By Eric Smith
The active lifestyle marketplace began 2020 with a high volume of M&A transactions, but the most notable story didn’t involve a done deal—just one of the highest-profile companies in the industry announcing plans to rightsize its portfolio and potentially target new assets.
VF Corp., the Denver, CO-based parent of Vans, The North Face, Timberland and a host of other outdoor and apparel assets, announced on January 21, a few days before reporting its fiscal third-quarter earnings, that it was seeking alternatives to its “occupational work” brands.
On the quarterly earnings call with analysts later in the week, when asked about the company’s acquisition appetite, VF Chairman, President and CEO Steve Rendle said, “M&A remains that No. 1 priority for capital allocation.”
That’s no surprise given its recent moves—the spinoff of its so-called “denim division” into Kontoor Brands and now the strategic review of its “occupational brands.”
What’s the next play for VF? The company, understandably, is playing its cards close to the vest, but look for a splashy brand that’s well-known among consumers.
“As we simplify and focus our portfolio around brands that really can connect more intimately with consumers and have a direct contact through owned distribution and key partners, it gives you a good sense of where we’re looking and where we think we can add value to our portfolio … ,” CFO Scott Roe said on the earnings call.
SGB Executive will continue following the company’s M&A maneuvers.
In other news, January saw plenty of deals that did occur, and one of the biggest was PVH Corp. agreeing to sell its Speedo North America business to Pentland Group, the parent company of Speedo International Ltd., for $170 million.
It’s a reunion of sorts for the iconic swimsuit brand that launched in Australia in 1914. Pentland already owns Speedo International Ltd., which had licensed the Speedo trademark to a PVH subsidiary, having acquired the brand in the early 1990s and growing it ever since. While it’s a natural move for Pentland, the deal also gives PVH the chance to go all-in on elevating its Calvin Klein and Tommy Hilfiger brands.
In a smaller deal that nonetheless packs plenty of intrigue, Boulder, CO-based snowshoe brand Crescent Moon was acquired by Elwood, IN-based Dunn-Rite Products. The move should help Crescent Moon scale up production and enter new markets, which SGB Executive detailed extensively in Behind The Deal: Crescent Moon’s Next Phase.
Here is the least you need to know about these top M&A deals from January.
VF Corp. To Explore Strategic Alternatives For Certain Work Brands
VF Corp. announced Tuesday that it is commencing a review of strategic alternatives for the occupational portion of its work segment, specifically Red Kap, VF Solutions, Bulwark, Workrite, Walls, Terra, Kodiak, Work Authority, and Horace Small. The company said this strategic review is a reflection of management’s continued focus on transforming VF into a more consumer-minded and retail-centric enterprise, with a portfolio of growth-oriented active, outdoor and work brands.
“Driving and optimizing our portfolio continues to be a top strategic priority for VF and exploring strategic alternatives for our occupational work brands is the natural next step in that process. Divesting these brands would leave VF with a simplified portfolio of higher-growth, consumer-focused brands while providing financial flexibility to fuel further strategic initiatives and enhance shareholder value.” —Steve Rendle, chairman, president and CEO, VF Corp.
As mentioned above, look for VF to (a) find a new home for the nine brands in its work segment, and (b) add another high-performing, high-profile outdoor or action sports brand. Erinn Murphy, an analyst at Piper Jaffray, wrote in a note to investors, “We are positive on this announcement and our view is divesting this portion of work allows VF to continue to align its focus on purpose-led acquisitions of even greater scale.”
PVH Corp. To Sell Speedo North America Business To Pentland Group
PVH Corp. announced Thursday that it has entered into a definitive agreement to sell its Speedo North America business to Pentland Group, the parent company of Speedo International Limited, for $170 million in cash, subject to a working capital adjustment.
“This strategic announcement aligns with PVH’s goal to optimize and streamline its Heritage Brands business in the ever-evolving retail environment and focus on delivering sustainable profitable growth of its global brands, Calvin Klein and Tommy Hilfiger. I am pleased to see Pentland Group reunite the Speedo business globally, as they are best positioned to capture the full potential of the iconic Speedo brand.” —Emanuel Chirico, chairman and CEO, PVH Corp.
The acquisition should be a big win for Pentland Group in advance of this summer’s Tokyo Olympics and Paralympics, which are sure to feature many Speedo athletes. “With the Tokyo Games this year, now is the right time to bring Speedo North America back into our brand portfolio,” said Andy Long, CEO of Pentland Group’s Pentland Brands division. “We’re looking forward to welcoming the Speedo North America team into the Pentland family and working together on the next chapters in the Speedo success story.”
Crescent Moon Snowshoes Acquired By Dunn-Rite Products
Boulder, CO-based Snowshoe maker Crescent Moon Snowshoes was acquired by family-owned and Elwood, IN-based Dunn-Rite Products. Financial terms of the deal weren’t disclosed. As part of the deal, Crescent Moon will transition production from Colorado to Dunn-Rite’s home in Elwood, IN. Founder Jake Thamm will stay on board for a while to help with sales and marketing.
“It needed to go to the next phase. Along with everything else that was on our mind, we also thought that perhaps we didn’t have the financial resources, let alone the energy, to push this to the next phase. We thought that with the potential of the foam shoe and, for that matter, the snowshoe category itself, that it’s probably better for us to try and find a strategic partner.” —Jake Thamm, founder, Crescent Moon
What’s next? – Dunn-Rite has both product and geographic expansion ambitions for its newest asset, the company’s Tanner Dunn told SGB Executive. “A huge untapped market is the running industry … ,” Dunn said. “This is a long-term play. We’re not going to sacrifice anything to get more sales. We’re looking to grow into Canada and Europe. That’s a pretty untapped market.”
Other M&A Deals From January
In case you missed SGB Media’s reporting on other notable deals last month—announcements of either new acquisitions or ones that closed—click the headlines below to read.
- Penn National Gaming To Acquire Barstool Sports
- GSM Acquires Hunters Specialties
- Minute Media Acquires FanSided From Meredith Corporation
- GSM Outdoors Acquires TekMat
- Milliken To Acquire Borchers
- Brand Velocity Acquires Altama And Original S.W.A.T.
- Slackline Industries Acquired By Canadian Distributor In-Sport Fashions
- Alterra Mountain Company Closes On Sugarbush Resort In Vermont
- Sea To Summit Acquires North American Distributor
- MacNeill Pride Group Acquires Orca Coolers
- Gart Capital Acquires Work World
- Largest Orangetheory Franchisee Acquires Significant Operations In New England
- Flight Fit N Fun Acquires 11 New Locations
- BSN Sports Acquires Wayne Sporting Goods
- Town Sports Acquires Flywheel Sports
- Hadley Development Acquires Muddy Girl
- Spartan Looks To Acquire Tough Mudder
- Genesco Closes Acquisition Of Togast, Enters Into Levi’s License Agreement
Photo courtesy VF Corp.