LOS ANGELES & NEW YORK - Guess?, Inc. (NYSE: GES) and WHP Global have announced a definitive agreement for Guess? to acquire the New York-based fashion brand rag & bone. The transaction includes Guess? acquiring all operating assets of rag & bone and jointly owning the brand’s intellectual property with WHP Global.
rag & bone, established in 2002, has become a notable name in the American fashion industry, recognized for its quality clothing and strong expertise in denim. The brand operates 34 stores in the U.S., two in the U.K., and maintains a global presence through boutiques, department stores, and e-commerce. In 2023, rag & bone reported unaudited annual revenue of around $250 million and an adjusted EBITDA of $18 million.
Carlos Alberini, CEO of Guess?, expressed enthusiasm about the acquisition, anticipating that it will deliver earnings per share accretion in the first year and create substantial value for shareholders. Paul Marciano, Co-Founder and Chief Creative Officer of Guess?, praised rag & bone's commitment to quality and authenticity.
Yehuda Shmidman, Chairman and CEO of WHP Global, highlighted the strategic alignment and growth potential that the acquisition presents for both entities. Andrew Rosen, Chairman of the Board at rag & bone, welcomed the new relationship, noting the opportunity for global expansion.
The acquisition aims to leverage Guess?’s infrastructure to accelerate rag & bone’s growth and drive synergies. Guess? will contribute $56.5 million to the transaction, with the potential for additional earnout consideration based on rag & bone’s fiscal performance in 2024.
The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close during the first quarter of Guess?’s 2025 fiscal year. The Sage Group (LON:SGE), LLC and O'Melveny & Myers LLP are advising Guess?, while Kirkland & Ellis LLP is advising WHP Global. Solomon Partners, L.P., Golenbock Eiseman Assor Bell & Peskoe LLP, and Katten Muchin Rosenman LLP are advising rag & bone.
This news is based on a press release statement.
InvestingPro Insights
As Guess?, Inc. (NYSE: GES) sets its sights on the acquisition of fashion brand rag & bone, the company's financial health and market position may offer insights into this strategic move. With a sturdy market capitalization of $1.32 billion, Guess? stands as a significant player in the fashion industry. The company's commitment to shareholder returns is evidenced by its track record of increasing dividends for 17 consecutive years, a testament to its financial stability and confidence in future performance.
InvestingPro data highlights a robust gross profit margin of 43.63% over the last twelve months as of Q3 2024, reflecting the company's efficiency in maintaining profitability amidst industry challenges. Additionally, the company boasts a compelling dividend yield of 4.98%, which is particularly attractive to income-focused investors.
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The strategic acquisition of rag & bone is poised to leverage Guess?'s established infrastructure, potentially accelerating growth and creating synergies that could enrich the company's portfolio and shareholder value.
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