Columbia Acquires Montrail in $20 Million Deal
Just before Outdoor Retailer Winter Market, Columbia announced that it acquired Montrail in a deal with an estimated enterprise value of roughly $20 million. Columbia management sees opportunities in leveraging sourcing, logistics, and capital strength to develop Montrail in the specialty footwear channel and to expand the brand globally. Columbia will also leverage the performance and fit characteristics that Montrail has developed to improve the fit and quality of all of their brands.
Montrail's integration should have minimal impact on COLMs operations. The company paid $15 million cash, plus the assumption of certain liabilities, and acquired substantially all of the assets of Montrail, which reported un-audited 2005 net sales of roughly $16.5 million. COLM managements expects the transaction to be neutral to first quarter earnings, and slightly dilutive to earnings in 2006. Sources close to the deal said that it was in the range of 1.2-1.3X sales and a “very high” EBITDA multiple.
Along with the acquisition, Columbia shifted some management positions to more effectively control the new footwear division. Brad Gebhard, Columbias new VP of Footwear, has accepted responsibility for the design and product line management for all footwear brands, including Montrail, Columbia, and Sorel. Mr. Gebhard will direct the cohesive integrated, multi-brand footwear strategy. Scott Tucker, Montrail's former President, will lead the Montrail brand as General Manager. Sean Beers has accepted the position of General Manager for Sorel, and will report to Mr. Gebhard.
Menno Van Wyck, the former majority shareholder and CEO of Montrail told BOSS that he will remain on-board as a consultant to facilitate the transition for one year. Every current employee at Montrail has been extended an offer to continue employment at Columbia in Portland, but it is unclear whether they will all be willing to make the move from Seattle.
Rumors were circulating before the acquisition was announced that Mr. Van Wyck was considering a bid for a congressional seat, and it turns out that a campaign for a seat in the 8th congressional district was in fact under consideration. However, other democratic candidates had already started their fund-raising and strategic planning process and were a step ahead, so the bid was abandoned.
“This is really one of the 15 seats the democratic party must win in order to take control of congress,” said Mr. Van Wyck. “In my discussions with the national democratic party we concluded that if the preliminaries were uncontested it would be worthwhile, otherwise, I would need to invest about $1 million of my own money in order to have a one in five chance of actually winning the seat.”
As far as his motivation for selling Montrail at this point in time, Mr. Van Wyck said that it was a matter of timing and finding the right partner to grow the brand. He did reiterate that all of the shareholders in Montrail were very happy with the final purchase price.
“Over the years we have been able to finance all of our growth internally, and with a few exceptions we have been profitable every year,” he said. “As the company grew we found we needed to invest more than we used to and the bank became more restrictive on increases in our credit line to finance this growth. We certainly could have survived as an independent company, but as we broadened our distribution and looked to Europe for expansion we felt we needed a partner.”
Mr. Van Wyck feels like Columbia is taking the brand in the right direction and is pleased that Scott Tucker will remain as the brands president. He also feels that Brad Gebhardt, with his experience at Salomon knows exactly what needs to be done to successfully run a multi-branded footwear group at Columbia.
