Eddie Bauer’s new owner scrapped plans to go public, instead opting for a private-equity deal valuing the company at $12.7 billion.
Selling a stake to CVC Capital Partners (CVC) and HPS Investment Partners (HPS) pushes Authentic Brands Group past the $10 billion it expected in value from an initial public offering.
With 30 brands including Juicy Couture, Lucky Brand, Brooks Brothers and JCPenney in its portfolio, ABG would have been the latest in a steady string of IPOs this year, including Poshmark, Mytheresa.com, Dr. Martens and ThredUp.
Rent the Runway’s shares opened at $23, 9 percent above the $21 IPO price, but closed at $19.29 on the rental pioneer’s first day of trading last month with shares now in the $16.20 range. Though Allbirds’ shares debuted at $21.21 earlier this month, the stock is currently trading in the $24.40 range, but has climbed as high as $26.76, all above its original $15 IPO pricing.
And even though the IPO market has been hot this year, avoiding the proverbial fishbowl that is part of being a publicly traded could benefit the brand management firm.
ABG CEO Jamie Salter hasn’t been shy about his plans for more acquisitions down the pike that could vault the company to $25 billion in the years ahead. The New York firm recently acquired PVH’s Heritage Brands, which include Izod, Van Heusen, Arrow and Geoffrey Beene. And when it closes its $2.5 billion Reebok acquisition early next year, ABG will see its annual sales top $20 billion across more than 150 countries.
By remaining private, ABG won’t have the additional firepower of dangling stock options in future transactions. CVC and HPS’ investment stake almost certainly means future deals will remain all-cash. But on the upside, the company won’t have to deal with the vagaries of investor sentiment pushing for earnings growth should consumer demand crater. Plus, ABG always has the option of going public at a later date.
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Meanwhile, the deal signals that CVC and HPS are confident in ABG’s growth prospects.
“We have known CVC and HPS for many years and are thrilled that they are coming on board as significant stakeholders in ABG. Their commitment is a testament to the exceptional work our team has put forth as well as CVC and HPS’s confidence in our future growth,” Salter said.
“The entire ABG team—from our leadership to the director of first impressions—has done an incredible job of building a sustainable and scalable business with a laser focus on brand development, digital innovation, e-commerce, specialty retail, expansion into new verticals and proven business models,” the ABG co-founder and chairman added.
Chris Stadler, a managing partner at CVC, believes the brand management firm is “only beginning to realize the full benefit of its scale and diversification.”
“We plan to work closely with the ABG team to execute on their strategic priorities, particularly around international expansion, given our extensive global footprint and experience in local markets around the world,” added Chris Baldwin, also a managing partner at CVC.
Scot French, a governing partner at HPS, applauded ABG’s highly differentiated and innovative acquisition and brand management platform.”
The investment from the two private equity firms is expected to close next month. Both CVC and HPS will join ABG’s board of directors. BlackRock Long Term Private Capital will retain its position as ABG’s largest shareholder, a position it has held since 2019. Other existing shareholders—Simon, General Atlantic, Leonard Green & Partners, GIC, Brookfield, Lion Capital, Jasper Ridge Partners and Shaquille O’Neal—will continue to hold “significant equity” stakes in the company.
ABG’s platform operates 30-plus fashion, lifestyle and entertainment brands, either owned or licensed, that include Juicy Couture, Marilyn Monroe, Sports Illustrated, Shaquille O’Neal, Barneys New York and Muhammad Ali. It also holds non-controlling stakes in retailers and brands—Forever 21, Aéropostale, Nautica, Lucky Brand, Brooks Brothers, Eddie Bauer and JCPenney—in a joint venture with Simon Property Group called SPARC that drives about $10 billion in net sales each year. Brookfield Property Group is also an investment partner in some of the SPARC deals.