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M&A: Coach, Pokémon & DHX

DHX Media acquires the entertainment division of Iconix Brand Group for $345 million, which includes a both an 80% controlling interest in Peanuts and 100% of Strawberry Shortcake. The remaining 20% interest in Peanuts will continue to be held by members of the family of Charles M. Schulz. The transaction is expected to close on or around June 30, 2017.

The deal will give the Canadian media company more than 340 half-hours of content that it can use to “feed potential new production including new digital content for [DHX’s WildBrain channel on] YouTube, mobile, and video-on-demand services.”

After the buy goes through, sales of consumer products will account for 44% of DHX’s annual revenues after the acquisition, up from 19% currently. Total revenues could grow 52% to about $323 million, with adjusted earnings up 40% to almost $98 million. DHX expects to see about $3.6 million in cost synergies in its first year.

Gotta Catch ‘Em All

The Pokémon Co. Intl. makes a strategic investment in Wicked Cool Toys, taking a seat on its board of directors, and appointing it as Pokémon’s master toy licensee worldwide, excluding Asia. The deal is similar to the company’s partnership with Niantic, the developer and publisher of mobile game app Pokémon Go. Tomy will continue to produce video game-based products, and other “select items.”

Bringing Luxury Back

Coach is buying handbag competitor Kate Spade for $2.4 billion, but CEO Victor Luis intends for its brands to remain so independent, shoppers don’t know the luxury fashion company owns Kate Spade and footwear brand Stuart Weitzman (purchased for $574 million in 2015).

According to CNBC, Coach estimates that there is only a 10% shopper overlap between its brand and the new buy. While there are no immediate plans to close Kate Spade’s full-priced or outlet stores, the brand’s presence on flash sale sites like Gilt, and in department stores that Coach says have become too promotional, will lessen. Prices will remain as they are, with Coach seeking to capitalize on the brand’s “whimsical, fun and fashionable positioning” to a younger, Millennial audience.

Coach believes it will save $50 million within three years of closing the deal thanks to back-house synergies, according to another interview Luis had with WWD. The CEO says that his company is also looking to learn from Kate Spade’s broader licensing profile—after acquiring Stuart Weitzman, for example, Coach took its footwear in-house, away from licensee Jimlar. While Coach may eventually expand its licensing program, the opposite may also come to pass—Kate Spade might see fewer licensees on its roster.


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