Iconix Brand Group, Inc. (ICON) has announced to offer convertible senior subordinated notes worth $325 million due 2018 only to qualified institutional buyers, subject to market conditions. In case of any over-allotments, Iconix will offer the initial purchaser of the notes up to an additional $50 million aggregate principal amount of notes within 30 days. The notes will mature on Mar 15, 2018.
Iconix expects to utilize the net proceeds to repurchase up to $75 million of its common stock in privately-negotiated transactions, to fund the net cost of a convertible note hedge transaction and a warrant transaction, and for general corporate purposes, such as investments or acquisition of new brands or additional share repurchases.
Since Jan 1, 2013, Iconix has repurchased approximately 2.6 million shares for approximately $62.0 million. Last month, Iconix reported its fourth quarter results and announced a new share repurchase program to repurchase up to $300 million of its common stock over a three-year period, in anticipation of full use of the $200 million share repurchase program, which was authorized in Oct 2011.
Iconix has a diversified portfolio of brands. Iconix builds its brand portfolio by acquiring new brands, entering into joint ventures or other partnerships, each of which enhances the company’s brand management expertise and existing infrastructure.
Most recently in February, Iconix acquired the renowned lifestyle brand Lee Cooper for $72 million to strengthen its brand portfolio and to expand in important international markets, which now account for 33% of its overall business.
Iconix has also formed a joint venture with Buffalo International ULC to acquire a 51% interest in the latter’s Buffalo David Bitton brand for $76.5 million, which will help Iconix to expand its retail footprint in the U.S. and Canada. Again, in early-Dec 2012, the company added sports apparel and footwear brand, Umbro from its peer Nike Inc. (NKE) to further strengthen its diversified portfolio.
Currently the stock carries a Zacks Rank #3 (Hold). Other favorable stocks in the consumer discretionary sector worth considering are Skechers USA Inc (SKX) and Michael Kors Holdings Ltd (KORS), both of them holding a Zacks Rank #1 (Strong Buy).
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