Walmart announced on Friday that it has acquired Bonobos, the 10-year-old mens clothing brand that started by selling pants online but has since expanded its assortment and opened dozens of brick-and-mortar showrooms.
Walmart has confirmed it is buying Bonobos for $310 million
Walmart’s M&A spree continues.
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
Walmart is paying $310 million in cash for the deal, just slightly above its $300 million valuation when it raised $55 million in 2014.
Bonobos co-founder and CEO Andy Dunn, and other top executives, can earn an extra $20 million combined if they remain with Walmart for four years, a source said.
The announcement comes two months after Recode first broke the news that the companies were in advanced discussions about an acquisition, raising questions in the industry about how Walmart’s low-price, Middle-America brand would mesh with Bonobos’ higher-end, higher-quality aesthetic popular in urban centers.
But sources previously told Recode that you shouldn’t expect to see Bonobos pants or shirts sold in Walmart stores or on Walmart.com.
Instead, Walmart may end up selling Bonobos apparel through Jet.com, the shopping site it acquired for $3 billion aimed at a higher-end shopper, as well as through Bonobos.com and its retail showrooms.
It’s not clear if Bonobos will continue to sell in Nordstrom, which also happened to be an investor in the startup.
As of two months ago, Bonobos was projecting 2017 revenue of around $150 million, and was growing around 30 percent year over year, according to a source. Sources say Walmart believes Bonobos has the potential over time to generate large operating profits for a retail brand of its size.
For Walmart, the deal marks at least its fourth acquisition of a digital-first retailer since Marc Lore took over as head of e-commerce in the U.S. last fall — others have included Modcloth and ShoeBuy.
Part of his strategy is to buy vertically integrated brands, like Bonobos and Modcloth, that have cultish, core customer bases, strong CEOs that can take on bigger roles, and no presence on Amazon. Bonobos CEO Andy Dunn will report to Lore and will “oversee the company’s collection of digitally-native vertical brands,” according to the company statement.
For Bonobos, the deal came together after the company was having trouble raising a new round of funding that would be a good deal for all sides. The fundraising efforts were complicated by the fact that Bonobos had already raised more than $120 million, which was a large amount for a company of its size.
This article originally appeared on Recode.net.
