Leonard Green to Buy Lucky Brand Jeans for $225 Million

Even buttoned-up financiers still like their name-brand denim.

The private equity firm Leonard Green & Partners agreed on Tuesday to buy Lucky Brand Jeans from Fifth & Pacific Companies, the clothier formerly known as Liz Claiborne, for about $225 million.

It’s the latest deal in the jeans industry, as mid- to high-end brands find themselves acquisition targets. This year alone, TowerBrook Capital bought True Religion for $835 million, while the investment firms that owned Hudson Jeans sold the brand to Joe’s Jeans for $98 million.

In Lucky Brand â€" best known for its “lucky you” signage sewn into its dungarees’ flies â€" Leonard Green will be buying a popular midtier brand found on many a store shelf. The 23-year-old Lucky is the second biggest-selling brand for Fifth & Pacific, behind only Kate Spade, bringing in $346.4 million in sales for the first nine months of the year.

Leonard Green is well-versed in the clothing trade: The investment firm owns J. Crew alongside TPG Capital.

The transaction also marks a significant milestone for Fifth & Pacific. Coupled with an agreement to sell Juicy Couture’s intellectual property to Authentic Brands, the divestment of Lucky will make the company a one-brand shop. It will now focus on Kate Spade, which has grown from simple handbags into a lifestyle empire for both women and men.

In a sign of Fifth & Pacific’s eagerness to focus on its higher-end, higher-margin brand, the company’s chief, William L. McComb, mentioned Lucky only twice in the company’s official statement about the sale. Instead, he reserved most of his words for discussing the shareholder value that selling the other brands has created.

“We believe that by focusing all of our resources on the huge opportunity at Kate Spade, we can deliver the strongest value creation opportunity for our shareholders,” Mr. McComb said. “This is all about bringing Kate Spade to its full potential.”

Under the terms of Tuesday’s deal, Leonard Green will pay $140 million in cash up front. The remainder will be paid for with an $85 million three-year note provided by Fifth & Pacific, which carries about $8 million in interest each year.

Fifth & Pacific agreed to help support Lucky’s infrastructure for up to two years while Leonard Green helps the company build out its own back-end services.

The deal is expected to close by the end of March.

Fifth & Pacific was advised by Centerview Partners, Perella Weinberg Partners and the law firm Paul, Weiss, Rifkind, Wharton & Garrison, while Leonard Green was counseled by Latham & Watkins.