The Timberland Company (NYSE: TBL) announced that it signed a definitive agreement today to acquire 100% of the outstanding stock of SmartWool Corporation, from RAF Industries, Inc. and the Stripes Group LLC.
SmartWool, a privately held company based in Steamboat Springs, Colorado, designs, develops, markets and distributes performance socks, apparel and accessories for men, women and children.
The purchase price is estimated to be approximately $82 million and will be funded through Timberland’s existing cash balances and short-term borrowings. The SmartWool organization will continue to be headquartered in Steamboat Springs, Colorado and will operate as a wholly-owned subsidiary of The Timberland Company under the leadership of Chip Coe, SmartWool’s President. Founded in 1994 by New England ski instructors who saw the potential for developing performance-based products for outdoor activities, SmartWool originated the outdoor-based merino wool sock market and has expanded its offering beyond socks to premium wool-based apparel and accessories.
SmartWool products are available in over 2,000 outdoor specialty stores throughout the United States and through independent distributors in Canada, Europe and Asia. SmartWool and Timberland partnered in early 2005 to develop and market performance footwear featuring SmartWool linings.
SmartWool’s 2005 revenues are anticipated to be approximately $42 million excluding sales of Timberland footwear with SmartWool linings. Timberland anticipates this transaction will add $0.02 to $0.03 to its earnings per share in 2006, with benefits weighted toward the second half of the year. The transaction will have minimal impact on fourth quarter 2005 earnings.
Completion of this transaction is subject to satisfaction of customary closing conditions, including regulatory review. The acquisition is expected to be completed by mid-December.
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