The New York-based brand management firm announced Tuesday that it has signed a definitive agreement to acquire yoga brand Gaiam Inc.
Sequential said it shelled out about $146 million in cash for the brand, which makes yoga equipment, apparel and accessories.
“We believe this is a home run for Sequential,” CEO Yehuda Shmidman said in a release. “The acquisition is immediately accretive to earnings, and aligns with our long-term playbook of acquiring brands with significant, untapped potential where we can immediately unlock value and position them for long-term organic growth.”
As part of the transaction, Sequential will acquire Gaiam’s yoga, fitness and wellness product business, which includes the Gaiam and SPRI brands. According to its website, Gaiam’s distribution consists of around 38,000 retail doors, 18,000 store-within-stores, 5,000 category management locations and e-commerce. Key retailers include Amazon, Kohl’s, Target and Bed Bath & Beyond.
The brand will be integrated into Sequential’s active division, which is currently anchored by brands And1 and Avia.
“Studies show that over 35 million people in the U.S. practice yoga today, up 76 percent in the past four years, and another 80 million aspire to practice yoga,” Eddie Esses, president of Sequential’s active division, said. “By acquiring one of the leading brands in yoga, fitness and wellness, the opportunities are vast as we think about gaining market share, adding new distribution and expanding globally.”
In tandem with the acquisition, Sequential signed long-term licensing agreements for the brands’ core categories, which will become effective upon closing. Fit for Life will be the licensing partner for the hard goods and equipment categories as well as the digital properties, and High Life will be the licensing partner for Gaiam’s yoga and athleisure apparel business.
“The combination of Gaiam’s innovative products and authenticity in the active lifestyle space, coupled with Sequential’s extensive retail relationships and strategic approach to brand building sets the stage for taking both the brands to new levels,” said Gaiam CEO Lynn Powers. “I am happy to be working with Sequential and the Fit for Life and High Life teams to ensure the culture of the Gaiam brands live on and grow.”
Post-closing, Sequential’s total guaranteed minimum royalties are expected to increase from approximately $360 million to more than $500 million, the company said. The deal is also expected to add $22 million in revenue and $20 million of adjusted EBITDA on a full-year run-rate basis.
Following the announcement, Sequential’s share price shot up more than 18 percent after the market close.
Last year, Sequential generated industry buzz when it snapped up the Jessica Simpson Collection, Martha Stewart Living Omnimedia and Joe’s Jeans.