Iconix to Buy Pillowtex Brands

New York — Official Pillowtex will be acquired by fashion brand development firm Iconix Brand Group in a transaction comprising $231 million in cash and up to an additional $15 million based on revenue targets for the Pillowtex brands, which include Cannon, Royal Velvet, Fieldcrest, and Charisma.

The four home brands are actively generating revenues via their licensees. Cannon and Royal Velvet are currently licensed to Li & Fung USA; Fieldcrest is in a direct-to-retailer license to Target Stores, and Charisma is licensed to WestPoint Home.

Iconix evp David Conn told HTT the company is pleased with the current licensees and with the positions of the brands at retail, saying, "We like the different segments of the marketplace."

Conn pointed to the "international momentum" of some of its apparel brands, and referred as one example to two of the company's partners in Japan: Mitsubishi for Ocean Pacific (OP), and IPGI for Mossimo. He sees real opportunity for global expansion by Pillowtex, "especially brands like Cannon — which is well known internationally."

"We believe that the home industry is an ideal fit for our first acquisition outside of fashion as there is a lack of innovative marketing and differentiation among brands," said Neil Cole, chairman and ceo of Iconix. The company's roster includes mainly youth-directed fashion brands such as Candie's, Joe Boxer, Mudd, Mossimo, OP, and Rocawear.

Iconix said the Pillowtex brands will generate between $35 and $37 million in 2008 royalty revenue with direct expenses of between $5 and $7 million. Total aggregate guaranteed royalty revenue for the brands equals approximately $160 million or approximately 65% of the purchase price, the company said.

"I believe that our marketing expertise will enable us to maximize the potential of these iconic brands and realize numerous growth opportunities including extending their reach into new categories in the home." Cole said.

The transaction is expected to close by the end of 2007.