Kontoor Brands has consented to divest its Lee denim trademark to Authentic Brands Group in an agreement potentially reaching $1 billion, both entities announced on Thursday.
As per the arrangement, Kontoor will obtain $750 million initially, with a supplementary $250 million reliant on the brand’s performance following the acquisition by Authentic. The transaction garnered unanimous endorsement from Kontoor’s board of directors, but remains conditional on regulatory clearance. Completion is anticipated by the close of 2026.
Following the consummation of the deal, Authentic intends to convert Lee into a licensing-based business model and is already engaged in discussions with prospective brand operators who will oversee daily operations and advancement across content, lifestyle, and heritage-oriented products.
According to Authentic founder and CEO Jamie Salter, Lee’s worth resides in its historical legacy. The trademark, established in 1889, has a presence in 73 nations and generates roughly $1.5 billion in yearly retail revenue, a substantial portion of which originates from markets beyond the United States and Canada.
For Kontoor, the sale represents a strategic maneuver to concentrate resources on its primary Wrangler and Helly Hansen brands, which the company posits possess greater growth prospects. The liberated capital will be employed to cultivate higher-potential domains, encompassing denim, outdoor, and workwear.
The agreement aligns with Authentic Brands’ approach of procuring the intellectual property of reputable brands and delegating operational management to licensing collaborators. The company’s holdings encompass over 50 brands, including Reebok, Champion, Brooks Brothers and Guess, with collective retail sales approximating $38 billion annually.
Authentic Brands is also reportedly gearing up for a potential IPO within the forthcoming 12 months. Morgan Stanley and Foley & Lardner are offering counsel to Kontoor on the transaction, while Kirkland & Ellis is advising Authentic.
Source: Reuters