Supreme, the streetwear brand with a cult following, is to become a stablemate of Timberland and The North Face after the listed clothing conglomerate VF reached a $2.1bn deal to buy the privately owned label.

VF said on Monday it had agreed to acquire the clothing, footwear and accessories label — which began as a skate shop in New York’s Soho neighbourhood in 1994 — with Supreme’s owners, which include private equity groups The Carlyle Group and Goode Partners.

Supreme, known for its red box white logo, innovated the so-called drop model in fashion, in which new product is released frequently in small batches. The technique has resulted in Supreme goods selling out instantly online and long queues forming in front of stores.

Supreme was valued at $1bn in 2017 when Carlyle took a 50 per cent stake for $500m. Sales of its products including hoodies and beanies have grown rapidly, with its design and logo highly coveted by streetwear aficionados. But some in the industry have questioned if the brand lost its coolness after mainstream celebrities including Victoria Beckham started wearing it.

VF said Supreme was expected to add at least $500m in annual revenues to the group. James Jebbia, Supreme’s founder, and the brand’s senior managers will remain at the company following the deal, which is expected to complete by the end of the year. He will receive a portion of the purchase price in VF equity.

VF said the brand would complement ‘street-inspired’ aspects of its portfolio

VF, the Denver-based conglomerate, said the brand would complement “street-inspired” aspects of its portfolio, which also includes Vans shoes as well as Timberland and North Face.

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Supreme is VF’s first sizeable purchase since it added Icebreaker, the merino clothier brand, and Altra, the running shoes brand, in 2018. The company had in recent years focused on disposals, spinning off its Wrangler and Lee jeans businesses — among other assets — as Kontoor Brands last year.

VF has been on the lookout for acquisitions under Steve Rendle, chairman and chief executive. “VF is the ideal steward to honour the authentic heritage of this cultural lifestyle brand,” he said in a statement.

VF shares jumped almost 13 per cent on Monday, giving the company a market capitalisation of $27bn.

Via Financial Times