R.G. Barry Corp., the parent of Dearfoams and Terrasoles, has entered into a definitive agreement to acquire Baggallini, Inc., the Portland, OR-based handbag company, for approximately $33.8 million.
The purchase is expected to be finalized on Mar. 31, 2011.
Baggallini is a privately-owned developer and marketer of functional, fashionable handbags, tote bags and travel accessories. Its products are sold primarily in North America through a network of thousands of full-price specialty and independent retailers, boutiques, travels stores, catalogs and on-line retailers. From 2006-to-2010, Baggallini recorded a compounded annual revenue growth rate of approximately 19%.
In January, RG Barry acquired Food Pedals.
“Baggallini is our second acquisition this year; and collectively, these additions will transform our business and our future,” said R.G. Barry President and Chief Executive Officer Greg Tunney. “The face of R.G. Barry immediately changes from that of a one-dimensional, modest-growth slipper company to that of a multi-faceted, growing provider of functional, fashionable accessories.
“Until now, our business has been almost entirely rooted in accessory footwear, which accounts for only about 2 percent of the $30-billion-plus women's accessories market. With these acquisitions, we now have established, growing businesses in the much larger handbag and foot care segments, both of which offer us significant opportunities for high growth and profitable expansion. As with our earlier acquisition, baggallini's key management will be joining our team to help us grow the business into a premier consumer brand.
“Today, the total breadth of our business and our revenue and earnings productivity is greatly expanded. We have added a new, much less promotional roster of specialty and independent retailers to our already strong customer base. As a result, our business is less concentrated and the blend of products that we will be marketing will include more full-priced, higher-margin goods,” Tunney said.
“Category-appropriate acquisitions continue to be a key strategic growth driver for us and our recently negotiated credit facility supports this important strategy,” added R.G. Barry Senior Vice President Finance and Chief Financial Officer Jose Ibarra. “Taking on an appropriate amount of long-term debt enhances the efficiency of our balance sheet, while allowing us to maintain suitable cash reserves for funding operations, capital expenditures and dividends to our shareholders.
“Baggallini met all key criteria in our strategic acquisition filter. It is asset light, cash generating and will be immediately accretive to earnings; it expands our customer and consumer demographic bases; and it will benefit from backroom synergies with our existing enterprises. With a scheduled March 31 closing, we expect baggallini to be fully integrated by fiscal year-end and any transaction or integration costs to be expensed in the current fiscal year.
“When we begin fiscal 2012 on July 3, Baggallini and our earlier acquisition, Foot Petals, each will be contributing to our revenue and earnings streams. As a result, our business is now positioned to be much larger, more profitable and less reliant on a single season or holiday period to achieve its annual revenue and earnings goals,” Ibarra said.
Bbaggallini will remain headquartered in the Pacific Northwest and will be operated as a wholly-owned subsidiary of R.G. Barry.