Phoenix Footwear has signed an agreement to acquire Royal Robbins. The deal includes $6.5 million due at closing with an additional contingent purchase value of around $5 million based on a two-year earn-out formula. The initial payment will consist of $6 million cash and the remaining balance paid with PXG stock.
PXG stated that the acquisition would strengthen sales by 30-40% per year, and that it would be accretive to GAAP EPS within the first full year of operation under their ownership. The transaction is expected to close during Q4 of 2003.
This is the first apparel deal for Phoenix as the company continues to build its multi-brand platform. PXG recently picked up the license for Duck Head footwear, which will sit under the H.S. Trask division that was acquired last spring.
In an exclusive interview with The B.O.S.S. Report, a Sports Executive Weekly sister publication, Phoenix chairman & CEO James Riedman said that Phoenix has no plans to take Royal Robbins down in distribution.
“We are not going to take the brand to some discount retailer, and say have at it. Specialty retailers are an integral part of Royal Robbins success and we are absolutely committed to the equity of the brand”, said Reidman. The CEO also said Phoenix will be exploring the possibility of launching a Royal Robbins footwear line.
Royal Robbins chairman Dan Costa added his comments in a press release. “Phoenix Footwear brings us tremendous resources that will enable us to build upon our heritage and extend the brand we anticipate strengthening and preserving our existing specialty retail distribution channel”, said Costa.
Riedman continued, “At the time of closing we will have $13-15 million of funded debt – existing and related to the acquisition. Within six months we expect to start reducing this.” Phoenix Footwear was approved for a $24.75 million credit facility by their lender.
He went on to say that they would be keeping the management team in place. “To the end consumer, we want the Royal Robbins brand to look as it always has, that means with a dedicated management and marketing team.” He did say that in the I.T. and accounting departments they would be looking for “whatever synergies we can create”.
Phoenix said that the Royal Robbins distribution center and headquarters in Modesto are expected to remain in their current locations for the foreseeable future.
>>> The deal caused a number of raised eyebrows at the OIA Rendezvous event, with the standard response, “Phoenix who?” Most people we spoke with thought RR was just getting it back together…