The proposal would have cofounders Paul and Maurice Marciano and CEO Carlos Alberini roll over their stakes in the denim business.
Georgina Rodriguez in the Guess holiday campaign. Nima Benati, Courtesy of Guess
WHP Global is looking to snatch up Guess Inc. in a deal that values the company at $751.5 million and would see cofounders Paul and Maurice Marciano as well as chief executive officer Carlos Alberini hold onto their shares.
WHP — the licensing specialist that last year teamed with Guess to buy Rag & Bone — submitted a non-binding proposal to buy the company’s shares not owned by the trio at $13 each, Guess said in a statement and regulatory filings.
Investors liked the sound of that and pushed shares of Guess up 30.1 percent to $12.62 on Monday.
“The proposal contemplates that the proposed transaction would be financed through a combination of equity and third-party debt financing, as well as rollover or reinvestment by each of the proposed rollover shareholders, and assumes that the company will operate in the ordinary course of business and that there will be no material change to the strategic and operational position of the company,” Guess said.
A source close to the situation said that, if the deal goes through, WHP is seen as owning the Guess intellectual property while current management would own the operating company and continue to operate the brand’s stores under license.
The proposal is subject to various assumptions on WHP’s part, it is not dependent on financing.
Guess has formed a special committee of its independent and disinterested directors to consider the offer.
Paul Marciano, chief creative officer, controls 19.5 million shares, or 37.6 percent of Guess. His brother Maurice Marciano, who retired in 2023, owns 4.9 million shares, or 9.6 percent of the company. And Alberini, who’s been CEO since, owns 1.7 million share, or 3.4 percent of the company.
All together, the three own about 50.6 percent of the company, meaning WHP would be coming in as a minority partner, but with the biggest single stake.
According to a filing with the Securities and Exchange Commission, Paul Marciano has held “preliminary, high-level discussions” with WHP and would not support any transaction where he could not remain a shareholder. He has not entered into any agreement related to the proposal with WHP or anyone else.
The deal would bring Guess fully into the brand management revolution, which has seen players like WHP, Authentic Brands Group and Marquee Brands rapidly scoop up market share by owning intellectual property and licensing parts of the business to manufacturers and operators.
The top brand management players have rapidly grown to represent some $50 billion in retail sales and Yehuda Shmidman, cofounder, chairman and CEO of WHP, projected last year that the sector would double again to $100 billion in five years.
WHP represents more than $7 billion in retail sales through 14 brands, including Vera Wang, which was acquired last year, and Bonobos, Express, G-Star and others.
While IP specialists have been around for years, the model has been evolving lately. Where the focus used to be on buying brands that were headed for extinction and then getting the last bite of the apple, companies are looking to invest in healthier brands.
Shmidman said that was the case with Vera Wang. Likewise, Guess is on a steady footing although its stock is trading at a relatively low level, with an enterprise value of just three times earnings before interest, taxes, depreciation and amortization.
But not all of the brand management deals have played out.
WHP invested in Express and the two partnered to buy Bonobos only to see Express struggle, file for bankruptcy and be bought by WHP and landlords.
And late Sunday, the U.S. operating arm of Authentic’s Forever 21 business filed for bankruptcy, five years after the fast-fashion retail was bought out of bankruptcy. The Forever 21 brand is not a part of the bankruptcy.
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