Vans Inc., a trailblazing Southern California maker of shoes for skateboarders, agreed Tuesday to be bought by apparel giant VF Corp. for $396 million in cash.
Vans would retain its name and headquarters in Santa Fe Springs, but the proposed purchase by Greensboro, N.C.-based VF -- the nation’s largest publicly held apparel company and a major producer of jeans and bras -- would mean a notable shift for an icon of youth culture.
Many people still relate Vans to the 1982 hit movie “Fast Times at Ridgemont High,” in which Sean Penn’s character, Jeff Spicoli, sported a pair of slip-on checkerboard Vans, a style still available, and sparked a brief surge in demand for the shoes. Vans went on to capitalize on the nation’s skateboard craze in the 1990s, though its growth fell off in the early years of the new millennium.
Vans’ fortunes are again turning up, and VF’s offer of $20.55 a share represented a 30% premium over the shoemaker’s Monday closing price of $15.81. In response to VF’s bid, Vans’ stock soared $4.48, or 28%, to $20.29 a share Tuesday on Nasdaq. VF shares rose 23 cents to $47.55 on the New York Stock Exchange.
“It’s a good deal for Vans’ stockholders,” said Jeffrey Van Sinderen of investment firm B. Riley & Co. in Los Angeles.
Vans would be the latest in a string of acquisitions by VF, which is snapping up familiar brand names to boost growth. Last year, VF bought sportswear maker Nautica Enterprises Inc. In 2000, it purchased outdoor-gear maker North Face Inc. of San Leandro, Calif.
VF -- with 2003 sales of $5.2 billion -- has used the deals to grow beyond its huge-but-cyclical jeans business. The company makes jeans under the Lee, Wrangler and Rustler brands, among others. The company’s products also include JanSport backpacks and Vanity Fair bras.
“VF is all about brands,” and Vans “is one of the strongest brands within the action-sports market,” VF Chief Executive Mackey McDonald said in a conference call with analysts.
The deal also would give VF its first major entry into the footwear market, McDonald said, “and give us greater access to a younger, more contemporary consumer,” namely the Vans market segment of 12- to 24-year-olds, which accounted for more than $12.5 billion in sales of surf- and skateboard-related clothing and shoes last year.
The two firms’ boards approved the deal after VF sought out Vans, McDonald said. But Vans, with its business back on the upswing, was a ready target.
Despite its recent improvement, Vans has struggled to grow beyond its core audience of young males, said Michael Pachter, an analyst with Wedbush Morgan Securities in Los Angeles. VF’s financial heft and expertise would help the company expand into women’s shoes and apparel for both sexes, he said.
“VF is buying a tired brand that still has a strong niche position” with the male skating and surfing crowd, Pachter said.
Vans Chief Executive Gary Schoenfeld told the analysts that VF “means more resources available to us, particularly as we tackle the next big opportunity for this brand, which is apparel.”
In addition to its 156 stores, Vans sells through other specialty retailers and mass-merchandisers. No major job cuts are planned among its 1,722 employees, 1,042 of whom work in California, Schoenfeld said in an interview. But Schoenfeld said his own future at VF hadn’t yet been decided. “I would like to [stay] depending on what the role and opportunity is,” he said. But he and McDonald said the makeup of Van’s management team under VF had not been determined.
Schoenfeld, 41, wouldn’t leave empty-handed. According to Vans’ last proxy statement, Schoenfeld owned 447,465 Vans shares, and they would be worth $9.2 million if VF’s purchase was completed at the offering price.
Other companies also have acquired niche shoemakers to bolster sales. Last month, for instance, action-sports apparel maker Quiksilver Inc. of Huntington Beach agreed to buy skate-shoe producer DC Shoes of Vista, Calif., for $87 million in cash and stock.
And the moves come just as the footwear industry appears to be rebounding from several years of lackluster results.
Vans flourished in the late 1990s -- aided by a dozen skateboard parks that Vans built to help promote its brand -- and its stock traded near $25 a share in mid-2001. But the firm’s sales and earnings slumped as Vans’ popularity waned and apparel in general went through a stubborn downturn. The stock price fell into single digits.
Vans replaced several of its senior executives and upgraded many of its stores. The company also largely exited the skate-park market because municipalities’ widespread construction of free skate parks diluted the appeal of Vans’ sites.
The moves have begun to pay off. In the nine months ended Feb. 28, Vans’ sales climbed 7.3% from a year earlier, to $282.4 million, and it turned a $7-million profit, contrasted with a $7.5-million loss a year earlier.
Vans traces its roots to 1966, when an Orange company named Van Doren Rubber Co. began making casual canvas shoes that appealed mostly to skateboarders and surfers.
Despite the lift from “Fast Times at Ridgemont High,” Van Doren entered bankruptcy proceedings in 1984 after excessive expansion and while facing growing competition. Under new ownership, Vans went public in 1991 and again enjoyed solid growth as skateboarding’s popularity soared in the 1990s.
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A high-rolling market
Surfers and skateboarders ages 12 to 24 spend billions on sports apparel and shoes each year.
Average monthly total spent on clothes and shoes per person in 2003
Female surfers: $114.90
Male surfers: $96.14
Female skateboarders: $82.48
Male skateboarders: $78.94
Average number of items purchased in 2003 per person
*--* Surf Skate Product Females Males Females Males Sandals 4.58 1.92 2.48 1.22 Jeans 6.06 3.89 9.32 6.67 Shorts 4.60 3.70 7.20 4.66 T-shirts 16.33 11.07 17.37 11.72 Skate shoes 2.01 1.94 3.12 3.57