Sharper Image Sold in Joint Venture

May 31, 2008 2:47 AM  By

Sharper Image Corp., which put itself up for sale last month after filing for Chapter 11 bankruptcy protection, has been acquired by a joint venture led by units of private investment firms Hilco Consumer Capital Corp. and Gordon Brothers Group.

According to wire reports, the joint venture, which also includes Windsong Brands LLC and Crystal Capital, will pay $49 million plus some contingent recovery for assets for the San Francisco-based gifts and gadgets merchant.

The deal, which follows a two-day auction, is subject to bankruptcy court approval. The joint venture had earlier been approved as the “stalking horse” bidder for the company, which had filed for Chapter 11 in February.

Hilco and Gordon Brothers reported earlier this month that they are developing a licensing strategy for The Sharper Image brand. What’s more, they plan to partner with several global institutions to further strengthen the company.

The firms teamed up in a similar deal last year to buy the intellectual property and trade name of furniture retailer Bombay Co.

Stuart Rose, managing director of Wellesley, MA-based investment bank of Tully & Holland, says Hilco and Gordon Brothers are “ideal buyers” for The Sharper Image.

“They know this area very well, they’re very smooth operators, and they’ve been through this kind of deal before, dozens of times,” he says.

“Whether or not they just salvage it for the intellectual property and sell it off, that’s a possibility, but I imagine that they’ll probably try to operate it for a while to try to get some of the value out of it first.”

And there’s still plenty of value in the brand, Rose says. “Sharper Image, Brookstone and Hammacher-Schlemmer are the three best known names in the business, and there’s a tremendous amount of demand for ‘men’s toys.’ Now’s a good time, with the coming slowdown, to stage a comeback.”

The new owners have no interest in keeping the stores going, however: After closing and liquidating 97 Sharper Image stores across the country in February they announced on Sunday the remaining 86 stores will also be closed. More than $50 million of inventory will be sold through store close-out sales.