US clothing and footwear manufacturers VF and Timberland have agreed to merge.
According to the official statement of the company VF, it will pay for Timberland at 43 dollars per share, or $ 2 billion for the whole company.
The merger will create a company with a capitalization of $ 10 billion.
The merger has already been approved by the boards of directors of both companies. For Timberland, it is profitable because of the amount of the transaction: now the company's shares on US exchanges are valued only at $ 30 apiece. The merger news raised stock prices to $ 42,7 in just a few hours.
VF's takeover will increase sales for the Outdoor & Action Sports division. According to the company's plans, after the merger, this department will bring VF up to 50% of revenue. In addition, VF is going to take advantage of Timberland's strong position in Japan and strengthen its presence there.
VF now specializes in the production of jeans and work clothes. In particular, she owns such brands as Wrangler, Lee Jeans, Vans, Eastpak, Napapijri, The North Face, 7 For All Mankind, John Varvatos and others - all in the company's portfolio of about 30 brands. The company's revenue in 2010 amounted to $ 7,6 billion. Timberland expects to achieve a turnover of $ 2011 billion in 1,6, of which almost half of the sales will be in foreign markets for the American brand.
“Timberland is proud of its rich heritage and its reputation as a socially responsible and environmentally friendly company,” said Jeffrey Schwartz, CEO, “and we are delighted to be part of the VF family of brands. She is known for her ability to develop national brands while preserving their unique culture. ”
VF plans to increase Timberland revenue by 10% annually.
Growth will be provided due to 5 factors:
- the use of all VF resources in Europe: Asia and Latin America;
- The use of direct communications with consumers, including its own retail and rapidly growing e-business;
- increasing the share of clothing in the assortment;
- increasing the share of women's shoes and clothes in the total volume of production;
- reducing costs in the organization of the retail network.
According to experts, the merger, which is scheduled to be completed in the third quarter of 2011, will bring VF $ 700 million of additional profit, as well as increase shareholder income, from $ 25 per share in 2011 to $ 75 in 2012.
Timberland's headquarters will remain in Stratham (New Hampshire).