Russell Corporation is benefiting from K2 Inc.’s acquisition of Marmot Mountain last and will realize a gain of approximately 8.5 cents per share in the second quarter for their interest in Marmot. K2 told SEW last month (SEW_0425) that the deal included a 50/50 combination of cash and KTO shares but did not know how Marmot would divvy up the proceeds. A RML company spokesperson told SEW last week that Russell did receive a combination of cash and stock in the deal, but could not elaborate on the amount of KTO stock that Russell now owns.

The deal would value RML’s assumed 10% stake at roughly $8.4 million. If Russell took the 50/50 cash to stock split it would give them a ownership of $4.2 million in KTO shares, or les than 1% of the company. Russell would not confirm their actually ownership, which they have always said is “less than 20%”, and would not confirm the cash to stock percentages.

The boost to Q2 earnings from the deal, coupled with the acceleration of the cost savings from RML’s Operational Improvement Program and “improved manufacturing efficiencies from increased volume”, has led the company to increase guidance for the quarter to the range of 28 cents to 30 cents per share. Excluding the sale boost, EPS is still expected to be in the 20 cents to 22 cents per share range, exceeding the most recent consensus estimate of 15 cents per share and its own guidance of 12 cents to 18 cents per share. RML shares were up 5.6% for the week to close at $18.04 on Friday.

Russell said the profits from the Marmot sale will be “reinvested into special one-time projects or activities this year that can positively impact the company.”