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Stanley Black & Decker $SWK to Acquire @Craftsman Tools from Sears $SHLD for $900M

Stanley Black & Decker $SWK to Acquire @Craftsman Tools from Sears $SHLD for $900M

Sears Holdings initiated a formal process to explore strategic alternatives for its Kenmore, Craftsman and DieHard brands, and its Sears Home Services, with the assistance of Citigroup Global Markets and LionTree Advisors, as reported last year by ExitHub. The deal provides Stanley Black & Decker with the rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries. As part of the agreement, Sears Holdings will continue to offer Craftsman-branded products, sourced from existing suppliers, through its current retail channels via a perpetual license from Stanley Black & Decker, which will be royalty-free for the first 15 years after closing, then 3% thereafter. Today only approximately 10% of Craftsman-branded products are sold outside of Sears Holdings and the agreement will enable Stanley Black & Decker to significantly increase Craftsman sales in these untapped channels. “Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” said Stanley Black & Decker President and CEO James M. Loree. “This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels. We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online. To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S. This will add jobs in the U.S., where we have increased our manufacturing headcount by 40% in the past three years. Sears Holdings’ Chairman and Chief Executive Officer Edward S. Lampert stated, “We are pleased to reach this agreement, after determining that externalizing the Craftsman brand would accomplish our goals of driving value for Sears Holdings and positioning Craftsman for future growth. This transaction represents a significant step in our ongoing transformation to a membership focused business model.” Lampert, who is also the founder, chairman and CEO of ESL Investments, his hedge fund based in Greenwich, Connecticut, engineered today’s Sears Holdings by merging Kmart and Sears Roebuck in 2005. Existing sales of Craftsman products outside the Sears Holdings and Sears Hometown distribution channels, which will be assumed immediately upon closing by Stanley Black & Decker, were approximately $200 million over the last 12 months. The sale of Craftsman branded products is expected to contribute approximately $100 million of average annual revenue growth for approximately the next ten years. The transaction is expected to be accretive to earnings by approximately $0.10-$0.15 per share in year one, increasing to approximately $0.35-$0.45 by year five and to approximately $0.70-$0.80 by year ten, excluding approximately $20 million of deal-related costs. The deal, which was approved by the Boards of Directors of both companies, is expected to close during 2017, subject to customary closing conditions and regulatory approvals. Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Sears Holdings is a leading integrated retailer focused on seamlessly connecting the digital and physical shopping experiences. Sears Holdings is home to Shop Your Way, a social shopping platform offering members rewards for shopping at Sears and Kmart as well as with other retail partners. The company operates through its subsidiaries, including Sears, Roebuck and Co., founded in 1886, and Kmart Corp., founded in 1899, with full-line and specialty retail stores across the United States. Photo: Edward S. Lampert, Chairman and CEO, Sears Holdings Corp, and ESL Investments.]]>

@BainCapital to Transfer Edcon Control to Creditors in Debt-For-Equity Swap

@BainCapital to Transfer Edcon Control to Creditors in Debt-For-Equity Swap

Bain Capital and Goldman Sachs (NYSE: GS) agreed to acquire a majority stake in Carver Korea, a leading Korean cosmetics company, in a deal valued at over $300 million. “This important milestone in the history of the Edcon Group follows the recent payment deferral implemented in May 2016 and the securing of R1.5 billion of bridge financing under new Facilities A1 and A3 of the existing Super Senior Liquidity Facility Agreement,” said Edcon Group’s chief executive Bernie Brookes. “Our operational turnaround plans are already well underway and the finalisation of the process to reduce our debt will ensure Edcon remains the largest South African clothing retailer, but that it also returns to its former status as the leading clothing retailer in South Africa,” he added. The restructuring is expected to materially improve the liquidity position of the Edcon Group to ensure ongoing operations as well as address the current high structural leverage and cash interest burden on the operating company, the company said. The extended maturities and additional funding should facilitate the ongoing operational turnaround and allow management to refocus onto running the business and executing its strategic plan. The restructuring is also expected to alleviate concerns of key stakeholders such as suppliers, landlords and credit insurers. A new governance structure will be put in place, including provisions relating to transfers of shares, pre-emption rights, tag-along rights and drag-along rights, board composition and reserved matters requiring the consent of specific majorities of shareholders, the company said. Johannesburg-based Edcon has been in operation for more than 80 years and has expanded its footprint to include 1,542 stores as at March 26, 2016. Edcon’s Edgars division includes Edgars, Boardmans, Edgars Active, Edgars Shoe Gallery, Red Square and the group’s mono-branded stores such as Topshop Topman, Tom Tailor, Dune, Lucky, T.M. Lewin, Lipsy, Salsa, River Island, Vince Camuto, Calvin Klein, Inglot, La Senza and Accessorize whose products, are also available through Edgars stores, serving principally middle and upper income markets. Edcon’s Discount division includes Jet, JetMart and Legit, serving principally middle to lower income markets; and CNA, the group’s stationery, books, games, movies, music, hi-tech electronics and mobile retailer. The group offers credit and insurance products to its customers through strategic partnerships with third parties. Edcon’s primary operations are in South Africa where the group generated 88 percent of its retail sales in fiscal year 2016. The rest of its operations are in neighbouring Namibia, Botswana, Lesotho, Swaziland, Mozambique, Ghana, Zimbabwe and Zambia, where it operates 213 retail outlets.]]>

