Differential Brands Group Inc. announced plans on Wednesday to shell out $1.38 billion to acquire the majority of Hong Kong-based Global Brands Group Holding Ltd.’s North American licensing business.
The companies said in a statement that the acquisition will bring Differential Brands’ annual revenues up to more than $2.3 billion.
Following the deal’s closing, Global Brands’ remaining businesses will comprise all of its footwear business, all of its New York fashion business, all of its European and Asian businesses and all of its Global Brand Management business.
GBG’s North American licensing business is comprised of licensed brands such as Disney, Star Wars, Calvin Klein, Under Armour, Tommy Hilfiger, BCBG, Bebe, Joe’s, Buffalo David Bitton, Frye, Michael Kors, Cole Haan and Kenneth Cole.
Differential Brands’ shares jumped to $4.94 in pre-market trading on Wednesday, up from 89 cents at yesterday’s close.
Global Brands Group was founded as a subsidiary of sourcing and supply chain giant Li & Fung but was spun off in 2014 and has been listed as an independent company on the Hong Kong Stock Exchange since. In its annual earnings report, released alongside the acquisition announcement, it reported a net loss of $877 million for the year ended March 31, compared with a profit of $95 million the year prior.
Revenues grew 3.4 percent to $4.02 billion, but it said the results suffered from Tapestry Inc.’s June 2017 decision to take Coach’s footwear production in-house.
“On behalf of the board, I am thrilled that we were able to structure a transaction with the Fung family to acquire one of the leading branded consumer soft-goods companies in North America with a world-class management team led by Jason Rabin,” said William Sweedler, chairman of the board of directors at Differential and managing partner at Tengram Capital Partners LP.
Said Rabin, president of GBG North America, said: “We are thrilled to join Differential Brands Group and lead our combined platform by leveraging our expansive infrastructure, distribution and sourcing networks to drive growth, and we look forward to working with the Differential management team and Tengram to help support the company’s growth as it capitalizes on promising market opportunities.”