The Timberland Company has signed a definitive agreement to acquire 100% of the outstanding stock of SmartWool Corporation, from RAF Industries, Inc. and the Stripes Group LLC. SmartWool, a privately held company based in Steamboat Springs, Colorado, designs, develops, markets and distributes premium performance socks, apparel and accessories for men, women and children.
The purchase price is estimated to be approximately $82 million and will be funded through Timberland's existing cash balances and short-term borrowings. The SmartWool organization will continue to be headquartered in Steamboat Springs, Colorado and will operate as a wholly-owned subsidiary of The Timberland Company under the leadership of Chip Coe, SmartWool's president.
SmartWool was founded in 1994 by New England ski instructors who saw the potential for developing performance-based products for outdoor activities, SmartWool products are available in over 2,000 better outdoor specialty stores throughout the United States and through independent distributors in Canada, Europe and Asia. SmartWool and Timberland partnered in early 2005 to develop and market performance footwear featuring SmartWool linings.
SmartWool's 2005 revenues are anticipated to be approximately $42 million excluding sales of Timberland footwear with SmartWool linings. Timberland anticipates this transaction will add two to three cents to its earnings per share in 2006, with benefits weighted toward the second half of the year. The transaction will have minimal impact on fourth quarter 2005 earnings.
“SmartWool and Timberland share a common heritage as authentic brands grounded in functional and purposeful innovation, and our initial footwear collaboration demonstrates SmartWool's widespread consumer appeal,” stated Jeffrey B. Swartz, Timberland's president and CEO. “We look forward to working with the SmartWool team to build upon the strong momentum they've created, sharing Timberland's global infrastructure and product expertise to accelerate and broaden SmartWool's brand reach while retaining its unique brand essence and culture.”
Commenting on the transaction, SmartWool's president, Chip Coe, stated, “We are very excited to expand our relationship with Timberland. We are passionate about our brand. Timberland's brand building heritage, operational expertise and commitment to community will enable SmartWool to better serve our loyal and growing consumer base through expanded offerings of socks, apparel and accessories to reach our full potential as part of the Timberland organization. Timberland's extraordinary commitment to social responsibility is also a great fit with our SmartPrint initiative.”
Completion of this transaction is subject to satisfaction of customary closing conditions, including regulatory review. The acquisition is expected to be completed by mid-December.
Ropes & Gray LLP served as legal advisor to Timberland. Dechert, LLP served as legal advisor and Wachovia Securities served as financial advisor to RAF Industries, Inc. and Stripes Group LLC.
