Iconix Brand Group Inc., which makes and licenses clothes under brands including Candie's and Joe Boxer, said Monday it has agreed to acquire Mossimo Inc. in a stock and cash deal valued at $119 million, sending the Santa Monica-based apparel company's shares surging more than 43 percent.


Shares of Mossimo jumped 39.7 percent to settle at $7.64 on Monday in heavy-volume trading, after rising as high as $7.93.


New York-based Iconix said it would acquire all of Mossimo's shares for $7.50 per share, comprised of $3.25 per share in Iconix stock and $4.25 in cash. The offer price is a 37.1 percent premium over Mossimo's Friday closing price of $5.47.


The deal is subject to a potential $16 million adjustment if Iconix shares don't rise to a level that would value the deal at $8.50 a share within a year of its closing.


The transaction has been approved by the boards of both Iconix and Mossimo.


Mossimo will have $17 million of cash in the company that Iconix will acquire upon closing. The Mossimo brand is projected to generate $20 million to $25 million in 2007 royalty revenue, Iconix said in a statement.


"Adding the Mossimo brand to this exciting platform is a compelling way to generate value for our shareholders and I look forward to working with the Iconix team to continue to develop Mossimo to its greatest potential both domestically and around the world," said Mossimo Giannulli, chairman and chief executive of Mossimo, in a statement.


In a separate deal announced Monday, Iconix said it bought the Mudd jeans brand for $88 million from Mudd USA, a Delaware company controlled by Hong Kong-based apparel maker Tack Fat Group International Ltd.


Iconix's offer for Mossimo bested previous bids from Giannulli to take the company private. Last year, he proposed to pay $5 a share for the company after initially bidding $4 a share to buy the nearly 35 percent of Mossimo he didn't already own.


Ultimately, the Giannulli deal was rejected once Iconix expressed interest in assuming control of the company. With an Iconix takeover possible, institutional investors criticized the Giannulli offer, saying it inadequately compensated shareholders.


Iconix has been actively pursuing apparel companies to wrap into its portfolio, which includes a diverse array of fashion brands such as runway favorite Badgley Mischka and laid-back teen clothes specialist Bongo. The Mossimo purchase follows Iconix's September acquisition of Los Angeles-based Rampage Clothing Co. for just under $46 million.

For reprint and licensing requests for this article, CLICK HERE.