New York—Shares of Sequential Brands Group surged as much as 19% today following the licensing company’s news on Wednesday that it had agreed to acquire Galaxy Brand Holdings Inc. for about $263 million. Sequential’ s offer includes $100 million in cash, 13.75 million shares of common stock of the company and certain performance-based warrants.
The deal will also give Sequential four well-known consumer brands: Avia in the fitness market, basketball-footwear brand AND1, outdoor-focused Nevados and home goods retailer Linens ‘N Things, there by increasing Sequential’s brand portfolio from 8 to 12. And giving it nearly $2 billion in global retail sales annually, the company said.
Sequential’s brands include William Rast, People’s Liberation, DVS, Heelys, Caribbean Joe, Ellen Tracy, Revo and the Franklin Mint.
Sequential called the deal a “transformational acquisition” that will position the company as “one of the largest pure-play brand licensing companies in the world.”
The merger is expected to close by year-end.
Brean Capital analyst Eric Beder said in a note that the acquisition gives Sequential “key positions at Wal-Mart” and “firmly establishes the company as a major player in the brand licensing sector.”
It not only “creates a footwear licensing powerhouse,” it also will expand the company’s offerings into home goods, Beder wrote. (The home goods category is “well-situated for brand licensing noting that Iconix is already an established player in that sector with brands Waverly and Fieldcrest, Beder said.)
Carlyle Group, majority owner of Galaxy Brands, will own a significant stake in Sequential and will take a seat on its board. Bank of America and GSO Capital Partners, an affiliate of the Blackstone Group are providing financing.