According to published reports, VF Corp. is rumored to be near a deal to acquire DC Shoes, a division of Quiksilver Inc. The Orange County Business Journal cited rumors that Quiksilver “could sell part or all of the company to a larger competitor are circulating among people in the industry and on message boards and blogs.” The trade journal noted that there's also “gossip” that Quiksilver rejected an investment or buyout offer from Nike Inc.
But much of its article was centered around the possible sale of DC Shoes to VF Corp., which owns Vans and Reef in the action sports space.
Quiksilver hired Morgan Stanley last year to help it raise money to alleviate its debt load. Although the company said it was looking to expand borrowing with existing lenders or find a private equity investment, it was also exploring the sale of all or part of its assets. Quiksilver has $1 billion in short- and long-term debt as of Oct. 31.
The rumored DC Shoes sale comes after VF Corp. last week said it is splitting up its Outdoor Americas division, replacing it with two new divisions, or coalitions, Outdoor Americas and Action Sports Americas, effective Feb. 1. Steve Rendle, president of The North Face, will become president of the new Outdoor Americas coalition, and Stephen Murray, president of the Vans brand, will oversee the Action Sports coalition
Wedbush Morgan Securities analyst Jeff Mintz told the The Orange County Business Journal that he hasnt heard the rumor about Quiksilver shopping DC Shoes, which is acquired in 2004. But he said a deal could make sense.
“DC is probably the companys most valuable property and selling it could bring in some much needed cash to pay down debt and put Quiksilver in a stronger financial position,” he said.
“DC was a very good acquisition for Quiksilver,” Mintz added. “At the moment, it is the companys fastest growing business and one that seems to be least impacted by the consumer slowdown.”
