VF Corp. To Acquire Dickies Parent in $820 Million Deal; Raises 2017 Outlook

VF Corporation, parent company to iconic brands Wrangler, The North Face, Vans, Timberland, Jansport, and Williamson-Dickie Mfg. Co., parent company to the Dickies, Walls, Terra and Kodiak brands, have signed a definitive merger agreement.

The transaction is expected to be completed early in the fourth quarter of this year and VF will pay Williamson-Dickie shareholders approximately $820 million in cash. On a trailing 12-month basis, Williamson-Dickie generated approximately $875 million of revenue.

Well-known Williamson-Dickie brands include: Dickies®, Workrite®, Kodiak®, Terra®, and Walls®. These brands will join VF’s current workwear offerings including: Wrangler® RIGGS Workwear®, Timberland PRO®, Red Kap®, Bulwark®, and Horace Small®. Upon closing, Williamson-Dickie will become part of VF’s Imagewear coalition.

Philip Williamson, Chief Executive Officer of Williamson-Dickie will remain with the company, headquartered in Fort Worth, Texas.

“When we introduced our 2021 global business strategy earlier this year, reshaping our portfolio to accelerate growth was our highest priority,” said Steve Rendle, President and Chief Executive Officer of VF. “The acquisition of Williamson-Dickie is another meaningful step that delivers on that commitment and further demonstrates our focus on being an active portfolio manager to drive transformative growth for VF and value creation for our shareholders.”

“For nearly a century we’ve worked hard to judiciously grow our company and portfolio of strong brands to maintain our leadership in the global workwear marketplace,” said Philip Williamson. “Today’s announcement is an authentic and natural next step as we look to combine the strengths of our two companies to create significant opportunities for our employees, vendors, retail partners and ultimately our customers. We expect that under VF’s leadership, we’ll be able to experience the next wave of growth and better meet the needs of workers everywhere.”

“This acquisition combines two great companies and a group of iconic brands to create a global leader in workwear with approximately $1.7 billion in annual revenue,” Rendle continued. “Williamson-Dickie has a proud history and heritage, and has served a loyal consumer base for nearly 100 years. VF is the ideal steward to honor that heritage while providing a platform for growth that ensures continued success for another century. We look forward to welcoming Williamson-Dickie and its 7,000 dedicated employees to the VF family.”

2017 Outlook Raised

The following outlook for 2017 has been updated to include the impact of the Williamson-Dickie acquisition, excluding transaction and other deal-related expenses, and now includes the following:

Revenue is now expected to reach $11.85 billion, up 3.5 percent on a reported basis (up 4.5 percent currency neutral), and includes about a $200 million contribution from Williamson-Dickie. This compares to the previous expectation of $11.65 billion, a 2 percent increase on a reported basis (up 3 percent currency neutral).

Gross margin is now expected to reach 49.5 percent, versus the previous expectation of 49.8 percent, and includes the impact of Williamson-Dickie. Excluding the impact of Williamson-Dickie, gross margin is still expected to be 49.8 percent and includes about a 70 basis point negative impact from changes in foreign currency.

Operating margin is now expected to approximate 13.7 percent, versus the previous expectation of about 14 percent, and includes the impact of Williamson-Dickie. Excluding the impact of Williamson-Dickie, operating margin is still expected to be about 14 percent and includes about a 60 basis point negative impact from changes in foreign currency.

Earnings per share is now expected to be $2.96, versus the previous expectation of $2.94, and includes about a $0.02 contribution from Williamson-Dickie. Accordingly, EPS is expected to decline approximately 1 percent on a reported basis (up at a mid-single-digit percentage rate currency neutral) compared to 2016 adjusted EPS of $2.98.

Transaction and deal-related expenses are estimated to approximate 4 cents per share.

2021 Financial Targets Increased

The following outlook for 2021 has been updated to include the impact of the Williamson-Dickie acquisition, excluding transaction and other deal-related expenses, and includes the following:

Revenue through 2021 is now expected to grow at a five-year compounded annual growth rate (CAGR) between 5 percent and 7 percent to more than $15 billion, versus the previous expectation of a 4 percent to 6 percent five-year CAGR. Williamson-Dickie is expected to contribute more than $1 billion of revenue by 2021.

Earnings per share is now expected to grow at a five-year CAGR between 11 percent and 13 percent to more than $5.00, versus the previous expectation of a five-year CAGR between 10 percent and 12 percent. Williamson-Dickie is expected to contribute more than 25 cents by 2021.

Barclays is acting as financial advisor to VF Corporation and Davis Polk and Wardwell LLP is acting as legal advisor.

Photo courtesy Dickies