While the “big get bigger” deals had everyone talking in 2005, the second tier of acquisitions and mergers during the year will provide a more subtle approach to growing the business.
VF Corporation continued its moves in the action sports space, picking up Reef Holdings in a deal that gives them an entry point into the surf/beach business. Growing apparel here is an obvious first priority, but VFC is also expected to expand Reefs horizons by moving the brand into the outdoor market more aggressively as part of VFs vision for a broader, more inclusive, and younger outdoor market.
Stride Rites acquisition of Saucony was a clear sign that the parent company of Keds and the Stride Rite childrens brand wanted a foothold in the performance footwear arena. In Saucony, SRR gets a brand that has been a strong performer in womens running, but has suffered of late as average selling prices and technology expectations rose in the mall even as the brand chased what had been easier dollars at the under $65 price-points with their “cross-over” product. The goods news is that retailers want the better goods from Saucony, a move new management will certainly look to address.
American Sporting Goods started the year as a company on the selling block and close to completing a deal. By WSA, the deal was off the table and the company had a new investor and new CEO. By May, ASG itself was in the hunt for acquisitions and became the fly in the ointment in a deal that would have seen And 1 acquired by Skechers. ASGs deal for And 1 gives them a solid brand in basketball, a category that Avia hasnt seriously played in for many years, and gives them street cred with a more up market brand. As the year ended, the talk on the street was that ASG is again looking for a suitor.
Vital Apparel Group also diversified its portfolio with two deals during the year. The acquisition of ProMarx before Super Show last year gives an accessories line to be marketed along with the Vital Team girls and womens apparel line. Vital closed the year with the acquisition of InSport, giving Vital an entry into the running and performance markets. The operations are expected to run separately, but the companies see synergies in back office operations and sourcing.
Sport Brands International, the parent company to Fila, moved into the outdoor category with the acquisition of Cloudveil Mountain Works, a performance outdoor apparel company based in Jackson Hole and Denver. SBI formed a Mountain division that will house Cloudveil and Filas winter business. Elsewhere in outdoor, Timberland wasnt satisfied with its investment in developing the new Mion technical outdoor line and reached into the bag to acquire apparel and sock maker SmartWool in November. The two companies have been collaborating on a number of very successful products and the deal gives Timberland another legitimate brand in the outdoor space.
The paddlesports business saw significant consolidation in 2005 when two of the three top boat builders were merged after Confluence acquired Watermark. The deal was perhaps the worst kept secret in the market, but few significant details were disclosed when the deal closed.
Diversity is one thing, but few see the upside for Nautilus after their acquisition of Pearl Izumi. The deal matches a fitness hardgoods company with a running and cycling apparel and footwear company with few readily identifiable synergies. Still, NLS management feels the deal gives them an entrée into the IBD market and provides them with a platform to develop fitness apparel.
