Founded in 1910, Everlast became the brand in boxing -- especially when the company signed legendary fighter Jack Dempsey. But like many top brands, Everlast (NASDAQ:EVST) deteriorated. However, apparel veteran George Horowitz saw opportunity and spent $60 million to buy the company.
It looks like the investment was a smart one. Everlast announced a five-year licensing agreement with Jacques Moret. On the news, Everlast's stock price surged a knockout 71% to $7.04. The deal is the biggest in Everlast's history. After all, it included a minimum royalty of $12.5 million. Keep in mind that -- even after the surge in Everlast's stock -- the market cap is still only $22 million. The deal could eventually be worth as much as $30 million.
Jacques Moret will sell Everlast's women's apparel in the U.S., so Everlast can now focus its energies on its popular men's apparel.
Making money on a licensing model is no easy feat. But when done right -- such as with Qualcomm (NASDAQ:QCOM) or Marvel Enterprises (NYSE:MVL) -- the benefits can be significant. With Everlast, the company is pursuing an innovative hybrid approach.
No doubt, to continue the aggressive licensing strategy, Everlast needs to continue to build its brand. The company, for example, entered a deal to produce a reality-TV series with DreamWorks and Mark Burnett Productions. The show, called The Contender, stars Sugar Ray Leonard and Sylvester Stallone, who search for the next star fighters.
Lately, Everlast has certainly been a star fighter for its shareholders.
Fool contributor TomTaulli does not own shares mentioned in this article.
