy Couture business.
"In the end, we believe that all of our brands will have a very bright future, and this announcement will help to ensure that. We are not prepared at this time to make comments on any process or decisions about Lucky Brand. If and when we have news to announce on Lucky, we will do so."
Centerview Partners and Perella Weinberg Partners advised Fifth & Pacific Companies, Inc. on this transaction.