Iconix Brand Group Inc. has entered into a definitive agreement to acquire the Ocean Pacific brand from The Warnaco Group, Inc. for approximately $54 million.
As part of the transaction, Warnaco will be granted a license from Iconix to continue to manufacture and sell women's and junior swimwear.
According to Neil Cole, Chairman and CEO of Iconix, “The action sports lifestyle segment is an area that Iconix has been seeking to penetrate. OP is the original action sports lifestyle brand with tremendous authenticity, high brand awareness and applicability to a broad variety of consumer products, including apparel, accessories and sports equipment like surf, snow and skate boards. OP has a large global footprint with 15 different international licensees, and Iconix believes it can expand OP's international business further and significantly grow the brand's penetration in the U.S.”
Joe Gromek, Warnaco's President and Chief Executive Officer, said, “As part of our strategy to increase shareholder value, we continually assess our portfolio of brands and licenses to ensure we focus on our strongest platforms for growth. While we have made significant progress in the restructuring of the OP business, the sale will allow us to increase our attention on our core brands and on our international opportunities, which are the key drivers of our growth strategy. Additionally, given the strength of the OP brand, we are pleased to maintain our association with the OP swimwear business.”
Pursuant to the purchase agreement, Warnaco will be paid $10 million in cash at closing, which is anticipated to be in November 2006. The remainder of the purchase price will be in the form of a short term note from Iconix. The note is payable in full on or prior to December 31, 2006 through a combination of cash of not less than $17 million and shares of Iconix common stock. Iconix may at its election extend payment of the note until January 31, 2007, at which time it would have paid cash of not less than $30.5 million and the remainder in Iconix common stock.