The Athletes Foot parent company, NexCen Brands, Inc., has entered into a definitive agreement to acquire the Bill Blass Holding Co., Inc. This acquisition will also include two subsidiaries owned by Blass, Bill Blass Licensing Co., Inc. and Bill Blass International LLC. NexCen will pay $54.6 million at closing through a combination of cash and the issuance of NexCen common stock.
NexCen is currently in the process of transforming itself from a mortgage-backed securities company into a consumer products and franchising company. NexCen acquired TAF earlier this year and shortly thereafter said that it would be implementing an aggressive acquisition strategy.
Part of this strategy was to find brands that could be sold through TAF franchise stores, although it appears there will be little, if any, of this kind of synergy with Bill Blass.
The stock component of the deal is 28% or $15.5 million of the initial purchase price. NexCen also agreed to an earn-out arrangement that will entitle the sellers to receive an additional amount of up to $16.2 million of cash or stock for a potential total aggregate payment of $70.8 million including the consideration paid at closing.
The additional amount will be paid if gross royalties generated by the Bill Blass trademark for the trailing 12 month period ending December 31, 2007 meet certain performance targets.
NexCen anticipates that the brand will generate approximately $10 million of royalty revenue and approximately 7 cents per share of incremental EPS in 2007. The transaction is expected to close in January 2007.
