Blue Holdings Terminates Up Against the Wall Acquisition and Licensing Deals
Vernon, Calif.–based premium-denim maker Blue Holdings abandoned its bid to purchase Long Rap Inc., owner of the Up Against the Wall streetwear chain. A press release from the blue-jeans company said the decision to quash the deal was mutual. Representatives atWashington, D.C.–based Long Rap declined to comment.
In June, Blue Holdings—which produces Antik Denim, Yanuk and Taverniti So jeans—said it planned to pay $32 million in cash and stock for Long Rap’s chain of Up Against the Wall shops. The 24-store mall-based chain sells a range of streetwear and denim brands, including Antik Denim, True Religion and 7 for All Mankind.
At the time, Blue Holdings’ chief executive and president, Paul Guez, said buying the chain was faster and more economical than opening 24 stores on his own. Under the new ownership, Blue Holdings’ labels would have accounted for 30 to 40 of Up Against the Wall’s stock.
Guez, a veteran of the denim manufacturing business, noted the success of manufacturers-turned-retailers Guess? Inc., BCBG and American Eagle Outfitters, and said becoming a retailer “is the only way to grow and express yourself in the right way and present your product in the right way.” In September, the apparel maker opened Blu, a new concept store selling Blue Holdings’ denim, in the Westfield San Francisco Centre.
Now the company seems to have soured on the retail idea. “While we are disappointed that we were unable to conclude our acquisition of the Up Against the Wall retailer stores, we are now able to refocus our efforts on our wholesale business,” Guez said in a statement.
Patrick Chow, Blue Holdings’ chief financial officer, attributed the collapse of the deal to bad timing. Chow declined to state how much the failed deal would cost Blue Holdings, saying only that “these things are costly.” Blue Holding’s stock dropped more than 7 percent to $4.14 after the news broke.
On Oct. 5, Blue Holdings also terminated an agreement to enter into a joint venture with the Global Fashion Group. In March, the two companies formed a licensing agreement giving the Global Fashion Group the right to manufacture and distribute Antik, Taverniti So and Yanuk brand jeans in Europe. A document filed with the U.S. Securities and Exchange Commission on Oct. 10 said the two companies were unable to agree on the final terms of the license.
—Erin Barajas
