Russell Corporation has signed an agreement to acquire Brooks Sports, Inc. for approximately $115 million. Brooks sales for 2004 are expected to be approximately $95 million and the acquisition is expected to be accretive to Russell’s 2005 earnings. The all-cash transaction will be funded with proceeds from Russell’s existing credit facility.
Brooks is a leading global provider of performance athletic footwear, apparel and accessories to running enthusiasts worldwide. Its products are sold predominately through specialty running stores and other retail outlets specializing in high quality, performance running products. Approximately 25 percent of Brooks revenues are generated internationally from 26 countries.
The transaction, which is subject to regulatory review and other customary conditions, is expected to be completed by early January 2005.
“This is a continuation of our strategy to expand our position as a leading, authentic sporting goods company,” said Jack Ward, chairman and CEO. “The addition of athletic performance footwear strengthens Russell’s position in the sporting goods business. We believe that this acquisition, just as our other recent acquisitions, is an investment in our future growth.
“Brooks position as a leader in performance running products will provide a broader platform for Russell as we continue to expand our position in performance athletic products,” added Ward. “Like Russell Athletic, Bike, Moving Comfort, Huffy Sports, AAI and Spalding, Brooks is an authentic performance brand with a long history in the sporting goods business. Product excellence, outstanding customer service and grass-roots marketing have helped Brooks steadily gain market share to become one of the most respected brands in the running industry today.”
Headquartered near Seattle, Brooks employs 165 worldwide.
“We are very pleased that Russell Corporation will be Brooks new owner,” said Jim Weber, president and CEO of Brooks. “Russell understands the athletic industry and the specialty store environment, and they believe passionately in the Brooks brand, strategic vision, and plans for growth.
“Russell enthusiastically supports Brooks dedication to continue providing best-of-class customer service and products to our partners and customers,” continued Weber. “We look forward to investing more in key areas that support Brooks brand growth, including systems and marketing.”
“While Brooks certainly has had a long, successful history, we believe that the company continues to have significant growth potential,” Ward said. “Additionally, we believe Brooks has growth opportunities with Russell through a variety of avenues, including leveraging our team track business with high schools and colleges, and expanding Brooks apparel business.”
Russell Corporation has a long history in the athletic market. It expanded its presence in the sporting goods market with the 2002 acquisition of one of the first women’s performance running apparel brands, Moving Comfort, the 2003 acquisitions of Bike Athletic and Spalding, and its acquisitions this year of American Athletic and Huffy Sports.
Wachovia Capital Markets, LLC acted as the sole financial advisor to Brooks Sports, Inc. on the transaction.
Russell expects to be in the lower end of the previously announced earnings range and in line with current First Call estimates for the 2004 fiscal year. “As reported, holiday sales results are mixed and certain retailers have not performed to their expectations,” according to Ward.
The Company has now completed the initial business planning process for 2005 and believes that with the acquisition of Brooks Sports, sales for the 2005 fiscal year will be approximately $1.5 billion and earnings per share for the year will be in the $1.55 to $1.65 range assuming a projected tax rate of 35 percent.
“We continue to make substantial progress in our strategy of expanding our position as a leading, authentic sporting goods company. We believe that our brand portfolio positions Russell to take full advantage of growth opportunities in all of our major businesses including athletic apparel, activewear, footwear, sports medicine, basketballs and backboard systems, as well as gymnastics. We see increased potential both inside and outside the U.S.,” said Ward.
