Differential Brands Group Inc (NASDAQ: DFBG) is soaring in the market today, gaining in multiples rather than percentages. The gains are ultimately the result of news that the company has agreed to acquire a significant asset. Of course, the news excited investors, leading to massive gains in the value of the stock. Today, we’ll talk about:
- The asset acquisition;
- what we’re seeing from DFBG as a result; and
- what we’ll be watching for ahead.
DFBG Flies On Asset Acquisition
As mentioned above, Differential Brands Group is having an incredibly strong start to the trading session this morning after the company announced asset acquisition news. In a press release issued early this morning, the company announced that it has entered into a definitive agreement with Global Brands Group Holding Limited to acquire a significant part of the company’s North American licensing business.
The licensing business at the center of the news is comprised of licensed brands like Disney, Star Wars, Calvin Klein, Under Armour, Tommy Hillfiger, BCBG, bebe, Joe’s, Buffalo David Bitton, Frye, Michael Kors, Cole Haan, and Kenneth Cole. In the release, DFBG said that the agreed upon price came to $1.38 billion, subject to adjustement. In the release, DFBG said that following the closing, which is expected to take place in the third quarter of this year. , it is anticipated that the company will have in excess of $2.3 billion in pro forma annual revenue.
In a statement, William Sweedler, Chairman of the Board of Directors at DFBG and Managing Partner at Tengram Capital Partners, had the following to offer:
On behalf of the Board, I am thrilled that we were able to structure a transaction with the Fung family to acquire one of the leading branded consumer soft goods companies in North America with a world class management team led by Jason Rabin… Jason and his team plan to invest significant capital into this Transaction, which will transform Differential into a large scale North American branded platform.
The above statement was followed up by Jason Rabin, President of GBG North America. Here’s what he had to offer:
We are thrilled to join Differential Brands Group and lead our combined platform by leveraging our expansive infrastructure, distribution and sourcing networks to drive growth, and we look forward to working with the Differential management team and Tengram to help support the Company’s growth as it capitalizes on promising market opportunities. We are proud of what we have accomplished since joining Li & Fung in 2009, judiciously expanding the GBG platform and driving profitability, and thank them for their long-standing support and partnership… Mr. Rabin has a proven track record of successfully growing numerous world class brands since inception. We are confident this Transaction will create tremendous value for our stockholders, as well as provide enhanced opportunities in North America for our brands and business partners.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of Differential Brands Group, the news proved to be overwhelmingly positive. After all, this acquisition will drive tremendous revenue for the company. So, it’s no surprise that excited investors are sending the stock through the roof. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:00), DFBG is trading at $3.58 per share after a gain of $2.69 per share or 302.25% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on DFBG. In particular, we’re interested in following the story surrounding the company’s new asset acquisition and the revenue the move will generate for the company. We’ll also be following the transaction itself closely. As is the case with most transactions of this magnitude when they are first announced, it is still subject to customary closing conditions. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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