The New York City-based fashion company has announced an $875 million strategic investment from BlackRock’s Long Term Private Capital arm, making it ABG’s largest investor to date. As part of the deal, LTPC will work closely with ABG’s management, headed by chairman and CEO James Salter and President and CMO Nick Woodhouse, as well as existing investors Leonard Green & Partners, Simon Property Group, Shaquille O’Neal and more.
“We have built a close relationship with Jamie and Nick over the past 10 years as they’ve established this company as a leader in the licensing industry by successfully capitalizing on trends and continuing to innovate in the evolving consumer space,” said Colm Lanigan, a senior member of the LTPC team. “They have built a best-in-class business model and grown it with flawless execution.”
Salter added, “BlackRock’s scale, global footprint and digital capabilities will enable us to build out our organization and continue our domestic and international growth trajectory.”
Following the infusion, experts are now debating ABG’s next steps, particularly as the company continues to rapidly expand its brand portfolio.
ABG, which was named 2018 Company of the Year by FN, already counts more than 50 brands across the fashion, lifestyle, sports, entertainment and media sectors, including Vince Camuto, Nine West, Frye and Aeropostale, and has been aggressive in the acquisition game.
The group picked up the Nautica brand from VF Corp. last March, purchased Nine West and Bandolino out of bankruptcy in June and secured Camuto Group in October. It also recently completed the $110 million purchase of the Sports Illustrated intellectual property from Meredith Corp., noting an opportunity to position the brand as a leader in e-sports and sports gambling.
Experts noted that ABG has inked some surprising deals, such as, early this year, a decade-long partnership with Tilray Inc., a global pioneer in cannabis production, and the acquisition of skate brand Volcom, which was previously owned by French luxury group Kering SA.
“A lot of times when [companies] make acquisitions, they look to have synergies within their portfolio as it makes it easier for cost-cutting, negotiating rates and long-term strategies,” said Farla Efros, president of retail consulting firm HRC Retail Advisory. “It’s interesting as there’s little synergy to [ABG’s] acquisitions.”
And it now has the capital to go after other big fish.
Less than three weeks ago, Salter expressed a desire to snap up the Adidas-owned Reebok brand. “My partner, [Shaquille O’Neal], beat me to the punch in mentioning it a few weeks ago,” when he told FN’s sister publication WWD in June, “I’d love to buy Reebok. Maybe one day Adidas will let it go.”
A Bloomberg article also speculated about ABG’s possible purchase of Barneys New York, with the help of BlackRock’s investment. Last week, the storied department store filed for Chapter 11 bankruptcy protection after skyrocketing rents and changing consumer demands weighed heavily on its margins. It is currently seeking a buyer and received $218 million in new financing during the sale process as it works to streamline the business.
“This is the beginning for BlackRock and their stake in ABG,” Efros added. “They are now on an acquisition path, which can be retail [through] physical stores or buying retail assets such as the Barneys’ name — and then they have the option to decide how and where they use the intellectual property by opening up a store or two or [doing business] online only.”
Jeff Van Sinderen, retail analyst at investment research firm B. Riley FBR, added, “This investment should be supportive of the next phase of ABG’s expansion, including incremental acquisitions. … Arguably, ABG has potential to acquire other entities and apply its skill set to leverage the value of those entities. This investment opens the door to new possibilities and would expect ABG to continue to acquire and manage additional strong brands in the future.”
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