California Apparel News

Sequential Brands Group is getting ready to double its revenues. The company, which got its start in Los Angeles as a clothing company that has the William Rast label, announced it had signed a definitive agreement to acquire Galaxy Brand Holdings for $280 million in cash and stock.

Sequential is paying $100 million in cash and 13.75 million shares of Sequential common stock as well as issuing certain performance-based warrants that can be converted into stock.

The acquisition, which should be completed by the end of the year, will give Sequential three outdoor labels that will help grow the company. Those labels are the fitness brand Avia, basketball brand AND1 and outdoor brand Nevados. Sequential also will have the home-goods brand Linens ‘N Things.

“This merger is a game changer for Sequential, as it doubles the scale of our brand portfolio and further diversifies our licensee and distribution platform,” said Yehuda Shmidman, Sequential’s chief executive. “We were attracted to these four brands for both their existing licensing base as well as the strong prospects for continued organic growth in the future.”

After the acquisition, Sequential’s annual global retail sales are expected to grow from $1 billion to nearly $2 billion. Sequential will go from owning eight brands to 12 brands.

Galaxy also has 15 licensees whose products are sold at Walmart as well as at a wide range of mid-tier and specialty stores.

Global alternative asset manager The Carlyle Group, which has a majority interest in Galaxy, will be granted one seat on Sequential’s board of directors and will become a significant shareholder in the company after the acquisition has been completed.

In addition, Galaxy Chief Executive Eddie Esses and his team will continue to lead the business for the newly acquired brands.

Sequential Brands obtained financing from Bank of America and GSO Capital Partners LP, an affiliate of Blackstone Group. The company also will be replacing its existing debt facilities with new first lien and second lien debt facilities totaling approximately $180 million. Additionally, upon completion of the deal, Sequential’s diluted share count will be approximately 40 million.

Since changing its name from People’s Liberation to Sequential Brands Group in 2012, the publicly traded company has been brand hungry. In 2012, Sequential bought DVS Shoe Co. for $8.5 million. The next year it paid $63.2 million for Heely’s Inc., best known for those athletic shoes with a detachable wheel in the heel that turns mere pedestrians into gliding travelers. It also owns the brands Ellen Tracy, Caribbean Joe and Revo.

Last November, Sequential agreed to acquire for an undisclosed sum The Franklin Mint brand, which for 50 years has been selling collectibles such as coins, figurines, stamps and board games.