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Iconix Brand Group, Inc. (ICON) Stock Surges Following News of Acquisition in “Go Private” Transaction

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Iconix Brand Group, Inc. (ICON) stock prices surged by 27.3469% shortly after the trading day commenced, bringing the price per share up to USD$3.12 early on in the trading day.

Acquisition of ICON

The company announced on June 11th, 2021 that it had entered into a definitive agreement and plan of merger that would oversee ICON being acquired by Iconix Acquisition Corp, an affiliate of Lancer Capital. The agreement will result in an all-cash transaction that will set the value of ICON at roughly USD$585 million, which will include existing net debt.

Background of Decision

This news comes after the company spent a year examining potential strategic alternatives for the company before deciding to authorize the merger. ICON is expected to continue developing its brand and supporting its partners after its transition into a private company, with its Board of Directors deeming this to be the best choice in the interests of their shareholders.

Pricing of Transaction

As per the agreement, the Purchaser will initiate a tender offer that will see the acquisition of all of the company’s outstanding shares of its common stock. The pricing has been set at USD$3.15 per share of common stock, in cash.  The offer price per share includes a 28.6% premium over the stock’s closing price on June 10th, 2021, the last trading day prior to the announcement. The agreed-upon price represented a 46.5% premium over the 30-day average volume-weighted share price for the period ended June 10th, 2021.

Details about the Deal

Shares that are not tendered as a part of the offer will be acquired in a second-step merger, with the pricing being the same as the cash price paid in the initial offer. The closing of the transaction is contingent on the satisfaction of a minimum tender condition, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other typical closing conditions. Following the completion of the transaction, which is expected for the third quarter of fiscal 2021, ICON will be a private company.

Future Outlook for ICON

Armed with the additional resources that stem from its acquisition, ICON is poised to capitalize on its expanded opportunities. The company is keen to continue its trajectory of success in its push for further growth. Current and potential investors are hopeful that management will leverage the resources are their disposal to facilitate significant and sustained increases in shareholder value.

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