Guess’ share price has shot up more than 30% because WHP Global has made an offer to buy Guess’ shares at a 34% premium, valuing Guess at $770 million USD.
👉 Background: Guess is the US clothing retailer that was founded in 1981 and helped kick off the career of Claudia Schiffer. It makes everything from jeans to tees, watches to perfumes and shoes. Last year, Guess, alongside a licensing specialist WHP, acquired Rag&Bone.
👉 What happened: 2024 was not kind to Guess' share price after it fell more than 50% in the past 12 months, and for context, the S&P 500 gained 23%. But now, Guess’ share price has shot up more than 30% because WHP Global, Guess' partner in Rag&Bone, has made an offer to buy Guess’ shares at a 34% premium — and this values Guess at $770 million USD.
👉 What else: But, WHP won’t be buying the shares of Guess’ cofounders and CEO, which makes up just over 43% of the company’s shareholding. As part of the deal, WHP Global will own Guess’ intellectual property (IP) and the existing management team would continue to run the day-to-day operations under licence, otherwise known as the brand management model.
What's the key learning?
💡The brand management model focuses on separating IP ownership from operational activities. Brand managers like WHP don’t want to be running stores and warehouses and dealing with logistics. They prefer to acquire well-known IP and then license it to third parties who handle the heavy lifting.
💡This brand model allows brand managers to stay asset-light and collect royalties and licensing fees from the operator of the brand that they own. In this case, WHP Global would be paid a recurring revenue stream for the use of the Guess brand, which they would own.
💡We saw Authentic Brands Group acquire Reebok for $2.5 billion in 2021. Rather than run Reebok directly, it licensed the brand out to a network of partners worldwide who sell Reebok.
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