The outdoor industry’s biggest player is about to get a lot bigger.
VF Corp. (NYSE: VFC), parent company of The North Face, JanSport and Vans, announced plans June 13 to purchase Timberland Co. (NYSE: TBL) for approximately $2 billion.
VF’s buyout offer of Timberland’s stock at $43 per share represents a 43-percent premium from the footwear’s company’s June 10 closing price before the weekend. The deal is expected to close during the third quarter, and it has unanimous approval from both companies’ board of directors.
Timberland, which is best known for its boots and owns the SmartWool brand, will remain headquartered in Stratham, N.H. The company is expected to generate revenue of $1.6 billion in 2011, which added to VF's estimated $8.4 billion in 2011 revenue would create a $10 billion company, officials said.
“We believe the unique rugged outdoor positioning of the Timberland brand will perfectly complement the premium, technical positioning of The North Face brand, while the SmartWool brand will provide us with a leadership position in a new category,” VF Chairman and CEO Eric Wiseman said in a statement. “VF will benefit from Timberland's rugged outdoor footwear expertise, international penetration in markets such as Japan, and leadership position in sustainability.”
The acquisition, which is expected to add $700 million to VF’s revenues in 2011, will quickly propel VF’s Outdoor & Action Sport segment to account for half of the company’s total revenue – a long-term goal laid out by VF officials on March 11, 2011. Wiseman said VF now projects its outdoor segement to record 60 percent of companywide revenue by 2015.
"We're squarely focused on building our brand portofilo on the outdoor and action sport space," Wiseman said during the conference call June 13, follwing the annoucement. He said VF started with a list of 50 outdoor companies to consider for acquisition, then narrowing it down to a handful that made strategic and financial sense, of which Timberland was at the top of the list.
VF officials said they will target 10-percent annual revenue growth for Timberland by leveraging its international platforms in Europe, Asia and Latin America, leveraging its direct-to-consumer platform (including 229 stores and e-commerce) and enhancing the brand by aggressively growing the women’s footwear and apparel business.
The latter has been a goal of Timberland’s off and on over the years, with its latest push in early 2011.
The transaction is still subject to regulatory and stockholder approval.
-- David Clucas