April 6, 2018
Sequential purchased the brands for $62.3 million in cash and approximately 2.8 million shares of Sequential stock.
The two brands join Sequential’s growing roster of properties that also include William Rast, People's Liberation, DVS Action Sports and Heelys.
"Today's acquisition represents the completion of Sequential's base platform, as we acquired two strong brands and a proven activation team led by Rick Platt, who joins Sequential as group president, brand management," says Yehuda Shmidman, chief executive officer, Sequential. "With the addition of both Ellen Tracy and Caribbean Joe, Sequential's portfolio now includes six brands that have more than 50 licensees and an expected run-rate of close to $1 billion in retail sales worldwide. With our brand management platform in place, our plan is to focus on growing each brand in our portfolio, while aggressively pursuing new brands as well."
Both brands are currently licensed to major licensees including Li & Fung, Komar, The Moret Group, Bernette Textile and G-III Apparel Group, and Sequential estimates that the two properties will generate between $12 and $14 million in royalty revenues over the next 12 months.
On a combined basis with the company's existing brand portfolio, Sequential is projecting 12-month royalty revenues of $23 to $25 million from its six brands, operating at a 50 percent EBITDA margin. The company expects this EBITDA margin to expand as it leverages the platform to acquire additional brands. After taking into account the cost of concluding the new acquisition, Sequential estimates that it wil have $15 million of cash on its balance sheet as well as about $80 million in aggregate minimum royalty revenue contractually guaranteed to the company for its six brands.
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