Columbia Sportswear Co. (Nasdaq: COLM) has acquired the assets of the Pacific Trail group of brands with a winning bid of $20.4 million in a March 29 bankruptcy auction held at U.S. Bankruptcy Court, District of Nevada, in Reno, Nev. The court approved the sale on March 30.
In acquiring Pacific Trail, Columbia successfully outbid two other companies, including Perry Ellis, which had been considered by insiders the one most likely to nab the assets of Pacific Trail early on. Perry Ellis was the stalking horse bidder at $14.5 million.
What does Columbia get for its investment?
>> Fall orders on the books that exceed $26.2 million.
>> Audited inventory level valued at $10 million.
>> Receivables listed in court documents at $4.8 million.
>> None of the $6.4 million in liabilities owed to factories by London Fog Group.
>> Rights to the Dockers license from Levi Strauss through the end of 2006.
>> Assumption of the lease for Pacific Trail's distribution facility in Washington (after Columbia agreed to assume just over $300,000 in liability for unpaid rent).
>> All of the global trademarks, including: Pacific Trail, Pac Tec, Black Dot, Moonstone, Towne, Roffe, Glacier Bay, Mountain Design, etc.
Will Columbia move Pacific Trail? Insiders feel it is likely and SNEWSÂ® won't argue with that sentiment. Why, after all, would Columbia keep the offices in Seattle open at additional costs when doing so really gives the company no clear design or distribution advantages?
One email, sent via our news tip service shortly after the sale was announced over the news wires on March 29, stated, "I think it is good Columbia bought them. Now they can send the truck over from Montrail for another pick-up before heading south to Portland!"
We spoke with Peter Bragdon, vice president and general counsel for Columbia, who told us that the company has made no decisions regarding the disposition of the brands Columbia acquired or where each will be headquartered.
When asked about Moonstone and its future, Bragdon allowed that, "For Columbia, the most attractive reason for this acquisition was the Pacific Trail brand. As a company, we have competed with them in the market for some time now, so we feel we know that brand and its potential very well."
In the company press release announcing the acquisition, Tim Boyle, president and CEO of Columbia, stated, "With the acquisition of Pacific Trail, we continue to strengthen our portfolio of authentic, outdoor brands. We are particularly enthusiastic about the opportunity to leverage our design and capital strengths to expand the growth opportunities for Pacific Trail products in distribution channels that Columbia has not yet developed."
Pacific Trail now joins Mountain Hardwear, Sorel and recently acquired Montrail as a member of Columbia's expanding outdoor brand profile.
Grant D. Prentice, vice president of global outerwear integration at Columbia, will be responsible for interim management of the Pacific Trail brands.
SNEWSÂ® View: Pacific Trail was founded in 1945 in Seattle, Wash. Columbia was founded in 1938 in Portland, Ore. Now the two, once formidable competitors, are one. And what of Moonstone? Columbia could have saved itself $2 million in the purchase price had it elected not to acquire that brand, according to court documents obtained by SNEWSÂ®. Did it decide to pick up the brand just to let it die? Perhaps, though that doesn't appear to be Columbia's style. Perhaps it will die in the United States, but continue chugging along in Canada, Japan and other countries. Of course, there is not much chug left in the train at this point to be sure. Doubtful that Columbia would have paid $2 million just to sell it to a potential competitor for anything less than $2 million, though. Plus, we can't imagine anyone in their right mind paying more than $1 million for the brand as it now stands -- and even that is loaded with good will.
As for the Pacific Trail buy, very smart move for Columbia at a bargain price. While both share distribution into some of the same larger department store chains -- Kohl's and J.C. Penney -- the doors are now open at Costco, Sam's, Sears and other venues that Columbia either chose not to enter, or simply was not in currently. Columbia, a very strong ski brand, could also conceivably look to resurrect the once strong Roffe brand name, and we suspect that the company will also look to revitalize the otherwise withered snowboard and surf brand in Black Dot.