In a recent development, V.F. Corporation (VFC) has completed the acquisition of Timberland Co. (TBL) for $43 per share, representing a total consideration of $2.3 billion.
V.F. Corporation financed the transaction with the issuance of $400.0 million of floating rate notes as of August 24, 2011 to be matured in 2013 and 3.5% notes worth $500.0 million maturing in 2021. The balance of the acquisition amount has been financed by the company through cash in hand, commercial paper and term debt.
V.F. Corporation's portfolio of outdoor and action sports business, comprising Vans, Jansport, Eastpak and other brands, is expected to contribute 50% to the company's revenues after the inclusion of Timberland brands, and is projected rise to 60% by 2015.
The deal is expected to increase V.F. Corporation's profit by 25 cents a share, including acquisition related expenses and revenues by $700 million in fiscal 2011. While in fiscal 2012, the deal is expected to add 75 cents to the earnings of the company. When the news of acquisition came, Timberland was expecting annual sales of $1.6 billion in fiscal 2011 while V.F. Corporation targeted an annual revenue growth of 10%.
V.F. Corporation has also announced that Timberland's two strongest and authentic brands, Timberland and Smartwool, will remain headquartered in Stratham and Steamboat Springs, Colorado, respectively.
Headquartered in Stratham, New Hampshire, Timberland designs, engineers and markets premium-quality footwear, apparel and accessories for consumers and had generated total revenue of $1.4 billion in fiscal 2010. Timberland markets products under the Timberland, Timberland PRO, Mountain Athletics, SmartWool, Timberland Boot Company and Howies brands.
Based in Greensboro, North Carolina, V.F. Corporation is one of the world's largest apparel companies. The company, together with its subsidiaries, engages in the design, manufacture, and marketing of branded apparel and related products in the United States and internationally. Major competitors of the company are Gap Inc. (GPS) and Sears Holdings Corporation (SHLD).
V.F. Corporation currently retains a Zacks #1 Rank, which translates into a short-term 'Strong Buy' rating. However, we maintain a long-term 'Neutral' recommendation on the stock.
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TIMBERLAND CO A (TBL): Free Stock Analysis Report
V F CORP (VFC): Free Stock Analysis Report
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