Authentic Brands Postpones IPO to Sell $ 12.7bn Share to Investors

Jamie Salter, Chairman and CEO of Authentic Brands Group LLC.

Norm Betts | Bloomberg | Getty Images

Retail conglomerate Authentic Brands Group plans to postpone its planned initial public offering and instead sell significant stakes in its business to a private equity firm. CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders, as it became known to CNBC.

The deal is valued at approximately $ 12.7 billion and is expected to be announced on Monday, the company said.

Authentic Brands’ portfolio companies include apparel retailers Forever 21 and Aeropostale, department store chain Barneys New York, menswear maker Brooks Brothers and Sports Illustrated magazine. Early next year, a deal to buy sneaker maker Reebok expected to closeby adding another brand to their holdings.

The company had applied for an IPO in early July… But Authentic Brands CEO Jamie Salter said the IPO is planned for 2023 or 2024. He said he signed a contract with the CEO for another five years.

“The IPO atmosphere is ridiculous,” Salter said in a telephone interview. “I think we would get a huge mark … maybe even more than what we sold the business for. But you know what? I’d rather stay private. “

A wave of retail companies have entered the public market in recent months, from eyewear maker Warby Parker and fashion rental platform Rent the Runway to the eco-friendly shoe brand Allbirds and e-commerce site Lulu’s. Investors prefer names that have a solid web footing, allowing some to get valuations as if they were fast-growing tech companies.

CNBC reported that Authentic Brands was pushing for an estimated $ 10 billion during its public debut.

The deal with CVC and HPS is expected to close in December this year, after which PE and the hedge fund will retain their seat on Authentic Brands’ board of directors.

“We plan to work closely with the ABG team to advance their strategic priorities, especially with regard to international expansion,” said Chis Baldwin, Managing Partner at CVC.

The company said BlackRock will maintain its position as Authentic Brands’ largest shareholder from 2019. Existing investors, including US mall owner Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shaquille O’Neill, will retain their equity positions.

When the company filed for a public offering, Authentic Brands said its 2020 net profit jumped to $ 211 million from $ 72.5 million a year earlier, and its revenues rose about 2% to $ 489 million.

“Today we have the same scenario as yesterday,” Salter said. “By the end of this year, you will hear about new acquisitions.”

CVC recently signed a deal to buy Unilever’s tea business… Some of the firm’s other portfolio companies include streetwear brand A Bathing Ape and pet supply chain Petco, according to its website. HPS spun off from JP Morgan Asset Management in 2016.

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