Authentic Brands Acquires Controlling Stake in Guess for $1.4 Billion

What's Happening?

Authentic Brands Group has acquired a controlling 51% stake in Guess, taking the company private in a deal valued at $1.4 billion. The acquisition involves a newly formed entity that will own and license most of Guess's intellectual property and product licensing agreements. The remaining 49% will be owned by Guess co-founders Maurice and Paul Marciano, Nicolai Marciano, and CEO Carlos Alberini. The all-cash deal offers $16.75 per share, a 73% premium over the closing price on March 14, when WHP Global proposed $13 per share. The acquisition is expected to add approximately $6 billion in retail sales to Authentic Brands, marking its second-largest brand acquisition after Reebok.

Why It's Important?

This acquisition is a strategic move by Authentic Brands to expand its portfolio and increase its global retail sales, which are projected to reach $38 billion annually. By acquiring Guess, Authentic Brands aims to capitalize on the brand's established market presence and international scale. The deal underscores the competitive nature of the fashion industry, with Authentic Brands successfully securing the acquisition over WHP Global. The transaction is expected to enhance Guess's operational flexibility and allow for more focused strategic planning, potentially leading to increased market share and profitability.

What's Next?

The acquisition is set to close in the fourth quarter of Guess's fiscal year in January. Authentic Brands plans to expand Guess into new categories and territories, leveraging its global reach and established network of licensing partners. As a private company, Guess will have greater flexibility to navigate the current operating environment and implement a long-term strategy. The acquisition is anticipated to strengthen Guess's position as a global lifestyle brand and enhance its ability to serve customers worldwide.