NexCen Acquires Blass

by MR Magazine Staff Dec 20, 2006

NEW YORK – The deals just keep on coming.

NexCen Brands Inc. has agreed to buy the Bill Blass operating company and licensing subsidiary in a stock and cash transaction that could net the sellers more than $70 million.

NexCen will pay the principals of Bill Blass Holding Co., chairman Haresh Tharani and president Michael Groveman, $54.6 million at closing, with 28% of the amount, or $15.5 million, coming in the form of NexCen stock. The sellers can also earn an additional $16.2 million in cash or stock if gross royalties attributable to the Bill Blass mark during calendar 2007 reach certain targets. NexCen expects royalties of $10 million next year, with an accretive effect on earnings per share of 7 cents.

As part of the transaction, expected to close next month, Designer Licensing Holdings LLC will take over the license for Bill Blass men’s and women’s denim in fall 2007, and an affiliate of the new licensee will acquire a 10% stake in the Blass trademark facility.

The denim license is currently held by Resource Club Ltd., of which Tharani is also chairman.

The sellers were represented by MMG and the buyers by UCC Capital Corp. in the negotiations.

Robert D’Loren, president and chief executive officer of NexCen, said, “Bill Blass is a lifestyle brand that represents the best of timeless and classic American design. We could not think of a more suitable brand for our portfolio that we expect will be a fashion icon for years to come.”

D’Loren was personally involved in the last sale of Blass name seven years ago. He was principal of CAK Universal Credit Corp. in November 1999 when CAK financed Tharani and Groveman’s $50 million acquisition of the company from Blass through asset-backed securities based on the future earning value of the Blass business and trademarks, including the royalties generated by the name. The structure of the deal was unprecedented in apparel industry history. The bonds paid interest and would have liquidated next November. The intellectual property basis of the earlier deal foreshadowed the “IP-centric” basis for D’Loren’s current company.

Blass died on June 12, 2002, at the age of 79.

“This is a mutually beneficial opportunity for Blass and for our couture designer, Michael Vollbracht,” Groveman said in a statement. “We’ve spent years working with Bob D’Loren and looking forward to working with him at NexCen. We anticipate a very successful endeavor, and one that will help to further enhance the Bill Blass brand.”

Groveman and Vollbracht will continue their involvement in the Blass couture business, Bill Blass Limited.

Although Blass is the first designer name to enter the NexCen portfolio, the company in October acquired The Athlete’s Foot, which franchises athletic footwear and apparel stores. Just last week, the company announced that it had hired Charles Zona as executive vice president of licensing and brand management.