8-K: Guess Merger Faces Shareholder Lawsuits, Antitrust Cleared

Guess?, Inc. announced supplemental disclosures regarding its proposed merger with Authentic Brands Group, including new shareholder lawsuits challenging the deal and recent antitrust clearance.

Summary

• Guess?, Inc. (the Company) is proceeding with its previously announced merger with Authentic Brands Group LLC, Glow Holdco 1, Inc., and Glow Merger Sub 1, Inc., which will result in the Company becoming a privately held entity.
• The Special Meeting of stockholders to vote on the merger is scheduled for November 21, 2025, at 9:00 a.m. Pacific Time.
• Since the filing of the Definitive Proxy Statement on October 21, 2025, the Company has received 12 additional letters from purported stockholders, bringing the total to 15, alleging material omissions in the Definitive Proxy Statement.
• The Company has also received 6 additional demands for books and records under Section 220 of the DGCL, totaling 7 demands, to investigate the Merger and related matters.
• Two shareholder complaints, Williams v. Guess?, Inc. et al. (filed November 4, 2025) and Clark v. Guess?, Inc. et al. (filed November 5, 2025), have been filed in the Supreme Court of the State of New York.
• These lawsuits allege that Guess did not fully disclose certain internal projections and other financial, background, and conflict-related information critical to evaluating the fairness of the transactions, seeking injunctive relief to prevent the merger's consummation and an award of attorneys' fees.
• Guess believes these allegations are without merit.
• The merger received antitrust clearance from the Republic of Cyprus on November 11, 2025.
• Supplemental disclosures were provided, including details on legal counsel retention and fees related to prior derivative actions, and updated financial analyses from Solomon, the Special Committee's financial advisor.
• Unaudited prospective financial information for Guess from FY2024 to FY2030 was updated with both January and June projections, showing slight variations in revenue, net earnings, EBITDA, and cash flow estimates.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the emergence of multiple shareholder lawsuits and increased demands for information, which introduce significant legal uncertainty and potential hurdles to the merger's completion. While antitrust clearance is a positive, the legal challenges outweigh this in terms of immediate risk.

Positives

• The merger received antitrust clearance from the Republic of Cyprus on November 11, 2025, removing a regulatory hurdle.

Negatives

• The Company has received a total of 15 demand letters from purported stockholders alleging deficiencies or material omissions in the proxy statements.
• A total of 7 demands for books and records have been received, purportedly to investigate the Merger and related matters.
• Two shareholder lawsuits, Williams v. Guess?, Inc. et al. and Clark v. Guess?, Inc. et al., have been filed, seeking injunctive relief to prevent the merger and alleging insufficient disclosures.

Risks

• The ongoing shareholder lawsuits could potentially delay or complicate the consummation of the merger, despite the Company's belief that the allegations are without merit.
• The demands for books and records could lead to further scrutiny or legal challenges related to the merger process.
• Uncertainty introduced by litigation may impact investor confidence and the Company's stock price leading up to the Special Meeting.

Future Outlook

The Company's future outlook is centered on the successful consummation of the merger with Authentic Brands Group, which would result in Guess?, Inc. becoming a privately held company. The provided financial projections extend through FY2030, indicating anticipated revenue growth and sustained profitability, albeit with some fluctuations in net earnings and free cash flow over the projection period.

Management Comments

• Guess believes the allegations in the Stockholder Letters, the Williams Complaint and the Clark Complaint are without merit.

Industry Context

This announcement is highly specific to Guess?, Inc.'s corporate actions regarding its proposed merger. While the filing includes comparative financial metrics for other publicly traded apparel companies and recent industry transactions, the primary focus is on the internal process, legal challenges, and regulatory clearances pertinent to Guess's specific acquisition by Authentic Brands Group, rather than broader industry trends.

