2010: A Year of M&As

The value and potential of brands will be the driving factor of every corporate deal as management companies and even retailers look for the perfect property.The power control switch for mergers and acquisitions, not only i

April 6, 2018

3 Min Read

The value and potential of brands will be the driving factor of every corporate deal as management companies and even retailers look for the perfect property.

The power control switch for mergers and acquisitions, not only in brand licensing but in other industries as well, was flicked on a few months ago with a strong and confident force—and it's likely not to be shut off for the foreseeable future. i1_754.jpg

This M&A activity indicates that the general economic conditions are getting better, and that bodes well for businesses and consumers worldwide. While it also might spell the dreaded C-word of consolidation in several industry sectors, including brand licensing, it will also give new life to brands and companies that suffered during the global economic downturn. The fundamental goal of all the recent mergers and acquisitions, after all the financial due diligence is assessed, is access to the most valuable asset: brands.

So whether it's the most recent mega-airline deal between United and Continental creating the world's largest airline, or Philips-Van Heusen's acquisition of Tommy Hilfiger creating one of the world's largest apparel companies, or Disney's acquisition of Marvel further strengthening the licensor's No. 1 position, the key factor no matter what is the brand equity.

Another recent deal that characterizes this factor, and also exemplifies the trend in licensing of companies looking to build a portfolio of power brands, is the acquisition by the Iconix Brand Group of United Media's licensing business for $175 million. For Iconix, the second-largest global licensor with $9 billion in retail sales of licensed products, according to License! Global's exclusive Top 125 ranking, the acquisition expands the company's portfolio beyond its core apparel position into the character business. The United Media brands, including Peanuts, Dilbert and Fancy Nancy, give Iconix a huge opportunity to expand its presence with major retailers worldwide. United Media is the sixth-largest licensing agency, with more than $2 billion in retail sales.

Two other companies were recently formed to build an international brand licensing and consumer products business and are now aggressively pursuing acquisitions. Saban Brands, a subsidiary of Saban Capital Group, is doing its market research and analysis as it looks for its first property, according to managing director Elie Dekel, who recently served as executive vice president, licensing and merchandising for Twentieth Century Fox.

Another contender in this suddenly fiercely competitive brand acquisition field is Infinity FS Brands, a new partnership between Infinity Lifestyle Brands and Bradley W. Snyder Enterprises. The two managing partners, Ike Franco, co-chairman and principal of the Infinity Group, and Bradley W. Snyder, formerly of Gordon Brothers, also have experience in brand development and acquisitions.

And then there's well-known Hilco Consumer Capital, which has acquired such iconic properties as Polaroid, Bob Marley and The Sharper Image, and is aggressively expanding its consumer products business. In somewhat of a reverse move, Hilco recently sold its Tommy Armour golf brand to The Sports Authority, the specialty sporting goods retailer with more than 450 stores.

The deal identifies another potential trend in the brand licensing business—retailers acquiring high-profile properties that offer exclusivity and proprietary ownership.

The brands that are acquisition candidates will likely come from the industry sectors that were most impacted by the global economic downturn, including small and mid-size entertainment properties, luxury apparel brands and venerable retail brands, such as The Sharper Image or Linens 'n Things, that could be reinvented as an exclusive licensed property or e-commerce business.

The M&A activity will continue to intensify throughout 2010 and beyond as various established licensors, new brand management companies and even retailers look for brands and properties that offer growth opportunities worldwide.

Editor's Clarification: The last issue of License! Global featured the 10th anniversary tribute to Concept One, one of the leading licensees of accessory products. We congratulate Sam Hafif, president and chief executive officer of Concept One, and his team on achieving this milestone, but we regret the errors in the original story. A revised version appears on licensemag.com.

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