What Happened?
Shares of contemporary clothing brand Guess (NYSE: GES) jumped 25.9% in the afternoon session after the company announced it has agreed to be taken private in a $1.4 billion deal. The transaction is a strategic partnership with Authentic Brands Group and a group of existing shareholders, including co-founders Maurice and Paul Marciano and CEO Carlos Alberini.
Under the terms of the agreement, shareholders will receive $16.75 per share in cash, a premium of approximately 73% over the unaffected stock price on March 14, 2025. Authentic will acquire 51% of Guess?'s intellectual property, with the remaining 49% held by the existing shareholder group. The deal is expected to close in the fourth quarter of fiscal 2026, after which Guess? common stock will no longer be listed on any public market.
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What Is The Market Telling Us
Guess’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Guess and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 3.9% on the news that markets rebounded following a sharp sell-off in the previous trading session as weaker-than-expected U.S. jobs data fueled investor hopes for a potential interest rate cut by the Federal Reserve. The July Nonfarm Payrolls report revealed a gain of only 73,000 jobs, significantly below the 110,000 expected. Compounding the news, prior months' figures were revised downward by over 250,000 jobs.
This data, indicating a cooling labor market, has led investors to dramatically increase bets on a September interest rate cut by the Federal Reserve, with the probability jumping to over 80% according to the CME FedWatch Tool. The prospect of lower borrowing costs typically stimulates economic activity and boosts consumer spending on non-essential goods and services, which directly benefits companies in the consumer discretionary space.
Guess is up 21.7% since the beginning of the year, but at $16.81 per share, it is still trading 21.9% below its 52-week high of $21.53 from August 2024. Investors who bought $1,000 worth of Guess’s shares 5 years ago would now be looking at an investment worth $1,473.
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