Iconix Brand Group, Inc. has signed, in two separate transactions, definitive agreements to acquire Mossimo, Inc. and the Mudd trademark. Also of good news for Iconix was the extension of Mossimos deal with Target through 2010.
The company will acquire all of the outstanding shares of Mossimo, Inc. for $7.50 per share, comprised of $3.25 per share in Iconix stock and $4.25 in cash. The total purchase price will be approximately $119 million subject to a potential one time adjustment of up to an additional $16 million in Iconix stock to be issued if the Iconix stock price does not appreciate to a level that would value the deal at $8.50 per share within one year of closing. Under the terms of the merger agreement, Mossimo, Inc. will have $17 million of cash in the company that Iconix will acquire upon closing. The Mossimo brand is projected to generate $20 – $25 million in 2007 royalty revenue.
The transaction is subject to approval by the stockholders of Mossimo, Inc., clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt by Mossimo, Inc. of a fairness opinion, and other customary closing conditions, but is expected to close in July of 2006. As part of the transaction, Mossimo Giannulli, founder and chairman of Mossimo, Inc., will join Iconix as creative director for his namesake brand.
The Modern Amusement section of Mossimo, Inc. will be spun out to Mossimo Gianulli himself, from which Iconix expects about $2 million in proceeds, but the exact details of the process have yet to be finalized.
Iconix updated its earnings guidance for fiscal 2006 to be in the range of 75 cents to 80 cents per fully diluted share compared to its previous guidance range of 65 cents to 70 cents.
