Iconix Brand Group, Inc. has acquired the worldwide master license for the Ed Hardy brand from Nervous Tattoo. Through this transaction, the company will gain control of the licensing and marketing functions, and increase its total ownership stake in the Ed Hardy brand to 85%. Previously, the company had a small investment in the brand through its joint venture with Don Ed Hardy.
On a pro-forma consolidated basis, the company estimates that the Ed Hardy brand will generate total annual royalty revenue of approximately $15-16 million.
Neil Cole, Chairman and CEO, Iconix stated, “We are excited to be able to utilize our marketing and licensing expertise to reenergize the Ed Hardy brand. The brand has an extremely high level of consumer awareness in the United States as well as very strong international business, and we believe our company will be able to add real value.”
Don Ed Hardy, commented, “I am thrilled that Iconix has assumed control of the brand. This is exactly what I had envisioned two years ago, when I first partnered with Neil and his team. Iconix has a proven track record and I trust my namesake brand in their hands and look forward to a bright future.”
Iconix paid $55 million plus a $7 million earn-out for this acquisition. As part of the transaction, Nervous Tattoo, who will continue as a licensee for Ed Hardy t-shirts, hats and hoodies, will pre-pay $7 million in royalties under its license.
With its increased stake, the company will now fully consolidate the Hardy Way financials and Don Ed Hardy's 15 percent will be reflected in minority interest. Going forward, Ed Hardy will no longer be included in the Company's equity earnings on joint ventures line in its income statement. Further, any non-cash gains relating to this transaction are not included in the Ed Hardy estimates.
