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Iconix Brand Group to Acquire Mossimo

The deal for the fashion design company, whose wares are sold at Target, is valued at $135 million.

April 04, 2006|David Colker | Times Staff Writer

Fashion design company Mossimo Inc., which had its roots in the Orange County surfer look, has agreed to be acquired by Iconix Brand Group, it was announced Monday.

The deal would put the Santa Monica company, whose wares are sold nationwide by Target Corp., under the same corporate umbrella as Joe Boxer underwear, Candie's shoes and Badgley Mischka women's wear.

The companies valued the cash-and-stock transaction at about $135 million. Mossimo's shares soared $2.17, or 40%, to $7.64, and Iconix added 58 cents, or 4%, to $15.13.

"Mossimo may not be the kind of brand it was 10 years ago when you could have called it a concept," retail consultant Kurt Barnard said. "But it still can make money -- on the name and the fame."

Founder and majority shareholder Mossimo Giannulli, who started by selling volleyball shorts out of his Balboa Island garage in 1986, would trade control to the New York-based branding firm for a big payday.

Giannulli, who owns about 10.3 million shares in the company, according to filings with the Securities and Exchange Commission, would reap nearly $88 million in cash and stock. He would join Iconix as creative director of the Mossimo brand.

Under the deal, Mossimo shareholders would receive $7.50 a share -- $3.25 in Iconix stock and $4.25 in cash -- for a total of $119 million. Iconix would give shareholders $16 million more in stock, bringing the deal's value to $8.50 a share, if Iconix's stock price doesn't appreciate to a level that would equal that deal value within a year.

Iconix Chief Executive Neil Cole, whose family founded Candie's, said his company avoided fashion whims by making licensing deals and doing no manufacturing of its own.

"After two decades of trying to figure out what teenagers want," Cole said, "we stopped making shoes three years ago and took on a new business model."

At Mossimo's height in 1996, when its clothing was sold in major department stores, the share price reached $50. Its fortunes plunged with the company's leap from beachwear to elegance.

The company considered filing for bankruptcy in 2000. But it was resurrected by its deal with Target, which gave the discount retailer exclusive U.S. rights to sell Mossimo-branded goods.

On Monday, Mossimo said the Target relationship had been extended into 2010.

Throughout the company's financial ups and downs, Giannulli has made his mark on fashion.

"He was the guy who took the surfer boy look and made it respectable," said Ilse Metchek of the California Fashion Assn.

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