Liz Claiborne Inc. (NYSE: LIZ) announced today that it has purchased all the outstanding equity interests in West coast Contempo Fashions Limited and Mac and Jac Holdings Limited which collectively design, market and sell the mac & jac, kenzie and kenziegirl apparel lines (“Mac & Jac”). The purchase price, which includes the retirement of debt at closing, is currently estimated to be $23.6 million (representing 50% of Mac & Jac’s initial valuation), plus additional payments based upon a multiple of Mac & Jac’s earnings in fiscal years 2006, 2008, 2009 and 2010. Mac & Jac generated net sales of approximately $40 million in fiscal year 2005.
Based in Vancouver, Canada and founded in 1985, the Company is a designer, marketer, wholesaler and retailer of premium apparel for women and men through its mac & jac, kenzie, and kenziegirl brands. The Company offers modern, fashionable, high-quality apparel and accessories for women and men. The fashion-forward yet classic combination results in clothes that fit and flatter, while providing women and men with a myriad of looks for work, nights out, weekends and holidays.
Mac & Jac sells its products primarily through select specialty stores and department stores in both the United States and Canada, including Nordstrom, Macy’s, Marshall Field’s and Dillard’s in the U.S. and Hudson’s Bay in Canada. The Company also operates 2 retail stores under the kenzie name in the U.S. (Seattle and Santa Monica). Through its joint venture operation in China, the Company operates over 40 retail locations under the mac & jac and kenzie names.
Commenting on the announcement, Paul R. Charron, Chairman and Chief Executive Officer of Liz Claiborne Inc., said: “We are quite pleased to announce this acquisition. Mac & Jac’s strong brand names and multi-brand, multi-channel and multi-geography approach complement our portfolio diversification strategy. Mac & Jac is well positioned for significant organic growth through the opportunity for expanded distribution in the U.S. department store and specialty store channels in addition to further penetration within its existing account base. We also are encouraged by the opportunity to expand specialty retail, which is in the early stages of development, as well as international opportunities through additional distribution and further growth in their Asian joint venture. Mac & Jac also has abundant brand extension opportunities in non-apparel categories, as well as in licensing.”
Trudy Sullivan, President of Liz Claiborne Inc., added: “We are pleased that Mac & Jac founders Eric and Lani Karls will continue to lead the Company. This will ensure that the focused vision and brand position that created their three distinct brands will remain intact. A global strategic partner like Liz brings a high level of intellectual and financial capital to the partnership that will help Eric, Lani and their team to successfully execute Mac & Jac’s growth strategies. We look forward to working with the entire Mac & Jac management team to maximize their performance within Liz Claiborne. We expect this transaction to have a slightly accretive impact on fiscal 2006 earnings.”
Eric and Lani Karls, co-founders of Mac & Jac, said: “We are excited to join the Liz Claiborne family and access resources that will enable us to grow our great brands faster. We are very impressed by Liz Claiborne’s management and their proven track record of acquiring brands and allowing the businesses to reach their full potential. We look forward to having our organization be part of Liz Claiborne’s worldwide network.”
Liz Claiborne Inc. designs and markets an extensive range of women’s and men’s fashion apparel and accessories appropriate to wearing occasions ranging from casual to dressy. The Company also markets fragrances for women and men.
Liz Claiborne Inc.’s brands include Axcess, Belongings, Bora Bora, C&C California, City Unltd., Claiborne, Crazy Horse, Curve, Dana Buchman, Elisabeth, Ellen Tracy, Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, Juicy Couture, Lady Enyce, Laundry by Shelli Segal, LIZ, Liz Claiborne, Lucky Brand, Mambo, Marvella, Metro Concepts, Mexx, Monet, Monet 2, Prana, Realities, Rhythm & Blues, Sigrid Olsen, Soul, Spark, Stamp 10, Tape measure, Tint, Trifari and Villager. In addition, Liz Claiborne Inc. holds the exclusive, long-term license to produce and sell men’s and women’s collections of DKNY(R) Jeans and DKNY(R) Active in the Western Hemisphere.
The Company also has the exclusive license to produce jewelry under the Kenneth Cole New York and Reaction Kenneth Cole brand names.
The Sage Group served as exclusive financial advisor to Mac & Jac.