Jamie Salter’s Authentic Brands Group likes the looks of the red-hot stock market and has confidentially filed for an initial public offering that could value the firm at $10 billion, according to sources.
The company is said to have been working for a few months on the offering, which is being handled by Bank of America, J.P. Morgan and Goldman Sachs. Representatives from all three banks declined to comment Wednesday afternoon.
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Filing confidentially gives ABG a chance to fine-tune with Securities and Exchange Commission staff. The official registration statement for the IPO is expected to be made public in early July, while shares could start trading by the end of that month.
The offering is expected to value the company at around $10 billion, marking the entrance of a major new Wall Street player. That valuation put ABG right above Under Armour Inc. (with a market capitalization of $9.3 billion), Ralph Lauren Corp. ($9.1 billion), Kohl’s Corp. ($8.9 billion) and Capri Holdings Ltd. ($8.2 billion).
ABG’s ascent has been driven by an approach centered on buying brands — often out of bankruptcy — and giving them new life.
Salter is a voracious dealmaker who has looked broadly at the branded world as he built his empire. The ABG portfolio, which is said to drive retail revenues of more than $15 billion, ranges from value with Forever 21 to uber luxury with Barneys New York (and in between are Brooks Brothers, Lucky Brand, rights to major celebrity names like Marilyn Monroe and many more).
ABG has become expert at getting more out of brands than others have, sometimes with the help of big-name partners such as mall giants Simon Property Group and Brookfield Properties and sometimes on its own with a global and licensing focus that helps drive these brands’ international expansion.
It’s an intellectual property playbook that has been used to some degree before, but where the other brand houses such as Sequential Brands Group and Iconix Brand Group have seen their stars wax and wane, ABG has thrived, in part by thinking big both in terms of brand and scope.
“The brands are just so much stronger,” said one source, contrasting ABG with its competitors. “The quality of the distribution, the percent digital that they’ve expanded to is much different, and the scale.”
ABG has used its many deals to build on its business, creating capabilities and partnerships that were a surprise to some when they were introduced, but have paid dividends over time. In addition to teaming with landlords, the company has set up an operating arm that started with the back office of Aéropostale and now gives it the options to grow brands it buys.
The result is a giant with unusual range and a hand in seemingly every major deal — including a reported interest in Reebok, which is being spun out of Adidas.
Salter declined to comment on rumbles about a possible IPO this week, responding in an email that he was concentrating instead on his most recent deal, the acquisition of Eddie Bauer, which is now expected to close next week.
Salter has said in the past that he was not interested in going public, but that was before the IPO market became so hot. When asked if he would consider testing the public waters at the WWD CEO Summit in December, he responded: “I’ve been public before and maybe one day we will be public again. Maybe, maybe not. We’re partners with some of the best private equity firms in the world: BlackRock, Leonard Green, General Atlantic with minority partners GIC and Simon Properties. We’ve got a good stable of partners and I’m not sure I’d want to change that.”
While ABG is staying mum about its plans to go public, it is still out in the market looking for deals. One of those deals may be for Izod and Van Heusen. According to sources, ABG is “gunning hard” to buy the heritage brands division from PVH Corp. The division consists of Van Heusen, Izod, Arrow, Geoffrey Beene, Warner’s, Olga and True & Co.
Although the brands are struggling, they would fit well into ABG’s portfolio, which includes Brooks Brothers, Hart Schaffner Marx, Hickey Freeman, and other classic labels.
In the fourth quarter, PVH’s heritage brands reported revenues fell 41 percent, a figure that included a 17 percent decline resulting from the sale of the Speedo North American business. Net sales for the wholesale part of the business fell to $169.7 million from $293.4 million in the prior-year period.
In its fourth-quarter earnings call at the end of March, Stefan Larsson, PVH’s chief executive officer, said the heritage brands “continued to face challenges” in the period and the company was “actively” addressing the issue by “managing inventory, lowering our cost base and reviewing additional ways to optimize and streamline the business.”
Larsson did not mention a possible sale, but one source said Wednesday that the division is “definitely for sale” and PVH has retained PJ Solomon to solicit offers. Although ABG is seen as the frontrunner, the other brand management firms including Marquee Brands and WP Global have also taken a look, sources said, although WHP Global, owner of the Joseph Abboud and Anne Klein brands, is not expected to make an offer. Marquee, which owns Ben Sherman, Bruno Magli, BGBG Max Azria and Martha Stewart, however, may still be interested.
PJ Solomon, Marquee Brands and WHP Global did not respond to requests for comment.
In recent years, PVH has been focusing in more on its major fashion brands — Tommy Hilfiger and Calvin Klein. In July, the company said it would close its Heritage Brands Retail business, which consisted of 162 outlet stores, a decision Larsson said was “strategically important for the long-term health of PVH” as consumer shopping habits have changed dramatically as a result of COVID-19.
A PVH spokesperson said the company does not comment on rumors.
ABG is also keen on adding Reebok to its stable. Salter has made no secret of his desire to own the brand. ABG has a long-standing partnership with former NBA star Shaquille O’Neal to own and manage his intellectual property. The former athlete was an ambassador for Reebok during his playing days. Because Reebok is so firmly intertwined with its parent company, Adidas, extricating it will be complicated and Adidas said recently that it hopes to complete a deal by the end of this year.
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