In its biggest acquisition yet, Iconix Brand Group reached an agreement to buy Rocawear for $204 million. Another $35 million may be included in the purchase price based upon the brand passing certain pre-determined performance thresholds over the next 3 to 5 years.
Rocawear co-founder Jay-Z, also known as Shawn Carter, will be in charge of all product development, marketing and licensing for Rocawear. Rocawears senior management in licensing, marketing and product development will also join Iconix. Jay-Z will retain his stake in the operating company that manufactures all of the Rocawear men's apparel and his two partners in that business, Alex Bize and Norton Cher, will continue to run the company and will enter into a long-term license agreement with Iconix for young men's apparel.
Iconix is forecasting that the Rocawear brand will generate approximately $43 million in royalty revenue in its first twelve months under the Iconix umbrella. Iconix said Rocawear generates more than $700 million in annual retail sales through better department stores and specialty stores, and grew “significantly” between 2005 and 2006. Beyond apparel, Iconix sees great potential for growth for Rocawear in footwear, handbags, intimate apparel, jewelry, and fragrance
The Rocawear deal is expected to close later this month. Since moving to a licensing model in 2003, Iconix has acquired Badgley Mischka, Mudd, London Fog, Mossimo and Ocean Pacific.
Iconix also reported fourth quarter licensing revenue more than doubled to approximately $26.9 million compared to approximately $12.4 million a year ago. Net income reached $8.9 million, increasing 18.7% from $7.5 million last year. In diluted earnings per share terms, the company reported net income of 18 cents per fully diluted share in 2006 versus 19 cents on a larger amount of shares outstanding.