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Joe’s Jeans Acquires Hudson in Denim Marriage

July 19, 2013

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joes-jeansOn Monday, Hudson Jeans reached an agreement to be acquired by its City of Commerce, California, neighbor Joe’s Jeans Inc.

Joe’s, which reported lower profits on higher sales for the second quarter Monday, said it would buy privately held Hudson Clothing Holdings Inc. for $97.6 million in convertible notes and cash in a deal expected to close by Aug. 31.

Fireman Capital Partners and Webster Capital acquired a controlling interest in Hudson in 2009 and had been reported to be shopping the brand since late 2011. Webster and Peter Kim, who founded the brand in 2002, rolled their equity into Fireman prior to the deal with Joe’s.

Kim will continue to serve as chief executive officer of Hudson and will join Joe’s board. He will report to Marc Crossman, President and CEO of Joe’s.

Crossman emphasized that he isn’t looking to restructure Hudson’s business. “Peter has done a phenomenal job of building the company to what it is today,” he told WWD. “We’re going to keep our headquarters and staffs separate and really focus on maintaining the very distinct DNA of both of the brands.”

Los-Angeles based Joe’s Jeans reported sales of $30.9 million for its fiscal second quarter, up 8% from the year-earlier period.

The two companies are not only based in the same neighborhood but reside in the same revenue territory as well, with Joe’s 2012 sales hitting $118.6 million and Hudson’s about $90 million. Joe’s has a stronger men’s business, and Hudson operates at generally higher price points and operates in the more rarefied air of the higher-end premium market.

“The acquisition by Joe’s Jeans gives Joe’s an opportunity to get better leverage on their operations as they spread their costs between the two brands,” said Richard Kestenbaum, partner at investment banking firm Triangle Capital. “Hudson is a great brand. It has real brand equity and a true following. It has a unique identity in the market.”

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