Aritzia, a vertically integrated designer and retailer of everyday women’s luxury clothing, has agreed to acquire Reigning Champ, a designer and manufacturer of premium athletic wear for men and women. Like Arc’teryx or a much larger vertical sports apparel company, Lululemon Athletica, both companies operate out of Vancouver.

Founded in 1984, Aritzia sells its branded clothing on its own website and at more than 100 boutiques throughout North America. Founded in 2007, Reigning Champ sells its relatively classical and timeless products with high-quality materials and attention to detail at influential digital and physical retail locations around the world.

The two businesses will continue to operate under their present management for a transition period of about five years in order to strengthen their specific brands and cultures while taking advantage of mutually beneficial synergies and efficiencies.

Their combination is expected to accelerate Aritzia’s expansion into the men’s segment and to allow Reigning Champ to capitalize on Aritzia’s operational expertise and infrastructure.

The transaction assigns a total enterprise value of around $63 million to Reigning Champ, which is projected to deliver adjusted Ebitda of about $5 million on sales of $25 million in the 2021 calendar year. The closing should happen before the end of June.

Aritzia has agreed to pay cash for an initial stake of 75 percent in Reigning Champ. The remaining 25 percent will be acquired by Reigning Champ’s management in the form of Aritzia shares in three instalments between 2024 and 2026.

Reigning Champ’s management currently consists of its two founders, Craig Atkinson and Chris Nordee, and the company’s chief financial officer, Paul Heathcote. Atkinson acts as CEO of the company and Nordee as vice president in charge of manufacturing.

Financo/Raymond James served as financial advisors to Aritzia in the transaction, with Borden Ladner Gervais acting as legal counsel. RBC Mid-Market Mergers & Acquisitions served as financial advisors to Reigning Champ, aided by Blake, Cassels & Graydon as legal counsel.