US clothing giant VF Corporation, parent of brands including The North Face, Wrangler jeans and Nautica, will buy Timberland for about 1.8 billion US dollars in cash, the companies announced Monday.
VF said the acquisition of the New Hampshire-based The Timberland Company, known globally for its outdoor footwear and apparel, would reinforce its presence in the active-wear market.
VF will benefit from Timberland's rugged outdoor footwear expertise, international penetration in markets such as Japan, and leadership position in sustainability, said Eric Wiseman, VF chairman and chief executive.
The Timberland brand is synonymous with high-quality outdoor footwear and apparel, Wiseman said, adding that the unique rugged outdoor positioning of the Timberland brand would perfectly complement the positioning of The North Face brand.
Despite their outdoors roots, both brands have gained huge popularity and revenues in the past decade in hip-hop culture, and are worn on stage by leading rap and pop artists.
Under the terms of the agreement, approved unanimously by the firms' boards of directors, VF will pay Timberland shareholders 43 USD per share, the companies said in a statement. The offer represents a 43% premium over Timberland's closing share price of 29.99 USD Friday.
Timberland is expected to generate 2011 revenues of 1.6 billion, more than half of them internationally. Almost three-quarters of Timberland’s 1.43 billion USD in sales last year came from footwear such as hiking boots, while the rest came from apparel, accessories and royalties.
The acquisition is expected to close in the third quarter. It was projected to add about 700 million USD to the 2011 revenues of the Greensboro, North Carolina-based VF and boost VF's earnings per share by 25 cents this year and by 75 cents in 2012.
The acquisition comes after Timberland has watched its shares tumble recently after reporting first-quarter earnings well below market expectations. VF said it was targeting 10% annual revenue growth for Timberland, in part through a big push to expand the women's footwear and apparel business.
Timberland, maker of the iconic yellow waterproof boot, said it was confident that VF would protect and enhance its reputation as a responsible and environmentally conscious global citizen, said the firm's president and CEO Jeffrey Swartz.