- Will create leading North American
consumer platform generating revenues in excess of $2.3
Billion
Differential Brands Group Inc. (the “Company” or “Differential”)
(NASDAQ:DFBG), a portfolio of global consumer brands comprised of
Hudson, Robert Graham and SWIMS, today announced that it has
entered into a definitive purchase agreement with Global Brands
Group Holding Limited, a Hong Kong listed company (SEHK Stock Code:
787) (“GBG”), to acquire a significant part of GBG’s North American
licensing business (the “GBG Business”), comprised of licensed
brands such as Disney, Star Wars, Calvin Klein, Under Armour, Tommy
Hilfiger, BCBG, bebe, Joe’s, Buffalo David Bitton, Frye, Michael
Kors, Cole Haan and Kenneth Cole, for a purchase price of $1.38
billion, subject to adjustment (the “Transaction”). It is
anticipated that upon closing, DFBG will have in excess of $2.3
billion in pro forma annual revenue comprised of branded men’s,
women’s, and kid’s apparel, along with accessories that will be
distributed to a diversified base of consumers across all retail
and digital channels. The acquisition is expected to close in the
third quarter of 2018.
William Sweedler, Chairman of the Board of Directors of
Differential Brands Group (the “Board”) and Managing Partner of
Tengram Capital Partners LP (“Tengram”), which played a pivotal
role in bringing the parties together and getting the Transaction
to signing, stated, “On behalf of the Board, I am thrilled that we
were able to structure a transaction with the Fung family to
acquire one of the leading branded consumer soft goods companies in
North America with a world class management team led by Jason
Rabin.” Mr. Sweedler continued, “Jason and his team plan to invest
significant capital into this Transaction, which will transform
Differential into a large scale North American branded platform.”
Jason Rabin, current President of GBG North America stated, “We are
thrilled to join Differential Brands Group and lead our combined
platform by leveraging our expansive infrastructure, distribution
and sourcing networks to drive growth, and we look forward to
working with the Differential management team and Tengram to help
support the Company's growth as it capitalizes on promising market
opportunities. We are proud of what we have accomplished since
joining Li & Fung in 2009, judiciously expanding the GBG
platform and driving profitability, and thank them for their
long-standing support and partnership.” Mr. Sweedler added, “Mr.
Rabin has a proven track record of successfully growing numerous
world class brands since inception. We are confident this
Transaction will create tremendous value for our stockholders, as
well as provide enhanced opportunities in North America for our
brands and business partners.”
The purchase price for the Transaction will be paid in cash.
Fully committed debt financing for the Transaction is being
provided by Ares Capital Management LLC, HPS Investment Partners,
LLC and GSO Capital Partners LP. Relatedly, certain members of
GBG’s existing management team, co-investors and lenders will be
making an equity investment in the common stock of DFBG (the
“Equity Issuance”). Upon the closing of the Transaction, Tengram
Capital Partners, LP will convert all of its Series A and Series
A-1 Convertible Preferred Stock into common stock of DFBG.
The closing of the Transaction is subject to satisfaction or
waiver of customary closing conditions, including the expiration or
termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, the approval of the
GBG’s stockholders under applicable Hong Kong listing guidelines
and the approval of DFBG’s stockholders in connection with the
Equity Issuance pursuant to NASDAQ listing requirements and
regulatory approvals. As part of the Transaction, certain
stockholders of the Company, namely Tengram Capital Partners, LP
and its affiliates, have agreed to vote in favor of such Equity
Issuance, and certain stockholders of GBG, namely, Fung Holdings
(1937) Limited, have agreed to vote in favor of the
Transaction.
Dechert LLP acted as lead counsel to DFBG and Richards, Layton
and Finger acted as Delaware counsel to DFBG. Freshfields Bruckhaus
Deringer LLP acted as lead counsel to GBG and Reed Smith LLP also
advised GBG on the Transaction. Goldman Sachs (Asia) L.L.C. acted
as financial advisor to GBG on the Transaction.
About Differential Brands Group:
Differential Brands Group Inc. (NASDAQ:DFBG) is a platform that
focuses on branded operating companies in the premium apparel,
footwear and accessories sectors. Our focus is on organically
growing our brands through a global, omni-channel distribution
strategy while continuing to seek opportunities to acquire
accretive, complementary, premium brands.
