Former Rossignol CEO Lands Deal to Buy Brand

 

C&MB is majority owned by MacQuarie Group, a global investment bank based in Australia that has been an advisor on more than 240 deals valued at $129 billion. Cercley is also tied to Jarden, where he served as president for the EMEA region of Coleman after resigning from the CEO post at Rossignol. Jarden, which sells $2.5 billion a year in sporting goods and is a global leader in skiing and snowboarding, holds a non-voting minority interest in C&MB.

The deal calls for Quiksilver to sell Rossignol for €100 million ($146.2 mm at Thursday exchange rate), including €75 million in cash and an €25 million seller’s note. The note, which will be interest free for four years, will be adjusted at closing depending on the amount of working capital at Rossignol. MacQuarie and Jarden have already committed to provide C&MB with €25 million of its closing payment, leaving Cercley to raise another €50 million by Oct. 31. If he fails, C&MB will owe Quiksilver a €10 million break up fee.

One source speculated MacQuarie would have no trouble raising the money given the low valuation of Rossignol’s assets. Quiksilver paid an estimated $288 million for the business in 2005, but announced plans to divest it in January after its sales of winter sports equipment fell 22% to $379 million in the wake of the unusually dry and warm 2006-07 winter.

It is unclear why Jarden is investing in C&MB, but one source speculated it will give the company better visibility into the European snowsports market for a relatively small investment. Jarden earned $43 million in the second quarter on sales of $1.4 billion. Because Jarden has no voting rights in C&MB, the deal should clear anti-trust hurdles in the United States. In France, the deal must be approved by Rossignol’s unions, which approved the company’s sale to Quiksilver three years ago. Quiksilver will use net proceeds from the contemplated sale to repay existing indebtedness.

The proposed transaction includes the sale of the Rossignol, Dynastar, Look and Lange brands of winter sports equipment and apparel. Quiksilver has also agreed to negotiate a trademark license agreement that would allow C&MB to manufacture, distribute and sell Roxy branded snow skis, snow ski boots, snow ski bindings and snow ski poles.
C&MB takes its name from the Chartreuse mountain range that birthed Rossignol and the Mont Blanc range that is home to Dynastar.
“This offer is a compelling transaction for Quiksilver and represents the culmination of a thorough sale process,” said Robert B. McKnight, Jr., chairman of the board, CEO and president of Quiksilver, Inc. “Once completed, we can fully concentrate our efforts on our core apparel and footwear brands Quiksilver, Roxy and DC.”

ZQK’s shares rose 11% Wednesday after the news, but lost much of that gain by the end of the week.
Cercely was a director then CEO of Rossignol for almost four years prior to its sale to Quiksilver. He was named president for the EMEA region of Coleman in 2006, but resigned that position in 2008 to focus on Rossignol and the development of C&MB.

“Product development expertise and innovation are in the DNA of Rossignol and there is significant talent and capability within the company. Fully utilising these substantial assets, together we intend to take the company from a loss making position into a new era of sustainable and profitable success,” said Bruno Cercley. “I am looking forward to sharing with the Rossignol team my vision and to work together to make Rossignol a profitable leader in its core business of making and marketing skis, snowboards, bindings and boots and to ensure we have a solid base for the apparel business. I am confident that this is a pragmatic approach in a tough economic environment, offering the best possible future for the brands of the Rossignol group.”

 

The transaction is expected to close in Fall 2008 following receipt of regulatory approval and completion of required employee consultation procedures.