Business Context and Reporting Period
Company: DSW Inc. (now Designer Brands Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: November 5, 2018
Event: Completion of the acquisition of substantially all of the business of Camuto Group LLC and Camuto Consulting, Inc. (excluding Bernard Chaus Inc. operations).
Key Financial Metrics and Transaction Details
- Total Aggregate Purchase Price: Approximately $323 million (after customary adjustments).
- DSW HoldCo Acquisition (Operating Business): Approximately $181 million.
- ABG-Camuto Acquisition (Intellectual Property): Approximately $143 million.
- DSW Investment in IP Acquisition: 40% of the $143 million IP purchase price was funded by DSW through its investment in the ABG-Camuto joint venture.
- Escrow Amount: $25 million deposited to fund post-closing adjustments and indemnity claims.
- Debt Facility Update: Unsecured revolving credit facility commitments increased by $100 million to a total of $400 million.
Material Changes Versus Prior Period
This filing reports a discrete transaction event rather than a periodic financial performance comparison. The primary material change is the expansion of the Company's portfolio through the acquisition of the Camuto Group operating business and a partial interest in its intellectual property. Additionally, the Company's available liquidity capacity increased via the amendment to its credit agreement, raising the revolving credit facility limit to $400 million.
Guidance, Outlook, and Risks
Management Commentary: The Company confirmed the closing of the acquisition as previously announced on October 10, 2018. A press release detailing the completion was issued on November 6, 2018.
Contingencies and Unusual Items:
- Financial Statements: Required financial statements of the business acquired and pro forma financial information are not included in this filing. They are scheduled to be filed by amendment within 71 days of this report.
- Guarantees: Subsidiaries formed or acquired in connection with the transaction are required to become guarantors under the Credit Agreement within 30 days of closing.
Important Facts for Investor Verification
- Verify the final purchase price adjustments once the 71-day filing for financial statements is submitted.
- Confirm the specific terms of the joint venture with Authentic Brands Group (ABG) regarding the 40% funding of the intellectual property acquisition.
- Monitor the utilization of the newly expanded $400 million revolving credit facility.
- Review the upcoming pro forma financial information to assess the impact of the acquisition on DSW's consolidated financial position.