Authentic Brands, the parent of Reebok, Champion and a number of other lifestyle brands, is preparing to file for an initial public offering that could arrive as soon as the first half of 2027, Matthew Maddox, Authentic’s CEO, said in an interview with Bloomberg TV.
“Our systems are in place. Our people are in place. Our story is crisp. We are ready to go,” said Maddox, who took over as CEO in May after previously leading Wynn Resorts Ltd.
In May, founder and former CEO Jamie Salter told CNBC that an IPO could arrive in the next twelve months. Salter at the time became executive chairman.
In the Bloomberg TV interview, Maddox said the company’s business is growing between 7 percent and 8 percent organically and 24 percent when including acquisitions. The firm has deployed $2 billion on mergers and acquisitions over the last 18 months, absorbing intellectual property like Guess? Inc., Care Bears, and a majority stake in Drake’s OVO brand.
He said Authentic generates $1.8 billion in EBITDA on $2.2 billion in revenue. The high profit margin of approximately 81 percent reflects the firm’s royalty-based model that enables the firm to avoid inventory expenses or major capital investment. Its standard arrangement is to earn roughly 6 percent to 7 percent in royalties on partner-made products. About 35 percent of revenue comes from international markets, and entertainment properties account for roughly 20 percent of the total.
Maddox said the company counts $10 billion worth of intellectual property and he would like to double that figure over the next 24 months.
Maddox also discussed Authentic’s new joint venture with The Diary of a CEO podcaster Steven Bartlett. Maddox explained that the company views the “creator economy” as a primary growth engine for media and audience expansion over the next decade.
Authentic has estimated that its portfolio of more than 50 brands drives more than $38 billion in annual systemwide retail sales worldwide, making it the second-largest global licensor behind Disney.
The company’s brand roster includes Reebok, Champion, Shaquille O’Neal, David Beckham, Kevin Hart, Sports Illustrated, Elvis Presley, Muhammad Ali, Marilyn Monroe, GUESS, Care Bears, Aéropostale, Nautica, Eddie Bauer, Lucky Brand, Nine West, Brooks Brothers, Juicy Couture, Vince Camuto, Izod, Van Heusen, Dockers, Ted Baker, Hart Schaffner Marx, Vince, OVO, Barneys New York, Judith Leiber, Quiksilver, Spyder, Billabong, Volcom, Roxy, RVCA, DC Shoes, Prince, Sperry and Hunter.
The Bloomberg TV interview can be watched here.
The interview comes as Authentic recently proposed a $4.2 billion term loan due 2033, according to Moody’s. Proceeds will be used to refinance the company’s existing $3.7 billion term loan B-1 due 2028 and repay roughly $500 million revolver borrowings.
In assigning a Ba3 rating to the proposed loan, Moody’s said, “ABG’s Ba3 corporate family rating benefits from the company’s relatively stable earnings, reflecting the recurring nature of its royalty revenue and the scale and diversity of its brands. Guaranteed minimum payments represent most of ABG’s revenue, while its asset-light licensor business model with low overhead costs supports strong profit margins and free cash flow generation. ABG’s broad brand portfolio and licensee network further support the stability of royalty collections. Reflecting its business model and solid acquisition execution, the company has grown consistently since inception and has demonstrated resilience through supply chain disruptions and a difficult discretionary consumer spending environment. Over the next 12-18 months, we expect continued earnings growth driven by recently acquired intellectual property, while liquidity remains good, supported by solid free cash flow and adequate excess revolver availability.
“Nevertheless, the rating also reflects governance considerations, including risks associated with private equity ownership and an acquisitive growth strategy that relies on debt financing, including a heavy reliance on revolver borrowings. We expect that pro forma for the pending Lee acquisition, debt/EBITDA will remain in the low-4x range in the next 12-18 months. In addition, the portfolio’s exposure to legacy brands with significant wholesale reliance poses a risk to the growth and sustainability of its royalty payments in a fast-evolving retail landscape that requires ongoing marketing and technology investment. ABG’s model depends on licensees maintaining product quality, distribution discipline and marketing investment, because deterioration at the licensee level can pressure retail sales and ultimately royalty growth. The rating also reflects exposure to licensee credit risk, as illustrated by the recent bankruptcies of several licensees, which can pressure royalty collections and require renegotiation of agreements. Further, in our view, the company’s growing entertainment business, including celebrity IP- and endorsement-related revenues tied to figures such as David Beckham, Shaquille O’Neal and Kevin Hart, is less proven and potentially more volatile than traditional product licensing.
“The stable outlook reflects our expectations for consistent operating performance, Moody’s-adjusted debt/EBITDA in the 4-4.5x range and good liquidity.”
Image courtesy of Authentic Brands Group