Syck Amore: Landlords $SPG, $GGP JV to Take Over @Aéropostale for $243M

Syck Amore: Landlords $SPG, $GGP JV to Take Over @Aéropostale for $243M

The Wall Street Journal, and is subject to court approval. The move comes two weeks after rival Los Angeles-based teen clothing retailer American Apparel LLC (AA), one of the largest apparel manufacturers in North America, reportedly hired investment bank Houlihan Lockey to explore a sale of the company, which was founded in 1989 by its controversial former chairman and CEO Dov Charney. In February 2016, American Apparel itself exited bankruptcy and is now privately owned by its creditors under a financial restructuring plan whereby the company converted $230 million in a debt-for-equity swap. AA’s new owners include Standard General, Monarch Alternative Capital, Coliseum Capital, and Goldman Sachs Asset Management. Two years ago, Aéro tied the knot for a $150 million senior secured credit facility with New York private equity firm Sycamore Partners, in conjunction with a sourcing arrangement with Sycamore’s portfolio company MGF Sourcing. However, the deal with Sycamore came back to haunt Aéro. On May 4, 2016, Aéropostale took the next steps in its ongoing business transformation saga by filing voluntary Chapter 11 bankruptcy petitions, closing 113 U.S. locations and all of its 41 stores in Canada. Aéropostale, headquartered in New York City, has about 800 stores in the U.S. and Puerto Rico, and through licensing arrangements around the world, but its footprint is expected to still be reduced drastically. The first Aéropostale store was opened in 1987 by Macy’s in the Westside Pavilion Mall in Los Angeles. The store was the brainchild of R.H. Macy Co. Aéro posted 13 straight quarterly losses and reported a net loss for fiscal 2015 of $136.9 million, which are provoking severe liquidity constraints. The company also indicated that it failed to resolve a vendor dispute with MGF, which “is causing a disruption in the supply of some merchandise.” “Under normal conditions, we would be very optimistic about our potential for financial growth throughout the first half of 2016,” said Aéropostale’s CEO Julian Geiger earlier this year. “Regrettably, our short-term visibility is limited by our current vendor dispute.” Sycamore, with more than $3.5 billion in capital under management, specializes in retail and consumer investments. The firm’s portfolio includes Talbots, Stuart Weitzman, Nine West, Kurt Geiger, Coldwater Creek, Belk, Dollar Express, Hot Topic, and others. Sycamore was founded in 2011 by Stefan Kaluzny and Peter Morrow, who previously worked at San Francisco private equity firm Golden Gate Capital. Given Sycamore’s aggressive retail shopping spree, The New York Times once referred to the pair as, “no retail parvenus.” Although Aéropostale continues to struggle with falling sales, its rivals such as American Eagle Outfitters Inc (NYSE: AEO) and Abercrombie & Fitch Co (NYSE: ANF) have managed to turn around their businesses by controlling inventories and responding faster to changing fashion trends.]]>

