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The Men's Wearhouse Buys Joseph Abboud for $97.5M
By JEAN E. PALMIERI
WITH CONTRIBUTIONS FROM VICKI M. YOUNG AND ARNOLD J. KARR
The Men's Wearhouse Inc. has reunited Joseph Abboud the man with Joseph Abboud the brand.
On Thursday, the Fremont, Calif.-based retailer said it signed a definitive agreement to acquire JA Holding Inc., a subsidiary of J.W. Childs Associates, for $97.5 million in cash. The deal is subject to certain adjustments and is expected to close in the third quarter. The company expects to finance this acquisition as well as a $200 million share repurchase program with cash on hand and/or proceeds from its existing credit facility.
J.W. Childs bought the Joseph Abboud name and trademark for $65.5 million in 2000. Since that time, confusion in the marketplace and emotionally charged lawsuits about the use of the Joseph Abboud name have marked the relationship between the designer and the label that he created in 1987.
Also in the last three years, there have been persistent rumblings that J.W. Childs was looking for a buyer for the brand. The label was reportedly taken off the market during the recession, but interest began heating up this year with Iconix Brand Group, Grano Retail Investments and others interested in the label. Iconix was believed to be in the running until the very end.
Doug Ewert, president and chief executive officer of Men's Wearhouse, said he believes the Joseph Abboud brand can "easily be a $300 million or more business for us within two years." The plan is to use the label on all product categories in the store -- everything from suits and tuxedos to sportswear and furnishings -- and add more volume through licensing and international expansion.
Joseph Abboud has been chief creative director of Men's Wearhouse since the end of last year.
The deal includes JA Holding's U.S. factory in New Bedford, Mass., which employs 450 people. Ewert said he considered the factory one...