Authentic Brands to Take Guess Private for $16.75 a Share
- Jean E. Palmieri
- 5 days ago
- 3 min read
Its rival WHP Global had made a bid in the spring to buy the Los Angeles-based denim brand for $13 a share.
Iris Law for Guess Jeans. Iris Law for Guess Jeans
Never count Jamie Salter out.
The founder and chief executive officer of Authentic Brands Group swooped in and snatched the controlling interest in Guess from its rival WHP Global, which had been close to finalizing a deal to acquire the brand.
On Wednesday morning, Authentic said it will acquire a 51 percent stake in a newly formed entity that will own and license substantially all of Guess’ intellectual property and assume the majority of Guess’ product licensing agreements. The remaining 49 percent will be owned by Guess cofounders Maurice and Paul Marciano, Nicolai Marciano and Guess CEO Carlos Alberini.
The all-cash deal is for $16.75 a share, a premium of 73 percent to the company’s closing price on March 14 when WHP Global offered $13 a share. The deal values Guess at $1.4 billion.
Wall Street appeared to give the deal a thumbs-up with the stock trading up more than 25 percent during the day.
The acquisition will add about $6 billion in retail sales to Authentic’s coffers and marks the company’s second-largest brand acquisition after Reebok. It will bring the company’s total annual retail sales to $38 billion globally.
Under the terms of the deal, Guess and its subsidiaries will be taken private and be wholly owned by the current management team. The operating company will continue under its existing leadership and structure, Authentic said.
“Guess is a powerhouse brand that has defined style and culture for over 40 years,” Salter said. “We have tremendous respect for the Marcianos and their team, who have built an innovative, heritage-rich brand with incredible global reach and an established ecosystem of partners. We are excited to build on this legacy in partnership with them as Guess enters its next chapter within our platform.”
Authentic said it will expand the Guess business into new categories and territories, and work to reactivate its archives.
“Guess’ international scale and market strength create a runway to accelerate Authentic’s growth around the world,” said Matt Maddox, president of Authentic. “This acquisition expands our presence in existing markets, opens doors to new ones and builds on a brand platform with a proven record of success.”
Alex Yemenidjian, chairman of the Guess board of directors and chairman of the company’s special committee, which was established to evaluate acquisition offers, said the company “evaluated a number of potential options and unanimously determined that the transaction with Authentic is the best path forward for Guess.”
Paul Marciano, cofounder and chief creative officer of Guess, added that over the company’s 44-year history, it has “always worked to create a strong network of licensing partners, and joining forces with Authentic — the world’s second largest licensor with a powerful lifestyle and entertainment platform —will enable us to build on this foundation and expand our reach as a global lifestyle brand.”
Alberini said that as a private company, Guess “will have enhanced flexibility to navigate today’s complex operating environment and execute on a more targeted, long-term strategy, enabling us to even better serve customers around the world.”
Founded in 1981 in Los Angeles, Guess became famous for its slim, stonewashed jeans and marketing campaigns overseen by Paul Marciano that featured “Guess Girls,” who in the past have included the likes of Claudia Schiffer and Anna Nicole Smith. Today it operates in about 100 countries through a global retail and licensing network that includes 1,600 stores globally, of which more than 1,000 are directly managed.
The deal is expected to close in the fourth quarter of Guess’ fiscal year in January.
Eric Beder, analyst with Small Cap Consumer Research, reiterated his buy rating on the stock, noting that at $16.75 a share, and with the unanimous approval by the independent members of Guess’s board of directors, “we believe the potential for another bidder will be highly limited, and we fully expect the deal to close.”
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