American Apparel New Owners Exploring Exit, Hire Houlihan Lockey

American Apparel New Owners Exploring Exit, Hire Houlihan Lockey

Reorg Research. In addition, “The 27-year-old teen retailer, which boasts on its Web site that its togs are ‘Designed, Cut and Sewn in Los Angeles,’ is making plans to pull up stakes and move east — possibly to North Carolina or Tennessee, where the minimum wage is $7.25,” the New York Post reported. American Apparel’s manufacturing is based in a seven-story 800,000-square-foot factory in downtown Los Angeles, where it produces more than 55,000 different products and garments. The company also owns and operates its own fabric dye house, garment dye house, and knitting facility, all based in Los Angeles. According to The New York Times, in 2006 American apparel was “the single largest garment factory in the United States.” The erstwhile fashion empire went “from being the coolest company on the block when it arrived in Britain in 2004,” according to The Guardian, which named American Apparel “label of the year” in 2008, to chapter 11 bankruptcy in October 2015, due to ongoing losses. “The label’s progressive labour standards and high voltage ads made it notorious – from dorm room project to generation-defining brand,” says Dazed writer Julie Zerbo. “After settling in Los Angeles in 1997, Charney began to make waves, challenging the labour standards of the local garment industry by paying higher wages (two times higher than the standard wage at times).” “American Apparel had a very precise identity to uphold: attainable aspiration – those hot, ‘real’ twenty-somethings that appeared in their images,” she added. “They took on larger competitors, such as The Gap, by catering to those experiencing logo fatigue. From early on, Charney eschewed logos – like the brand names his rivals were slapping on most of their t-shirts and sweatshirts.” In December 2014, Charney was forced out after an investigation for misuse of company funds and inappropriate conduct with employees. In January 2016, American Apparel rejected a bid reportedly valued at $300 million from Charney’s backers, Atlanta, Georgia-based family office and independent venture capital investor Hagan Capital Group, and Dallas, Texas-based early-stage venture capital investor Silver Creek Ventures. In February 2016, American Apparel exited bankruptcy and is now privately owned by its creditors under a financial restructuring plan whereby the company converted $230 million in a debt-for-equity swap. The company’s new owners include Standard General, Monarch Alternative Capital, Coliseum Capital, and Goldman Sachs Asset Management. The investor group also reportedly arranged a $40 million loan to help it exit bankruptcy, and injected another $40 million in new debt and equity. The holdings of former American Apparel shareholders, including Charney, became worthless. In February, Charney was said to be starting from the bottom again on a venture that sounds exactly like American Apparel, according to WWD. The new project is backed by Chad Hagan, president of Hagan Capital Group, who backed Charney’s bid to reclaim American Apparel. Hagan reportedly said the new company will make basics for men and women, will manufacture everything in the US, and will focus on wholesale in the early stages. “Sound familiar?” asks racked contributor Cameron Wolf. [caption id="attachment_433333" align="aligncenter" width="1024"]dov_charney Dov Charney, Founder and former Chairman & CEO of American Apparel.[/caption] “What’s important to us now is we’re able to form this new venture and put Dov at the helm and we’re going to do basics again,” Hagan told WWD. “We don’t want to just start with some funny, online brand. We’re going to do what Dov does best and then establish a robust e-commerce system.” “We hope to create a brand that captures the attention of the world. It will be irreverent and authentic.” Charney revealed on PBS during a recent interview with Tavis Smiley about his upcoming entrepreneurial ventures in downtown Los Angeles. “Whatever the past is, it is. I’m moving forward and I’m going to build a world-class company right here in Los Angeles,” the 47-year-old Canadian-born artist and industrialist said. “Long known for edgy, sexually charged advertising and store displays, the company lost its grip on the hottest fashion trends and basic retailing strategy, with stores selling the same goods year-round and factories churning out swimsuits in September,” according to USA Today. Paula Schneider, the new CEO, “has outlined a strategic path to rehab the company’s image through a mix of new marketing, products and store design,” it added. Schneider is an advisor on private equity acquisitions, brand strategies, operations and growth, through her firm Paula Schneider Consulting, since 2013. She’s an experienced senior executive in the apparel/fashion sector, who previously served as CEO and director at Big Strike LLC, a portfolio company of The Gores Group. She’s a former director at J. Mendel, as well as president of Warnaco Swimwear Group and BCBG Max Azria, among others. To understand why American Apparel has declined so spectacularly, take a stroll through Cambridge, Mass. by the Harvard campus, and you’ll notice that, “the store design is exactly as it was 10 years ago,” said racked contributor Elizabeth Segran. “It’s reminiscent of a factory, with stark white walls covered in metal racks and harsh overhead lighting. On the walls are enormous posters that capture the 1970s porn aesthetic: a woman in a sheer triangle bra suggestively stares at the camera on her hands and knees, a woman clad in nothing but legwarmers and panties looks more demure.” “American Apparel’s risqué marketing suggested a raw, empowered sexuality when it first entered the scene. Now it’s inseparable from the troubling exploits of company founder Dov Charney, who was ousted (in 2014) after the board compiled a long list of strikes like sleeping with employees, walking around the factory naked, and masturbating in front of a journalist,” she added. “Another reason these stores are doing so poorly? What was once considered “hipster style” has gone completely mainstream.”]]>