Sequential Brands To Buy Carlyle's Unit Galaxy Brand In Cash, Stock Deal

(RTTNews) - Brand licensing company Sequential Brands Group, Inc. (SQBG) announced Wednesday that it has signed a definitive agreement to acquire Galaxy Brand Holdings, Inc. for $100 million in cash, 13.75 million shares, and certain performance based warrants.

The transaction is expected to close by the end of 2014, subject to customary closing conditions and regulatory approval. The deal would be immediately accretive.

On Tuesday, the Wall Street Journal reported, citing people familiar with the matter that Sequential was nearing a deal to buy rival Galaxy Brand for $260 million in cash and stock, comprising $100 million in cash and the remaining $160 million in stock.

Galaxy Brand, with about $1 billion in annual sales, is majority-owned by private equity firm Carlyle Group LP (CG), which made an investment in the company in 2013. Galaxy Brand was founded in 2011.

In the transaction, Sequential, which owns a portfolio of consumer brands, will acquire four consumer brands that include the fitness brand Avia, basketball brand AND1, outdoor brand Nevados, and home goods brand Linens 'N Things.

Sequential expects the deal to position it as one of the largest pure-play brand licensing companies, and to increase its portfolio from 8 to 12 brands. The company also projects the annual global retail sales for its brands to grow to nearly $2 billion from approximately $1 billion.

Yehuda Shmidman, CEO of Sequential, said, "This merger is a game changer for Sequential, as it doubles the scale of our brand portfolio and further diversifies our licensee and distribution platform. We were attracted to these four brands for both their existing licensing base as well as the strong prospects for continued organic growth in the future."

Eddie Esses, CEO of Galaxy Brand, and the Galaxy team will continue to lead the business for the newly acquired brands, the company noted.

Following the deal, Global alternative asset manager Carlyle Group would become significant shareholder in Sequential, and will be granted one seat on Sequential's Board. Rodney Cohen, Managing Director and Co-Head of Carlyle Growth Partners and Carlyle Equity Opportunity Fund, would join the Board of Directors, the company said.

Sequential said it has obtained committed financing from Bank of America and GSO Capital Partners LP, an affiliate of Blackstone Group.

Sequential shares settled on Tuesday at $11.66, up $0.23 or 2.01 percent. Carlyle shares closed at $34.37, down $0.46 or 1.32 percent.