Kontoor Brands announced Thursday that it has reached an agreement to transfer ownership of its Lee denim brand to Authentic Brands Group in a transaction valued at up to $1 billion, allowing the clothing manufacturer to concentrate on more successful brands like Wrangler.
The transaction structure includes an upfront payment of $750 million plus an additional $250 million contingent payment based on the brand’s future success under new management, according to Kontoor’s announcement.
Kontoor’s stock price rose 1% during premarket trading following the news.
Since its 2019 separation from VF Corp, the company has struggled with Lee’s performance, which has consistently lagged behind Wrangler’s market success.
The Lee brand has encountered inconsistent consumer demand, especially within U.S. markets, while competing against strong rivals in the middle-market denim category.
Kontoor initiated efforts to sell the Lee division during its first quarter, seeking to concentrate resources on brands that better match strategic growth opportunities, company officials stated.
Authentic Brands manages a collection of fashion and lifestyle companies including Reebok and Guess, and announced Wednesday that Matt Maddox would become its new chief executive officer, with Jamie Salter moving to executive chairman.
Company founder Salter informed CNBC that he anticipates bringing the company to public markets sometime in the coming 12 months.
According to company information, Authentic achieves approximately $38 billion in “systemwide retail sales” mainly through licensing brand intellectual property of challenged companies to business partners.
Morgan Stanley will provide financial advisory services to Kontoor, with Foley & Lardner handling legal representation.
Kontoor’s board unanimously endorsed the transaction, which requires regulatory clearance and is scheduled to finalize during the latter half of 2026.
