Fashion retailer Esprit Holdings is to acquire full ownership of the Esprit trademark in the United States and the rest of the world for US$150 million. The acquisition, which unites the Esprit brand under one corporate entity, signals the first step in a long-awaited expansion into the US market by the Hong Kong-listed clothing chain. Esprit has long coveted the US rights to its brand. The fashion retailer has signed an agreement with Esprit de Corp, which controls the brand's global trademarks. The assets to be acquired include all relevant Esprit trademark rights in the US and the Caribbean, as well as a 37 per cent interest in Esprit International, giving it 100 per cent of the company. Analysts say Esprit International, which holds all trademark rights outside the United States, generates royalty income of about US$16 million per year. Despite holding nearly HK$800 million cash in hand, the Hong Kong company said the acquisition would be partly financed by bank borrowing. The deal, expected to be completed by April, means the global unification of the Esprit brand. Michael Ying Lee-yuen, chairman of Esprit Holdings, said: 'It would undoubtedly make strategic sense as it would create a global business with all the accompanying positives of scale and geographic diversification.' While the San Francisco-based Esprit de Corp has been controlling Esprit's global trademark rights since 1970, the Hong Kong company has engaged in the brand's wholesale distribution in Asia since the early 1980s. The Hong Kong company began its plan to unify the brand in the mid-1990s, when it acquired wholesaler Esprit Europe and the sourcing and manufacturing company Esprit Sourcing, as well as 63 per cent of Esprit International. As a result, only the US operations were left out of the Hong Kong company's control. 'We have been carefully watching the US opportunity, and this is clearly the right time for us to make the acquisition,' Mr Ying said. Executive director Heinz Krogner-Kornalik said he expected the brand's widespread recognition in the US to help the company establish the right business mix for the market. In the US, Esprit was recently ranked among the top 60 most recognised fashion brands by Women's Wear Daily. Esprit de Corp operates more than 50 stores and about 200 franchises within department stores. Although products sold under the US Esprit trademarks brought more than US$200 million in turnover last year, an ING Barings report said the US operations were making losses. The report also noted that because no physical assets were included in the transaction, the SAR company might take over some outlets in the US as the next step in its expansion in the country. 'We believe [Esprit Holdings'] ability to cherry-pick the best assets is clearly positive,' the ING Barings report said. However, Juan Tseng, an analyst at Deutsche Bank, did not expect the company to acquire a large number of stores there. 'I don't think it is necessary for the company to acquire a distribution network there,' said Mr Tseng, adding the company could build its network by granting franchises. Franchising is the company's main business model in Europe, where it operates almost 1,300 franchised shops. The European business is the major contributor to Esprit Holdings, helping it record a 41-per cent growth in its net profit to HK$385 million for the first half to December 31 last year.