Sustainability Leader Timberland Acquired for $2 Billion

VF Corporation (NYSE: VFC), parent company of the Wrangler brand, is buying outdoor apparel company Timberland (NYSE: TBL) for $2 billion.

New Hampshire-based Timberland is a long-time sustainability leader in the apparel industry. This year the company ranked second out of 150 companies evaluated by the nonprofit group Climate Counts.

The recognition was despite the fact that the company fell short of its ambitious goal to cut absolute emissions 50% in all the facilities it owns and operates and for employee air travel.

In 2009, Timberland made headlines by introducing its first recyclable footwear-a boot that was designed to be disassembled and recycled, rather than discarded, at the end of its product life. And it was the first company to post the carbon footprint of the shoes it sells right on the box.

VF owns other outdoor apparel and gear brands, including The North Face, Jansport and Eastpak. Ideally, Timberland’s sustainability practices will rub off on the lesser performing brands in VF’s portfolio, and not the other way around.

Timberland President and CEO Jeffrey Swartz says it will be the former, rather than the latter. "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."

"VF is known for its ability to acquire and grow authentic outdoor brands, while protecting a brand’s unique culture and DNA," he adds.

However, there is likely to be pressure from the new corporate owners, as VF is targeting 10% annual revenue growth for Timberland. VF says it can substantially increase Timberland’s profitability through expense management to improve administrative ratios; supply chain capabilities to reduce sourcing costs; and operating discipline.

VF says it will leverage its established international platforms in Europe, Asia and Latin America to expand sales, while adding to the Timberland® and Smartwool® brands’ apparel offerings, and aggressively growing the women’s footwear and apparel business.

Timberland expects 2011 revenues of $1.6 billion, over half of which is generated internationally.

VF will pay Timberland shareholders $43 per share. The agreement was unanimously approved by both companies’ Boards of Directors.

The acquisition is expected to close in Q311, adding approximately $700 million to VF’s 2011 revenues.