Authentic Brands pays tribute to the listing to sell a $ 12.7 billion stake to investors

Jamie Salter, Chairman and CEO of Authentic Brands Group LLC.

Norm Betts | Bloomberg | Getty pictures

Retail conglomerate Authentic Brands Group plans to shelve a planned listed offering and instead sell significant stake in the business to private equity firm CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders, CNBC has learned.

The deal is valued at around $ 1[ads1]2.7 billion, and is expected to be announced on Monday, the company said.

Authentic Brands’ portfolio companies include clothing retailers Forever 21 and Aeropostale, department store chain Barneys New York, suit manufacturer Brooks Brothers for men and Sports Illustrated magazine. Early next year, the agreement to buy the jogging shoe manufacturer Reebok is expected to be terminated, and another brand will be added to the inventory.

The company had applied for listing on the beginning of July. But Authentic Brands CEO Jamie Salter said it will aim for a listing date in 2023 or 2024. He said he has signed on to be CEO for another five years.

“The IPO climate is ridiculous,” Salter said in a telephone interview. “I think we would have gotten a massive valuation … maybe even more than what we sold the business for. But guess what? I’d rather be private.”

A wave of retail companies has entered the public market in recent months, from eyewear manufacturer Warby Parker and the fashion rental platform Rent the Runway to the eco-friendly shoe brand Allbirds and the e-commerce fashion site Lulu’s. Investors have favored names that have a strong foothold on the internet, so that some can pick up valuations as if they were high-growth technology companies.

CNBC had reported that Authentic Brands applied for a value of 10 billion dollars in its public debut.

The transaction with CVC and HPS is expected to be completed in December, at which time the PE company and the hedge fund will each retain their respective seats on Authentic Brands’ board.

“We plan to work closely with the ABG team to implement their strategic priorities, particularly around international expansion,” said Chis Baldwin, CVC’s managing partner.

BlackRock will retain its position as Authentic Brands’ largest shareholder, as it has had since 2019, the company said. Existing investors, including US mall owner Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shaquille O’Neal will hold on to their stock positions.

When Authentic Brands listed on the stock exchange, it reported that net income in 2020 increased to 211 million dollars from 72.5 million dollars the year before, while revenues increased by around 2% to 489 million dollars.

“We have the same playbook today as we had yesterday,” Salter said. “You will hear about more acquisitions by the end of this year.”

CVC recently entered into an agreement to acquire Unilever’s tea business. Some of the company’s other portfolio companies include the streetwear brand A Bathing Ape and the pet goods chain Petco, according to the website. HPS spun out of JP Morgan Asset Management in 2016.

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