Nautilus, Inc. has agreed to acquire all of the outstanding stock of privately-owned PEARL iZUMi USA for $68-million in cash and about $6 million in assumed debt. The deal is expected to be neutral to Nautilus' earnings in 2005 and is expected to add about 6 cents to 8 cents to 2006 earnings per share.
Established in 1951 in Japan and first distributed in the United States in 1981, the PEARL iZUMi(R) brand is known among fitness enthusiasts for its quality, innovation and technically superior sports apparel and footwear. The company's products are distributed through 2,600 independent bike dealers and 600 running-focused specialty retailers worldwide. PEARL iZUMi also operates nine retail outlet stores in the United States and an online store at www.pearlizumi.com.
PEARL iZUMi has increased sales 15% annually since 2001 as demand for high-performance fitness apparel continues to grow. In 2004, the company generated annual sales of approximately $49 million.
“We are delighted to extend our brand leadership with the addition of PEARL iZUMi and its high-quality products to our portfolio of fitness brands,” said Gregg Hammann, chairman and CEO of Nautilus, Inc. “It provides another high-performance brand and creates an opportunity to leverage the PEARL iZUMi business into new categories. We are looking forward to working with the PEARL iZUMi team. Both our organizations share a culture of growth through innovation and brand development.”
“This acquisition is a natural extension of our strategy and will provide a highly complementary entry into the $2 billion high-performance fitness apparel market, which is the fastest-growing portion of the active lifestyle category. With a 16% share in the high-performance cycling apparel market and its recently-established presence in the running apparel segment, PEARL iZUMi has done an excellent job positioning the brand for continued growth. The Nautilus management team, which has experience in the apparel and footwear industry, intends to apply expertise in both apparel and fitness to further leverage our brands as fitness enthusiasts pursue technically-superior equipment.”
Jerry Edwards, president of PEARL iZUMi USA, said, “We are excited to become part of the Nautilus team. PEARL iZUMi and Nautilus share a similar culture and passion for building a business that will help more people enjoy a lifetime of fitness and good health. Together, we will be able to leverage our innovation, marketing and presence to increase the presence of our industry-leading brands wherever people shop and exercise.”
Headquartered in Broomfield, Colo., and with European operations in Kirschzarten, Germany, PEARL iZUMi USA employs about 130 people. The leadership and staff are expected to continue with the organization. Eventually, some administrative functions may be moved to Nautilus world headquarters in Vancouver, Wash.
The transaction is expected to close during the third quarter of 2005 following completion of a regulatory process. Nautilus expects to provide additional details on the acquisition when it reports second quarter earnings in July.
