Nautilus (NYSE: NLS) is selling its Pearl Izumi segment to Shimano American Corp., for $69.5 million -- $65.3 million in cash and the assumption of $4.2 million in long-term debt. The transaction is expected to close by March 31.
Shimano said Pearl Izumi, which produces apparel and footwear for cycling and running, becomes a wholly owned subsidiary of its U.S. operations and will be maintained as a stand-alone company with its own management team. Pearl Izumi will continue to operate from its facilities in Broomfield, Colo., and Kirchzarten, Germany.
Shimano said in published reports that as part of a broad dual brand strategy, it will continue to offer its branded apparel and cycling footwear along with the Pearl Izumi apparel and cycling footwear in all markets.
Shimano's acquisition includes Pearl Izumi's facility in Kirchzarten and the rights to Pearl Izumi sales and distribution throughout North and South America, Europe, Australia and select other countries. The purchase does not include sales and distribution rights of Pearl Izumi branded products in Japan and most of Asia.
Nautilus has owned Pearl Izumi USA since 2005 and said in October 2007 that its apparel business would be put on the market.
"We believe this divestiture is in the best interest of shareholders by providing liquidity and keeping our organization focused on restoring profitability to our global fitness business," said Bob Falcone, president and CEO of Nautilus, in a statement. "Pearl Izumi is an excellent brand of apparel and footwear for cycling and running. We are pleased to have found a strategic buyer in Shimano that values the brand as well as our talented apparel and footwear staff."
To read about that acquisition in a June 20, 2005, SNEWS® story, "Nautilus calls Pearl Izumi acquisition 'pure-play in fitness,'" click here.
SNEWS® View: It was clear to many observers when Nautilus bought Pearl for $74 million -- sucking down about three-quarters of its cash at that point -- that the sale didn't seem to fit the exercise equipment company -- and definitely was not a reason to use up all that cash. Its stock price dropped upon news of the sale. But under then-CEO Gregg Hammann's leadership, the company forged ahead, trying to dabble in fitness apparel, although we never really saw anything that special. Pearl does running well and cycling well. That's where its name is and where it should likely stay. Now, of course the question is, will it remain true to running if it is being bought by a cycling company? We're sure there are a lot of Pearl running gear fans who hope so. We do too. It is a classic brand that dates back more than a century. With the recent demise of the Hind brand -- owner Saucony has decided its apparel should be Saucony-branded -- it would be a pity to see the Pearl brand find the same fate.