Spyder Active Sports, a ski apparel company, announced its acquisition of Cloudveil Mountain Works, a technical outdoor and mountaineering apparel company, on Feb. 4. Terms of the deal were not disclosed.
Under the agreement, Cloudveil will remain a separate brand entity and operate as a wholly owned, independent division of Spyder. Cloudveil's founders, President Brian Cousins and Vice President Stephen Sullivan, have signed multi-year contracts to continue in their respective roles within the new organization.
Click here to read the full press release posted on SNEWS® on Feb. 5.
Spyder acquired Cloudveil from Sport Brands International (SBI), the entity owned by private equity fund Cerberus. As SNEWS® readers may recall, SBI also owned Fila, and acquired Cloudveil in early 2005 (click here to read that story).
However, things quickly began to go south for the troubled Fila brand (consider that since 2002, the company burned through three CEOs), and since Cloudveil's future was enmeshed with that of SBI and Fila, it began to face challenges as well.
Reports from 2006 indicated Fila USA's sales at $100 million, and global sales for the brand at approximately $250 million -- a far cry from the $500 million in reported sales for the company when it was acquired by SBI in 2003.
In November 2006, Cerberus retained Goldman Sachs to shop both Fila and Cloudveil. At the time, insiders told us that Cloudveil was generating approximately $20 million in annual revenue.
Fila USA was first to go, sold along with all global rights to the Fila brand to Global Leading Brands Group of South Korea, and owner of Fila Korea, for a reported $400 million in April 2007. Former Fila President Jon Epstein rejoined Fila, leaving Le Coq Sportif as part of that deal.
Cloudveil remained on the block, with Fila providing back-end support under a shared-services agreement that was also negotiated as part of the sale. SNEWS® was aware of a number of suitors that fell by the wayside for a variety of reasons.
Spyder, which was acquired by Apax Partners LP, a United Kingdom-based private equity firm, in 2004, remains headquartered in Boulder, Colo., and is still very much directed by the Jacob family which created the brand. David Jacobs is the chairman of the board, and Jake Jacobs was named president and CEO in 2007.
Cloudveil, now under its third ownership umbrella, will remain headquartered in Jackson Hole, Wyo.
SNEWS® View: Although the talk from the Cloudveil and Spyder camps is very much the same as we heard in 2005 when Cloudveil was acquired by SBI, there is one, very big difference this time around. Spyder is a very healthy and growing brand, still directed by the family that founded it, and certainly regarded as a leader in the alpine skiwear category. In 2005, Fila was a troubled brand that SBI hoped could be revived by linking up with the mojo and technical apparel savvy of a cool mountain town backcountry brand like Cloudveil. Obviously, that did not work out -- not even close to what was dreamed.
In our interview with Steve Sullivan, Brian Cousins and Jake Jacobs, it was apparent to SNEWS® that a lot has been learned from the last two years of ups and downs (mostly downs) for the Cloudveil team, and that the Spyder acquisition now frees up the two co-founders to do what they do best -- focus on design, marketing, and ensuring brand strength and penetration in a specialty market.
The biggest opportunity, we believe, for growth of the Cloudveil brand in the near-term will be in Europe, where, suddenly, the company has access to Spyder's sophisticated and very strong European distribution infrastructure. It was enlightening to us to learn from Jacobs that Spyder's sales are quite evenly split between North America and Europe, with Europe accounting for just under 50 percent of annual company revenues. Expect Cloudveil to benefit in a big way from that connection.
In North America, there is growth opportunity for both brands, with surprisingly little overlap of retailers, we have learned. In fact, the number of retailers that currently sell both Spyder and Cloudveil brands number less than 100. Whether that will benefit Cloudveil more or Spyder remains to be seen, but we would suspect that outdoor specialty stores carrying Cloudveil won't necessarily feel inspired to pick up Spyder apparel. However, it is far more likely, we feel, for ski and snowsports specialty stores carrying Spyder to see year-round opportunity and added sales opportunities with Cloudveil.
Certainly, this is a savvy acquisition for Spyder as it gives a primarily seasonal brand strong year-round positioning.
All that remains to be seen is if Cloudveil will quickly improve its quality control, which in the last year has been slipping sufficiently that even consumer blogs have picked up on the banter regarding quality and returns. We would have to believe that now that distractions are removed, Sullivan and Cousins will restore QC and design-inspiration order to what should be a leading innovator in the outdoor space.