Comparison to Industry Standards

• Solomon's Selected Publicly Traded Companies Analysis compared Guess to Abercrombie & Fitch Co., American Eagle Outfitters, Inc., G-III Apparel Group, Ltd., Hugo Boss AG, J. Jill, Inc., Oxford Industries, Inc., PVH Corp., The Gap, Inc., and Victoria's Secret & Co.
• Median LTM Adjusted EBITDA for selected companies ranged from 2.8x to 5.8x, with a median of 4.4x.
• Median CY2025E EBITDA for selected companies ranged from 3.1x to 6.6x, with a median of 5.3x.
• Median CY2025E EPS for selected companies ranged from 5.7x to 16.7x, with a median of 9.5x.
• Median CY2026E EPS for selected companies ranged from 4.9x to 12.0x, with a median of 9.1x.
• Solomon's Selected Transactions Analysis included Sycamore Partners' acquisition of Chicos FAS (September 2023) at $872M Enterprise Value and 4.9x LTM Adjusted EBITDA.
• JD Sports' acquisition of Hibbett, Inc. (April 2024) at $1,102M Enterprise Value and 6.2x LTM Adjusted EBITDA was also considered.
• DICKS Sporting Goods, Inc.'s acquisition of Foot Locker, Inc. (May 2025) at $2,500M Enterprise Value and 6.4x LTM Adjusted EBITDA was part of the comparative analysis.

Corporate Governance

Legal Proceedings

• 15 demand letters from purported Guess stockholders alleging deficiencies or omissions in the preliminary and definitive proxy statements.
• 7 demands for books and records pursuant to Section 220 of the DGCL to purportedly investigate the Merger and related matters.
• Williams v. Guess?, Inc. et al., a complaint filed on November 4, 2025, in the Supreme Court of the State of New York, alleging insufficient disclosure of internal projections and other financial/conflict information, seeking injunctive relief and attorneys' fees.
• Clark v. Guess?, Inc. et al., a complaint filed on November 5, 2025, in the Supreme Court of the State of New York, making substantially the same allegations and seeking the same relief as the Williams Complaint.

Related Party Transactions

• Guess incurred approximately $500,000 in legal fees and expenses for Willkie Farr and Gallagher LLP's retention by the Redomestication Committee.
• Guess incurred approximately $200,000 in legal fees and expenses for Willkie Farr and Gallagher LLP's representation of Alex Yemenidjian and Anthony Chidoni in related stockholder derivative actions.
• Guess incurred approximately $45,000 in legal fees and expenses for Young Conaway Stargatt & Taylor, LLP's retention by Alex Yemenidjian, Anthony Chidoni, and Carlos Alberini relating to derivative actions.
• Natixis, S.A., the holder of a majority of Solomon's voting equity, and its affiliates, may purchase, sell, hold, or vote positions in securities of Guess, Authentic, Parent, the Rolling Stockholders, or any of their respective affiliates and third parties, including Significant Stockholders of Authentic.

Stakeholder Impact

• Shareholders face increased uncertainty regarding the merger's completion due to the multiple lawsuits seeking injunctive relief, potentially impacting the value of their holdings.
• The legal proceedings may incur additional costs for the Company, potentially affecting its financial performance prior to the merger.
• The Special Committee and management are dedicating resources to address the legal challenges and supplemental disclosures, which could divert focus.

Next Steps

• The Special Meeting of stockholders is scheduled for November 21, 2025, to vote on the proposed merger.
• The Company will continue to address the shareholder letters and defend against the lawsuits, believing the allegations are without merit.

Key Dates

Recommendation

The recommendation is 'hold' due to the significant uncertainty introduced by the multiple shareholder lawsuits challenging the merger. While the antitrust clearance is a positive step towards closing the deal, the legal actions seeking injunctive relief create a material risk that could delay or even prevent the merger's consummation. Investors should hold their positions pending the outcome of the Special Meeting and further developments in the legal proceedings, as the stock price will likely react strongly to any news regarding the lawsuits or the merger vote.

Keywords

Guess, Merger, Authentic Brands Group, Shareholder Lawsuit, SEC Filing, 8-K, Antitrust Clearance, Corporate Governance, Financial Projections, Apparel Retail, Proxy Statement