Kontoor Brands sells Lee denim to Authentic Brands for $1B

Kontoor Brands agreed to merchantability its Lee denim marque to Authentic Brands Group successful a transaction valued astatine up to $1 billion, the companies said connected Thursday.

Under the presumption of the agreement, Reuters reports that Kontoor volition person $750 cardinal upfront, with the remaining $250 cardinal contingent connected Lee's show erstwhile it moves to Authentic's stewardship. Kontoor's committee gave unanimous support to the sale, which regulators indispensable inactive wide earlier it tin beryllium finalized, with some companies targeting completion sometime earlier year-end 2026.

Authentic plans to person Lee into a licensing exemplary erstwhile the woody closes, the institution said. Talks are already underway with imaginable marque operators who would instrumentality connected Lee's day-to-day concern and prosecute maturation successful areas including content, experiences, and heritage-driven manner categories, Authentic said.

"What makes Lee truthful compelling is its legacy," said Jamie Salter, laminitis and enforcement president of Authentic, successful a statement. "It's 1 of the astir important names successful denim, with much than a period of heritage, user consciousness and taste relevance already built in."

The brand, which dates to 1889, has a planetary footprint spanning 73 countries and produces astir $1.5 cardinal successful yearly retail-equivalent sales; markets beyond the U.S. and Canada relationship for adjacent to 4 successful 10 of those dollars, the institution said.

For Kontoor, the merchantability is simply a deliberate determination to ore resources connected its remaining brands. "By expanding our absorption connected Wrangler and Helly Hansen, 2 iconic brands with important achromatic abstraction opportunities, we are amended positioned to substance a higher maturation illustration and make adjacent greater worth for our shareholders," said Scott Baxter, president, CEO and president of Kontoor Brands, according to Yahoo Finance. Shedding Lee gives Kontoor the latitude to redirect superior toward what the institution describes arsenic segments with stronger structural maturation potential, spanning denim, outdoor, and workwear.

The Lee acquisition fits a broader signifier for Authentic, which named Matt Maddox arsenic its caller CEO this week, with Salter transitioning to enforcement chairman. At the bosom of Authentic's concern exemplary is simply a straightforward playbook: acquisition the intelligence spot down well-known names and manus disconnected operations to third-party partners who wage for the close to usage those assets. Its portfolio includes much than 50 brands — among them Reebok, Champion, Brooks Brothers, and Guess — generating astir $38 cardinal successful system-wide retail income annually.

Salter has said helium expects Authentic to spell nationalist wrong the adjacent 12 months. On the advisory side, Kontoor tapped Morgan Stanley for fiscal guidance and Foley & Lardner for ineligible work, portion Authentic turned to Kirkland & Ellis arsenic its counsel.