Guess to Go Private in $1.4 Billion Deal with Authentic Brands

What's Happening?

Guess? Inc. is set to be taken private by Authentic Brands Group LLC, in collaboration with co-founders Maurice and Paul Marciano and CEO Carlos Alberini. Shareholders will receive $16.75 per share in cash, representing a 26% premium over the stock's closing price on Tuesday. The transaction values Guess at approximately $1.4 billion, including debt. The company's shares surged in premarket trading to match the offer price. Guess, founded in 1981 by the Marciano brothers, is known for its denim, handbags, and shoes. Earlier this year, Guess partnered with WHP Global to acquire the fashion brand rag & bone. In April, Guess announced it was considering a proposal from WHP to acquire the retailer for $13 per share.

Why It's Important?

The acquisition of Guess by Authentic Brands Group marks a significant shift in the fashion retail landscape. By taking Guess private, Authentic Brands aims to leverage its extensive brand management expertise to enhance Guess's market presence and profitability. This move could potentially streamline Guess's operations and allow for more strategic decision-making away from the pressures of public market expectations. The deal also highlights the competitive nature of acquisitions in the fashion industry, with Authentic Brands successfully outmaneuvering WHP Global's previous bid. The acquisition is expected to bolster Authentic Brands' portfolio, adding substantial retail sales and expanding its global reach.

What's Next?

Following the acquisition, Guess will be wholly owned by its current management team and continue under its existing leadership structure. Authentic Brands plans to expand Guess into new categories and territories, while also reactivating its archives. The deal is anticipated to close in the fourth quarter of Guess's fiscal year in January. As a private entity, Guess will have increased flexibility to navigate the complex operating environment and execute a more targeted, long-term strategy. This strategic shift is expected to enhance Guess's ability to serve customers globally and strengthen its position as a lifestyle brand.