When is a brand you know not a brand you actually know?

Brands are interesting things. There are many brands all over the world that we are all very familiar with and then there are brands that we think we know, but when we dig a little deeper perhaps what we thought we know turns out to be very different.

What has this got to do with M&A I am sure you are asking yourself?

Well a brand is classed as a ‘marketing intangible asset’ when it comes down to deal valuations. And as my buddy David Jarzyck at KT Mine (www.ktmine.com) keeps telling me, they can be very, very valuable and quite often misunderstood.

That’s why the announcement late on Monday that the Canadian company, Gildan Activewear Inc. is acquiring Gold Toe Moretz, a leading supplier of high-quality branded athletic, casual and dress socks in the US, caught my eye.

This may seem strange with me being based in the UK, but it comes as a result of my trips to the US which inevitably involve an element of my free time shopping. I am aware of the Gold Toe Sock brand (all I will say is an unoriginal and completely lacking in thought father’s day present one year). However, I was most definitely not aware that the Under Armour (you might have noticed English Premier League football players wearing this brand) and New Balance socks I have previously purchased for myself were under exclusive licence to Gold Toe.

What further intrigued me about this deal is that when you read the formal press release about the $350m purchase price, “the majority of this purchase price will be represented by intangible assets, including the value of these brands”. The press release goes on to talk about all the other niceties of the deal, like annualised cost synergies, competitive strengths and future organic sales growth, but the key to this for me is that the brands that Gold Toe represent have got a clear intrinsic value to the acqurior, even if you and I don’t know our sock brands…
 

Filed under: retail, US, brands