Kellwood is getting “Phat” after the company reported that it will acquire Russell Simmons Phat Fashions LLC in a deal that is reportedly worth $140 million in cash plus earnouts and additional incentives.
The Wall Street Journal said the deal was worth $115 million, but KWD also “agreed to pay $25 million to American Design Group for the license to the Phat Farm men's sportswear line”.
Phat Fashions reportedly “generates about $200 million in annual revenue”, said one investment banker in a published report. Kellwood had sales of $2.2 billion in its last fiscal year ended January 2003.
The deal calls for Kellwood to acquire Phat Fashions, its licensing organization and its “prized” Phat Farm®, Baby Phat®, and Phat® trademarks.
The acquisition comes on the heels of the December deal that saw Liz Claiborne Inc. acquire Enyce Holding LLC in a $114 million deal with Sports Brands International, parent company of the Fila brand.
Phat Fashions will operate as a subsidiary of Kellwood and Simmons will remain at the helm of Phat Fashions as CEO. Kimora Simmons will continue as the principal creative force behind Baby Phat.
The deal is expected to close in early February.
In a related story, Standard & Poor's Ratings Services announced that the ratings and outlook on Kellwood “would not be affected” by the deal with Simmons.
>>> Talk about an odd couple…
