DHX purchase of the classic brand closes, netting Iconix more than $100 million in profit.
NORTH AMERICA- Thanks to sale of the Peanuts and Strawberry Shortcake brands to DHX Media, a deal that closed Monday, Iconix Brand Group has seen a substantial reduction of its debt.
DHX bought the two classic brands for $345 million in cash, and allowing Iconix to take home more than $100 million in profit (it bought the brands in 2010 for $210 million).
Debt reduction will be key in Iconix’s turnaround efforts, following years of uncertainty for the company after accounting irregularities surfaced in 2015 followed by an SEC investigation.
Despite that Iconix is still one of the largest licensors in the world, ranking at No. 4 on License Global’s annual Top 150 Global Licensors report, with $12 billion in retail sales of licensed merchandise in 2016.
The sale of the company’s entertainment segment included an 80 percent, controlling interest in the Peanuts brand and 100 interest in the Strawberry Shortcake brand. The remaining 20 percent interest in Peanuts will continue to be held by members of the family of Charles M. Schulz.
The net proceeds from this transaction plus additional cash on Iconix’s balance sheet were used to pay down approximately $362 million in principal debt.
"Improving the balance sheet has been a key objective of our company, and with the entertainment sale complete we have made significant progress on this objective,” says John Haugh, chief executive officer, Iconix. “In a little more than one year, we have reduced our debt by over $650 million and improved our leverage by approximately two turns."
For its part DHX is looking forward to giving the classic brands new life.
"Today we take the reins of one of the world's best known kids' and family properties, Peanuts. We do so with excitement and a great sense of respect. This is a major step forward in DHX Media's growth plans," says Dana Landry, chief executive officer, DHX Media. "Both Peanuts and Strawberry Shortcake are ideal properties to leverage across our global platform of content creation, distribution and consumer products. We firmly believe they will provide tremendous shareholder value. ... Peanuts is a 'forever brand' and as such, we expect to immediately benefit from strong, resilient cash flow from royalties on consumer products, driven by its massive global appeal."