Done Deal: Express, WHP enter into joint venture

Express has officially completed its transaction with brand management firm WHP Global.

Under the terms of the two-part deal, which was announced in December, WHP is investing $235 million for a 60% stake in an intellectual property joint venture, with 40% owned by Express. The deal will allow the retailer to accelerate its growth scale through licensing in non-core categories and international expansion.

Express and WHP also plan to launch an omnichannel platform to acquire, operate and grow multiple fashion brands.

“Our partnership with WHP Global will allow us to achieve greater scale through non-core domestic licensing opportunities and international expansion,” said Tim Baxter, CEO, Express. “The $260 million in gross proceeds will be used to immediately pay down our high-interest term loan, invest in our omnichannel platform, and pursue additional opportunities for growth through the acquisition of brands with WHP, all of which are expected to drive long-term, sustainable value for our shareholders.”

In related news, Yehuda Shmidman has been appointed to the Express’ board of directors. He is the co-founder, chairman and CEO of WHP Global.

Express said the partnership is expected to provide the following financial and operational benefits.

• Capitalize on the strength of Express as a fully integrated omnichannel platform. The retailer will be ideally positioned to participate in anticipated retail industry consolidation and pursue acquisitions with WHP and is expected to expand its brand portfolio to accelerate growth and profitability. Through synergistic M&A, Express will leverage its platform to drive cost savings and margin expansion.

• WHP will acquire newly issued shares of Express at $4.60 per share. WHP will make a $25 million common equity PIPE investment to acquire 5.4 million newly issued shares of the retailer at $4.60 per share, representing an approximate pro forma ownership of 7.4%.

• Scale the existing multi-billion-dollar Express brand through the IP JV.  Express expects the partnership will accelerate growth for the Express brand by leveraging WHP’s licensing expertise to both expand on our non-core domestic categories and our international reach. The IP JV is valued at approximately $400 million, with WHP committing $235 Million to the IP JV for 60% ownership and EXPR contributing certain intellectual property in exchange for 40% ownership.

• Strengthens the Express balance sheet with $260 million in gross proceeds from WHP investment. The investment provides capital for Express to repay its $90 million term loan and fund the retailer’s first-year guaranteed minimum royalties of $60 million to the IP JV. The balance of the proceeds will be used for reinvesting in the Express platform and potential future M&A opportunities.