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8 Dec

WHP Global Sinks $260 Million Into Express; Acquires 7.4 Percent

WHP Global plans to take a position $260 million into Express in a two-part deal that can allow the retailer to scale internationally and in recent categories by the use of licensing deals, while forming a joint platform to accumulate more brands in the longer term. The deal is predicted to shut within the fourth quarter. 

“When we expect of the Express brand, we love the brand,” Yehuda Shmidman, WHP global chairman and chief executive officer, told WWD in an exclusive interview. “We see [the partnership] as an enormous opportunity. We see big opportunities to bring Express outside the U.S. and into the brand new categories. And once we’re within the marketplace taking a look at opportunities, our goal is to discover opportunities with the Express team. That’s the winning formula. It truly is the appropriate time for this. What an ideal time to capitalize on a volatile macro environment where there’s a lot in flux? That is the time to partner together.”

Tim Baxter, CEO of Express, added: “With the ability to leverage one another’s strengths and never only grow the express brand together, but acquire recent brands together and have the option to leverage those self same strengths with every brand we acquire together — it’s just an incredible power combination that’s really never been done before.” 

The deal is multilayered. First, the brand management firm will invest $235 million for a 60 percent stake in an mental property three way partnership. Express will retain a 40 percent stake. The deal will allow Express to scale internationally and into noncore categories — reminiscent of eyewear or children’s apparel — by the use of licensing deals. 

“We immediately strengthen our balance sheet at Express with a $260 million investment from WHP [and the deal will allow us to] upgrade our platform capabilities and eliminate our high-interest rate term loan,” Baxter said. 

WHP will even purchase $25 million value of Express common stock through a standard equity PIPE investment. The corporate will purchase 5.4 million newly issued shares at $4.60 per share, which represents a 7.4 percent pro-forma ownership. Express will proceed to operate as a publicly-traded company on the Recent York Stock Exchange. 

Lastly, the 2 firms will launch an omnichannel platform — dubbed the EXPR Platform — to accumulate, operate and grow multiple fashion brands. 

“This really positions us together to reap the benefits of retail industry consolidation that we all know is going on already and we anticipate will proceed to occur throughout the subsequent yr,” Baxter said. “Ultimately, we’re in search of brands that can provide probably the most synergies and the most important opportunities for us to drive each top- and bottom-line growth. But we can be focused on fashion brands. That’s clearly where our expertise lies on retail fashion brands.” 

The Express brand will proceed to operate as an independent business within the U.S. The partnership with WHP excludes the UpWest brand, which is a component of the Express portfolio. 

Shmidman added that with the present macro environment — the IPO market closed and types struggling to secure investments — opportunities to accumulate recent brands have increased exponentially. 

“When we expect in regards to the amount of fashion brands on the market [for sale], there are quite a bit,” he said. “Historically there have at all times been opportunities in fashion here and there. But given the environment today, it’s increased obviously, the quantity of opportunities. You’ll be able to imagine the varieties of fashion brands which can be on the market that we’re very excited to pursue.  

“The key though, there’s this recent combination on the market built to pursue those acquisitions,” Shmidman continued. “That is going to be a very recent vehicle. And a robust vehicle with a competitive edge to go pursue those acquisitions in a very recent and exciting way.” 

Express plans to disclose quarterly earnings Thursday before the market opens.

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