byLarry EderCollective Brands has been purchased by Wolverine Worldwide, Blum Capital and Golden Gate Capital, ending months of speculation on the new purchaser of one of the more innovative footwear holding companies in the world. Their portfolio included brands such as Saucony, Sperry Top-Sider and Keds. Their portfolio also included 4,300 PayLess & Stride-Rite International stores.
The value for the complete purchase, which will effectively break up
Collective’s key footwear brands (Saucony, Sperry Top-Sider and Keds),
and their retail component (4,300 PayLess Shoe Source and Stride-Rite
International stores), will be $ 2 billion plus debt. Wolverine World
Wide will purchase the stock at $21.75 a share. At $21.75 a share, that
is a 104 percent premium on the average 30 day stock price of
Collective as of August 24, 2011, the day Collective Brands announced
its desire to sell the company.
Wolverine is purchasing the Collective Performance & LifeStyle
Group, which is made of Saucony, Sperry Top-Sider and Keds. The value of
that acquisition is $1.23 billion. In their last fiscal year,
Collective Performance & Lifestyle group had $1 billion in revenues.
The other acquisition, made by Blum Capital & Capital Gate
Capital, was for Collective Brand & Licensing International, which
is the 4,300 PayLess & Stride Rite International stores, which had
$2.4 billion in revenues last year.
Collective Brands, suffering
from the malaise in the retail market this past year, posted a loss of
$155 million for the last year, after having made $122 million profit in
2011.
Comments from key players in the industry have noted the
strength of Saucony in the running market will complement other brands
at Wolverine, which include Merrell, Patagonia (licensee), and Harley
Davidson footwear.
Obviously it is too early to tell how
Wolverine will approach this new acquisition, however, several points
should be noted. Collective Brands Performance & Lifestyle will stay
in its present location, in Lexington, MA.
Wolverine Worldwide has had experience in the running footwear business in the past, as they were the owners of Brooks Running from 1982 to 1996. Of course, we at RBR are fascinated about all things footwear, however, the running footwear biz is what piques our interest.
The running footwear business is one of the most competitive segments in all of business. Running Network’s Cregg Weinmann, footwear reviewer for the Running Network LLC told RBR that there are at least 45 running brands that his team tracks, ” and that does even include trail.”
Saucony has been quite successful in the lightweight category over the past two years. Sperry Top-Sider has been one of the most popular brands for the college age young adult.
“Wolverine has come full circle, ” noted one keen observer of the footwear business, alluding to Wolverine’s interest in the Saucony brand.
In an article in the Boston Herald on Tuesday, May 1, Wolverine Worldwide CEO Blake Kruger
called the acquisition, ” iconic” and had this to say about Saucony, : “Saucony brings the opportunity to leverage Wolverine’s global
partnerships in the performance athletic space and, with Merrell,
provides a power vehicle in the running, training, trail, minimalist and
barefoot categories.”
He also noted: “Global interest in running has never been stronger, and Saucony will
take advantage of this trend with the upcoming summer Olympics in London
that will feature several Saucony-sponsored athletes,”
Mr. Kruger, who also noted the success of his brands, Sebago, Merrell and CAT, which were brands purchased by Wolverine Worldwide in the past, and have grown tremendously. Mr. Kruger also noted that Saucony, Sperry Top-Sider and Keds only have ten percent of their growth outside of the US, which he sees as a huge upside.
Should be an interesting ride!
To read more on the acquisition, please check:
