Royal Robbins has been acquired by Carlsbad, Calif.-based, Phoenix Footwear Group (AMEX: PXG) for $6 million in cash, $500,000 in Phoenix Footwear common stock, and a contingent purchase value of approximately $5 million based on a two-year earn-out formula. Royal Robbins adds an apparel arm to Phoenix which also owns footwear brands Trotters and SoftWalk, as well as the recently acquired H.S. Trask and Ducks Unlimited footwear lines.
Dan Costa, CEO of Royal Robbins, will remain with the company for at least three years under contract according to company president, Francisco Morales.
"Phoenix purchased our company and our management team," Morales told SNEWS. "We were not looking so much to sell the company as we were to finance our growth so when Phoenix came to us with their offer, it matched our needs perfectly.
"What Phoenix does for companies such as ours is help us deal with overhead costs and administrative efficiencies which allows us to focus entirely on running our business," added Morales. "All of a sudden, we are a much more competitive company with the money to finance our marketing efforts and the long-term financial capabilities of a public company."
Morales told SNEWS that Royal Robbins will remain in Modesto and that no layoffs are planned. He also assured us that the company distribution plan will not change and that Royal Robbins remains forever focused on the outdoor specialty market.
SNEWS View: It has been no secret that Dan Costa, who acquired Royal Robbins from Royal and Liz Robbins in May 2000, has been interested in selling the company to the right party for the right price. Our sources tell us the company book has been on and off the market for over a year now. The sale will put a smile on of the faces of key RR employees who received a piece of the pie in recent months, and no more deserving of the smile than talented company president Francisco Morales. For Costa, his smile has to be huge too since he turned what we have heard was approximately a $1.5 million outlay in 2000 into significantly more making his ROI quite satisfactory. For Phoenix, this adds a strong men's and women's outdoor and travel apparel line to its portfolio which will serve the company nicely as it looks to grow from $68 million in sales now to $100 million by the end of next year. It is likely too that Phoenix will look to leverage RR design talents and expertise in expanding the company's direct private label business which until now has been entirely footwear-focused. And while Royal will remain focused on outdoor specialty, it would not surprise the SNEWS team to see Phoenix leveraging the brands it has and the distinct customer bases loyal to each to establish cross-promotional sales opportunities.