The shareholders of Kathmandu Holdings Limited overwhelmingly approved the acquisition of Rip Curl Thursday in Australia for A$350 million (US$236 million).
In the special meeting, Kathmandu Chairman David Kirk outlined the rationale behind the deal from Kathmandu’s perspective.
“The acquisition of Rip Curl is an opportunity for Kathmandu to considerably diversify its geographic footprint, channels to market and seasonality profile, and creates a NZ$1.0 billion outdoor and action sports company anchored by two iconic Australasian brands,” Kirk said.
“There is strong cultural alignment between the two brands and a shared focus on technical and functional products.
The acquisition is expected to deliver meaningful EPS accretion for Kathmandu shareholders … in excess of 10% before synergies.
“There is potential for further upside over time as synergies are assessed and identified post-acquisition,” he said.
CEO Xavier Simonet told shareholders that Rip Curl and Kathmandu will retain operational ownership of their respective businesses. However the companies will evaluate sharing support functions where operational value can be derived. Kathmandu also owns the outdoor footwear company Oboz, based in the U.S.
The goal is to leverage each company’s respective strengths and build on each other’s competitive advantage over time.
Kathmandu is funding the acquisition by issuing more shares and by taking on $A220 million (US$150 million) in new debt.
In the shareholder meeting, Simonet said the surf category is healthy and is growing at 2.5% to 3.5% per year, similar to the outdoor category, according to the Australia Financial Review.
Simonet believes there is a bright future for the sector because there are more surfers globally than ever before and surfing will debut in the 2020 Olympics.
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