Timberland, purveyor of rugged boots and waterproof jackets to outdoorsy types, is being taken over by the world's largest apparel company, in a $2bn(£1.2bn) deal.
VF Corporation, whose portfolio of brands already includes Lee and Wrangler jeans, Vans shoes and The North Face brand, said outdoor clothing was among the fastest-growing apparel categories, and central to its plans for growth in the coming years.
"The Timberland brand is synonymous with high quality outdoor footwear and apparel," said Eric Wiseman, VF Corporation's chief executive, who added that the company had been number one on its acquisition hit list for years. "The unique rugged outdoor positioning of Timberland will perfectly complement the premium, technical positioning of The North Face brand."
The addition of Timberland hiking boots to the corporate wardrobe excited investors, who sent VF Corporation's shares up more than 10 per cent, their best one-day performance since 2008.
The deal has received the backing of Timberland's founding Swartz family, VF Group said.
Nathan Swartz turned Abington Shoe Company, a small-time Massachusetts manufacturer which he bought in 1952, into a global powerhouse thanks to the creation of the Timberland boot in 1973. The company, which is now run by his grandson, Jeffrey Swartz, makes $1.6bn in annual sales, half of which are in the US.
"Timberland is proud of its rich heritage, its track record of success and its reputation as a responsible and environmentally conscious global citizen, all of which will be preserved and enhanced by becoming part of the VF family of brands," Mr Swartz said.
Now based in New Hampshire, Timberland also owns the Mountain Athletics and SmartWool brands.
These days it claims a mission to "equip people to make a difference in their world". It says: "We make boots, shoes, clothes and gear that are comfortable enough to wear all day and rugged enough for all year. And we don't rest on our accomplishments – if we did, we'd only have ever made one waterproof leather boot."
VF Corporation has an even richer heritage stretching back to 1899, when it was founded as the Reading Glove and Mitten Manufacturing Company in Pennsylvania. It acquired Lee Jeans in 1969 and has been steadily buying other major clothing makers and retailers since then. After yesterday's share price jump, the group has a market value of more than $12bn.
Earlier this year, Mr Wiseman said he expected outdoor clothing to do much better than what he called "heritage brands" such as Wrangler and Lee, and promised such clothing would account for 50 per cent of sales by 2015. Yesterday, he upped that target to 60 per cent.
While the deal was approved unanimously by both boards, they left open the possibility that another bidder will emerge for Timberland. The company can solicit higher bids until late next month, but will have to pay an $87.2m break fee to VF Corporation if it walks away.
The takeover is pitched at $43 per Timberland share, a 43 per cent premium to the share price at the end of last week. But the company's shares had previously fallen by about one-third on a May profit warning which blamed rising product and labour costs for disappointing results and tightening profit margins.
VF Corporation said the acquisition would add to its earnings per share immediately, but warned it would take five years to raise Timberland's margins significantly.
Analysts, though, said improvements could come sooner than that. "The takeover price is fair," said Christopher Svezia of Susquehanna. "At first blush, it seems a bit expensive, but I think Timberland is definitely on the upswing in terms of their business."Reuse content