DEFA14A: Guess Merger Faces Shareholder Lawsuits, Gains Cyprus Antitrust Nod

Guess?, Inc. provides supplemental disclosures regarding its pending merger with Authentic Brands Group, addressing shareholder lawsuits and announcing antitrust clearance from Cyprus.

Summary

• Guess?, Inc. (the Company) is proceeding with its merger agreement, entered on August 20, 2025, with Authentic Brands Group LLC, Glow Holdco 1, Inc., and Glow Merger Sub 1, Inc., which will result in Guess becoming a privately held company.
• The Special Meeting of stockholders to vote on the merger is scheduled for November 21, 2025, at 9:00 a.m. Pacific Time.
• The Company has received 15 letters from purported stockholders alleging material omissions in the Definitive Proxy Statement and 7 demands for books and records related to the merger.
• 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 New York, alleging insufficient disclosure of internal projections and other financial information, seeking injunctive relief to prevent the merger.
• Guess believes these allegations are without merit.
• The merger received antitrust clearance from the Republic of Cyprus on November 11, 2025.
• Supplemental disclosures detail legal fees paid by Guess to Willkie Farr and Gallagher LLP ($500,000 for Redomestication Committee, $200,000 for directors in derivative actions) and Young Conaway Stargatt & Taylor, LLP ($45,000 for directors/CEO in derivative actions).
• Solomon Partners' engagement terms include a $500,000 retainer, $2.5 million upon opinion delivery, and approximately $9.0 million contingent upon the merger's closing.
• Updated unaudited prospective financial information (January and June Projections) for FY2024-FY2030 shows projected Total Revenue growing from $2,777 million in FY2024 to $3,776-$3,780 million in FY2030, and Adjusted EBITDA ranging from $316 million in FY2024 to $315-$321 million in FY2030.

Sentiment

Score: 5

Explanation: The sentiment is mixed. While antitrust clearance is a positive step towards merger completion, the multiple shareholder lawsuits alleging disclosure deficiencies introduce significant uncertainty and potential hurdles. The company's financial projections show modest growth, but the legal challenges are a notable negative.

Positives

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

Negatives

• The Company faces 15 shareholder letters and 7 demands for books and records alleging material omissions and deficiencies in merger disclosures.
• Two shareholder lawsuits have been filed seeking injunctive relief to prevent the consummation of the merger until alleged disclosure deficiencies are cured.

Risks

• Shareholder lawsuits could potentially delay or prevent the consummation of the merger.
• Allegations of material omissions in the Definitive Proxy Statement could lead to further legal challenges or require additional disclosures.
• The outcome of the Special Meeting of stockholders on November 21, 2025, is critical for the merger's approval.

Future Outlook

The Company's internal financial projections anticipate modest revenue and EBITDA growth through fiscal year 2030, with Total Revenue reaching approximately $3.78 billion and Adjusted EBITDA around $320 million. The primary forward-looking event is the proposed merger with Authentic Brands Group, which would result in Guess becoming a privately held entity, subject to shareholder approval and the resolution of ongoing legal challenges.

Management Comments

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

Industry Context

The proposed acquisition of Guess? Inc. by Authentic Brands Group reflects a broader industry trend where brand management firms acquire established retail and apparel brands to leverage their intellectual property and global reach. This strategy aims to optimize brand value through licensing and diversified distribution channels, a common approach in the evolving fashion and retail landscape. The financial projections for Guess indicate a stable, albeit modest, growth trajectory within the competitive apparel sector.

Comparison to Industry Standards

• Solomon Partners' analysis of selected publicly traded companies in the apparel sector showed a median LTM Adjusted EBITDA multiple of 4.4x and a median CY2025E EBITDA multiple of 5.3x.
• Selected precedent transactions in the retail sector, such as Sycamore Partners' acquisition of Chicos FAS (4.9x LTM Adjusted EBITDA), JD Sports' acquisition of Hibbett, Inc. (6.2x LTM Adjusted EBITDA), and DICKS Sporting Goods' acquisition of Foot Locker, Inc. (6.4x LTM Adjusted EBITDA), provide a range of valuation benchmarks.
• Wall Street research analyst price targets for Guess Common Stock, as of August 18, 2025, ranged from $12.00 to $23.00 per share, indicating a diverse view on the company's standalone valuation.

Corporate Governance

Legal Proceedings

• 15 Stockholder Letters received from purported Guess stockholders alleging deficiencies or omissions in the Definitive Proxy Statement.
• 7 additional 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. complaint filed on November 4, 2025, in the Supreme Court of the State of New York, alleging Guess did not fully disclose certain internal projections and other financial, background, and conflict-related information, seeking injunctive relief to prevent the merger.
• Clark v. Guess?, Inc. et al. complaint filed on November 5, 2025, in the Supreme Court of the State of New York, making substantially the same allegations and seeking substantially the same relief as the Williams Complaint.

Related Party Transactions

• Willkie Farr and Gallagher LLP, legal counsel to the Redomestication Committee, also represented Alex Yemenidjian and Anthony Chidoni (directors) in two related stockholder derivative actions, for which Guess incurred $200,000 in legal fees.
• Young Conaway Stargatt & Taylor, LLP, Delaware legal counsel to the Special Committee, also represented Alex Yemenidjian, Anthony Chidoni, and Carlos Alberini (CEO) in derivative actions, for which Guess incurred $45,000 in legal fees.
• Natixis, S.A., the holder of a majority of Solomon Partners' outstanding voting equity, and its affiliates, may engage in various financial activities and hold interests in Guess, Authentic, Parent, the Rolling Stockholders, or their affiliates.
• Solomon Partners is currently providing financial advisory services to a portfolio company of a Significant Stockholder of Authentic Brands Group, with compensation on a contingent basis.

Stakeholder Impact

• Shareholders: Will vote on the merger, face uncertainty due to lawsuits, and will transition from public to private ownership if the merger closes.
• Management and Board: Involved in the merger process and subject to scrutiny from shareholder lawsuits regarding disclosures.
• Legal Counsel: Willkie Farr and Gallagher LLP and Young Conaway Stargatt & Taylor, LLP have received significant fees from Guess for their roles in the merger process and prior derivative actions involving company executives.

Next Steps

• Stockholders will vote on the proposed merger at the Special Meeting scheduled for November 21, 2025.
• The Company will continue to address the shareholder lawsuits and demands for books and records.

Key Dates

Recommendation

The ongoing merger process is subject to shareholder approval and significant legal challenges. While antitrust clearance is a positive step, the multiple shareholder lawsuits alleging disclosure deficiencies create uncertainty regarding the deal's smooth completion. Investors should hold their position to monitor the outcome of the special meeting and the legal proceedings, as these factors will significantly influence the company's future and the ultimate value of the merger.

Keywords

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