DENIM
Joe’s Jeans Completes Acquisition of Hudson Clothing
The merging of two Los Angeles–based premium-denim companies is a done deal.
Joe’s Jeans announced Oct. 2 that it had completed the $97.6 million acquisition of Hudson Clothing.
“We look forward to capitalizing on the numerous opportunities created by this partnership,” said Marc Crossman, president and chief executive of Joe’s Jeans. “The combination of our two organizations, which doubles the size of our business, significantly enhances our prospects for growth across wholesale, retail and e-commerce, both domestically and overseas. The combination also provides operating and supply-chain benefits that should drive meaningful cost savings in the future and underscores our positive outlook.”
The two companies will maintain separate facilities and their own staff to preserve their distinct DNA. But sourcing options could change for Hudson. Currently, Joe’s Jeans manufactures about 50 percent of its blue jeans in Mexico, about 20 percent in Los Angeles and another share in Asia. Hudson manufactures almost all of its jeans in Los Angeles, except for a small percentage in Mexico.
Crossman said he wouldn’t be changing Hudson’s sourcing strategy right now, but he could help Hudson get better prices in Mexico.
Hudson was founded in 2002 by Peter Kim, who will become a board member of Joe’s Jeans and remain Hudson’s chief executive.
Crossman said the deal started to take form last November. He and Kim are both surfers and batted around the idea of combining forces to take advantage of the various cost savings that could be had with a larger company.
It is estimated that Hudson’s annual revenues are $90 million. It has a core line of denim that is known for its washes, cuts, fabrics and colors. Joe’s Jeans is publicly traded on the Nasdaq, with annual revenues of $118.6 million in 2012.
The transaction financing for the $97.6 million deal consisted of a $50 million revolving credit facility with CIT Trade Finance as agent and a $60 million senior-term loan provided by affiliates of Garrison Investment Group as agent. CIT Capital Markets acted as lead arranger for the transaction finances, and CIT Trade Finance will provide factoring services to the merged companies.
Threadstone Advisors served as financial adviser and Akin Gump Strauss Hauer & Feld served as legal adviser to Joe’s Jeans. Lazard Middle Market served as financial adviser and McDermott Will & Emery served as legal adviser to Hudson. Triangle Capital provided a fairness opinion to Joe’s Jeans’ board of directors.
