Westlake Village, CA—K-Swiss Inc., a performance and lifestyle apparel and footwear brand known for originating the first leather tennis shoes, said Wednesday that it had agreed to be purchased by E.Land World Ltd., a South Korean apparel distributor.
Under terms of the acquisition agreement, E.Land will pay about $170 million for K.Swiss’ brands with K. Swiss stockholders receiving $4.75 in cash per share.
According to Bloomberg data, the deal values K-Swiss, which has experienced a 50% drop in sales since 2005, at a valuation of about $135 million, or .58 times revenue compared with the 0.64 times average for 18 athletic shoe, footwear and related apparel deals made in the past five years. The merger is expected to close in the second quarter.
Founded in 1966 by two Swiss brothers who first introduced all-white leather tennis shoes into the United States, K-Swiss saw its shares sink in price as fashion sneakers overtook sales and the company failed to capitalize on the changing athletic footwear trends. Net revenue for 12 months ending Sept. 30 was $231.3 million compared to $508.6 million in 2005. Net losses from 2009 to 2011 amounted to more than $160 million.
E.Land’s business “will provide K-Swiss with the resources and scale to return to its former performance levels,” Steven Nichols, K-Swiss’ president, said.
A closely held company, E.Land owns more than 60 apparel and sports brands in South Korea and distributes products for New Balance. Last year, the company made a bid for Collective Brands Inc.
Goldman Sachs & Co. advised K-Swiss, while Morgan Stanley advised E.Land World, according to the acquisition statement.