Greensboro, NC—VF Corp., which owns Nautica, Wrangler and North Face brands, announced today it plans to buy The Timberland Co. for about $2 billion.
The company is paying $43 a share for the outdoors apparel and footwear company in a deal that’s already been approved by both companies and will close in the third quarter. According to analysts, VF’s offer of $43 a share represents a premium of 43% to Friday’s marking closing. Shares of Timberland, the boots and outdoor apparel specialist, traded above the offer price as recently as late April, buta disappointing first-quarter report last month that put the stock in a tumble.
‘Complementary Momentum and Capabilities’
Commenting on the acquisition, Eric Wiseman, VF’s ceo, told analysts that Timberland is expected to add some $700 million to VF’s 2011 revenue, an estimated $8.5 billion.
Noting that VF had been “admiring” Timberland for nearly a decade, Wiseman said the acquisition “size wasn’t a limiting factor” and that both companies “have complementary momentum and capabilities. Timberland was the No. 1 strategic opportunity for us.”
Indeed, the timing was ideal since VF now has a strong financial position and an infrastructure in place to expand in Asia, particularly China.
The deal will capitalize on each company’s strengths, Wiseman said. VF can help Timberland grow its apparel and women’s businesses, open more retail stores and expand internationally in Europe, Asia and Latin America. While Timberland can help expand VF’s footwear portfolio and help it expand in countries including Japan where VF is less developed in.
VF’s outdoor and action portfolio, already the company’s fastest growing and largest unit, will increase to 50% of VF’s total after the purchase, Wiseman added. Under VF, Timberland’s revenue is expected to grow 10% annually from an expected 2011 level of $1.6 billion, the companies said.
Timberland is expected to add 25 cents a share to VF earnings this year, and 75 cents a share in 2012, or 45 cents and 90 cents after excluding one-time costs.
“We believe the unique rugged outdoor positioning of the Timberland brand will perfectly complement the premium, technical positioning of The North Face brand,” said Wiseman.
Other VF action sports and outdoors brands include The North Face, Vans, JanSport, Reef, lucy, Eastpak, Napapijri and Eagle Creek.
Wiseman said that VF’s direct-to-consumer initiatives will bolster the sales of Smartwood and Timberland globally, while VF will gain from “Timberland’s outdoor footwear expertise and leadership position in sustainability.”
Jeffrey Swartz, the president and ceo of Timberland, said that VF will preserve and enhance its reputation as an outdoors brand and sustainability.
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