Our current brands are Hudson®, a designer and marketer of
women's and men's premium, branded denim and apparel, Robert
Graham®, a sophisticated, eclectic apparel and accessories brand
seeking to inspire a global movement, and SWIMS®, a Scandinavian
lifestyle brand best known for its range of fashion-forward,
water-friendly footwear, apparel and accessories. For more
information, please visit Differential's website
at: www.differentialbrandsgroup.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The matters discussed
in this news release involve estimates, projections, goals,
forecasts, assumptions, risks and uncertainties that could cause
actual results or outcomes to differ materially from those
expressed in the forward-looking statements. All statements in this
news release that are not purely historical facts are
forward-looking statements, including statements containing the
words “may,” “will,” “expect,” “anticipate,” “intend,” “estimate,”
“continue,” “believe,” “plan,” “project,” “will be,” “will
continue,” “will likely result” or similar expressions. Any
forward-looking statement inherently involves risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include, but are not limited to: the
parties’ ability to close the transaction, including the receipt
and terms and conditions of any required governmental approval of
or required financing for the proposed transaction that could
reduce anticipated benefits or cause the parties to abandon the
transaction; the diversion of management's time and attention from
the Company’s ongoing business during this time period; the impact
of the transaction on the Company’s stock price; the anticipated
benefits of the transaction on its financial results, business
performance and product offerings, the Company’s ability to
successfully integrate GBG’s business and realize cost savings and
any other synergies; the risk that the credit ratings of the
combined company or its subsidiaries may be different from what the
Company expects; the risk of intense competition in the denim and
premium lifestyle apparel industries; the risk that the Company’s
substantial indebtedness could adversely affect the Company’s
financial performance and impact the Company’s ability to service
its indebtedness; the risks associated with the Company’s foreign
sourcing of its products and the implementation of foreign
production for Hudson’s products, including in light of potential
changes in international trade relations brought on by the current
U.S. presidential administration; risks associated with the
Company’s third-party distribution system; continued acceptance of
our product, product demand, competition, capital adequacy, general
economic conditions and the potential inability to raise additional
capital if required; the risk that the Company will be unsuccessful
in gauging fashion trends and changing customer preferences; the
risk that changes in general economic conditions, consumer
confidence, or consumer spending patterns, including consumer
demand for denim and premium lifestyle apparel, will have a
negative impact on the Company’s financial performance or
strategies and the Company’s ability to generate cash flows from
its operations to service its indebtedness; the highly competitive
nature of the Company’s business in the United States and
internationally and its dependence on consumer spending patterns,
which are influenced by numerous other factors; the Company’s
ability to respond to the business environment and fashion trends;
continued acceptance of the Company’s brands in the marketplace;
risks related to the Company’s reliance on a small number of large
customers; risks related to the Company’s ability to implement
successfully any growth or strategic plans; risks related to the
Company’s ability to manage the Company’s inventory effectively;
the risk of cyber-attacks and other system risks; risks related to
the Company’s ability to continue to have access on favorable terms
to sufficient sources of liquidity necessary to fund ongoing cash
requirements of the Company’s operations or new acquisitions; risks
related to the Company’s ability to continue to have access on
favorable terms to sufficient sources of liquidity necessary to
fund ongoing cash requirements of its operations or new
acquisitions; risks related to the Company’s pledge of all its
tangible and intangible assets as collateral under its financing
agreements; risks related to the Company’s ability to generate
positive cash flow from operations; risks related to a possible
oversupply of denim in the marketplace; and other risks. The
Company discusses certain of these factors more fully in its
additional filings with the SEC, including its annual report on
Form 10-K for the fiscal year ended December 31, 2017 and
subsequent quarterly reports on Form 10-Q filed with the SEC, and
this release should be read in conjunction with those reports,
together with all of the Company’s other filings, including current
reports on Form 8-K, through the date of this release. The Company
urges you to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements
contained in this release.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Since the Company operates in a rapidly changing environment, new
risk factors can arise and it is not possible for the Company’s
management to predict all such risk factors, nor can the Company’s
management assess the impact of all such risk factors on the
Company’s business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
The Company’s future results, performance or achievements could
differ materially from those expressed or implied in these
forward-looking statements. The Company does not undertake any
obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events, except as may be
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20180627005664/en/
Investor Relations:Differential Brands GroupLori
Nembirkowlori@differentialbrandsgroup.com
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