Iconix buys global rights, ups stake in Ed Hardy brand
by Viraj Nair
Published : April 27, 2011
* Deal worth $55 mln plus $7 mln in earn-outs
* Increases stake to 85 pct from 50 pct
* Raises FY view on Ed Hardy deal
* Ed Hardy to add $15-16 mln in annual royalty rev
* Shares rise 5 pct to year high (Adds stake details, share movement)
April 27 (Reuters) – Iconix Brand Group Inc acquired the worldwide rights to American tattoo artist Don Ed Hardy’s brand from Nervous Tattoo in a $55 million deal that raised its stake in the brand to 85 percent.
Iconix, which acquired a 50 percent interest Hardy Way LLC — owner of the Ed Hardy brand and trademarks — in 2009, also raised its full-year expectations to reflect the acquisition. [ID:nASA01ZS4]
News of the acquisition, coupled with strong results, drove Iconix’s shares up 5 percent to $23.56 — their highest in over three years.
On a pro-forma basis, Iconix expects the Ed Hardy brand to generate total annual royalty revenue of about $15-16 million. The deal also included a $7 million earn-out.
Don Ed Hardy will retain a 15 percent minority interest.
Nervous Tattoo will continue as a licensee for Ed Hardy t-shirts, hats and hoodies and pre-pay $7 million in royalties under its license.
Iconix, which posted better-than-expected quarterly results driven by strength across its brand portfolio, owns and licenses brands including Candie’s, Joe Boxer and Badgley Mischka and sells its products at Target Corp , Wal-Mart Stores Inc and Kohl’s Corp among others.
“We also expect to continue to be acquisitive,” said Iconix Chief Executive Neil Cole, the brother of American designer Kenneth Cole.
Source : Reuters