Quiksilver to Buy Out Overseas Licensees
Sportswear maker Quiksilver Inc., expanding control over its brand globally with its biggest acquisition to date, said Tuesday that it will buy its Australian and Japanese licensees in a stock and cash deal worth $93 million.
In addition to the fiscal implications, the acquisition of Ug Manufacturing Co. in Australia and Quiksilver Japan has historical and personal significance for the Huntington Beach-based Quiksilver because the primary sellers are John Law and Alan Green, who co-founded the Quiksilver brand in Australia in 1969. The pair own most of Ug and about half of the Japanese licensee.
As part of the announcement, Quiksilver boosted its 2003 earnings projections to $1.75 to $1.79 a share from $1.71 a share and increased its revenue forecast to $840 million to $860 million from $770 million. Analysts were expecting to learn more about the acquisition and its implications during a conference call today.
“At first glance, it certainly sounds like a great move for these guys, establishing tighter control over the global brand,” said Jeffrey Klinefelter, an analyst with U.S. Bancorp Piper Jaffray. “From a financial perspective, it looks good.”
The acquisition -- Quiksilver’s fifth since March 2000 -- is important partly because it helps extend the company’s global reach, allowing it to consolidate operations and expand sales in Japan, where Quiksilver brand beachwear and other casual apparel is fledgling, Quiksilver President Bernard Mariette said. “From our point of view, this deal really makes Quiksilver global,” he said.
Quiksilver said it intends to expand its prominence in the Asia Pacific region by replicating the growth strategy it used in Europe, where sales have grown more than ninefold in 10 years. Quiksilver expects the newly added Asia Pacific territories to grow 10% to 20% annually.
Green and Law will become advisors to the company. They also will be among the company’s largest shareholders.
Quiksilver said about 75% of the purchase will be paid in restricted stock. The remainder will be funded with cash on hand and short-term borrowing.
Quiksilver’s stock rose 24 cents to $24.98 on the New York Stock Exchange. The announcement was made after the markets closed.
