Wolverine Worldwide (NYSE: WWW) announced today that it, along with Blum Capital Partners and Golden Gate Capital, has signed a definitive agreement to acquire Collective Brands, Inc. As part of the transaction, Wolverine will acquire Collective Brands’ Performance + Lifestyle Group (PLG), which consists of the Sperry Top-Sider®, Saucony®, Stride Rite® and Keds® brands. Adding these businesses to Wolverine’s existing portfolio, which is led by Merrell, Hush Puppies, Wolverine, Sebago and Caterpillar Footwear, creates an even more powerful stable of lifestyle brands that positions the Company for accelerated growth in both revenue and profits.
- Transformational acquisition will create a $2.5 billion global footwear and lifestyle brand powerhouse.
- PLG brands generated more than $1.0 billion of revenue in fiscal 2011.
- Addition of Sperry Top-Sider®, Saucony®, Stride Rite® and Keds® will result in a combined portfolio of 16 premium lifestyle brands, each targeting unique global opportunities.
- Purchase price of approximately $1.23 billion, or 10 times PLG’s projected 2012 EBITDA.
- Acquisition will be accretive in the first full fiscal year (2013) and will provide significant earnings per share accretion in future years.
- The parties expect to complete the transaction late in the third quarter or early in the fourth quarter of 2012.
“Our Company is thrilled to add these four iconic brands to our proven global platform,” said Blake W. Krueger, Wolverine Worldwide Chairman and CEO. “This transaction provides dynamic portfolio expansion and diversification, and significant additional horsepower in five of our targeted growth areas – women’s, athletic, casual, kids and retail. This transformational acquisition creates a powerful array of leading lifestyle brands that is balanced across product categories, genders and target consumers, with enormous opportunities for domestic and international growth.”
The acquired brands perfectly complement Wolverine’s strategic priorities. Sperry Top-Sider®, Saucony® and Keds® each have a strong following among women and also bring the opportunity to leverage Wolverine’s global distribution strengths. Saucony’s® leadership in the athletic space complements Merrell to provide a powerful resource in running, training, trail, minimalist and barefoot footwear. Stride Rite’s® leadership in the premium children’s shoe category and meaningful retail presence represent an important strategic opportunity for Wolverine’s existing brands. Each of the PLG brands has an authentic heritage, excellent customer loyalty, differentiated market positioning, mid-to-premium price points and global expansion opportunities that are aligned with Wolverine’s business strategy.
“Our Company has a proven track record of successfully growing brands of this size, in terms of both international reach and margin expansion,” continued Krueger. “Gregg Ribatt and his leadership team have done a great job building a world-class organization and they have delivered outstanding revenue growth over the past several years. We are pleased to welcome the entire PLG team to the Wolverine family, and we look forward to joining forces and continuing to build on their accomplishments. We intend to leverage our Company’s best-in-class sourcing organization, robust technology infrastructure and proven experience in building brands internationally to deliver even more growth for our shareholders.”
Wolverine, with commitments arranged by J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, anticipates funding the transaction through a combination of cash on hand and debt financing.
“This significant acquisition is an incredibly positive statement about the strength of our Company, our proven business model and confidence in our ability to grow both existing and newly acquired brands around the world,” said Don Grimes, Senior Vice President and Chief Financial Officer. “This transaction, because of both the significant opportunities for future growth and the historically low interest rate environment, promises to deliver meaningful earnings accretion and generate a very attractive return for Wolverine shareholders. Our historically strong cash flow, combined with the incremental profitability and cash flow of the newly acquired brands, will give us the ability to aggressively reduce debt over the next few fiscal years.”
The acquisition is expected to close late in Wolverine’s fiscal third quarter or early in the fiscal fourth quarter, after the most significant shipping months of the year for PLG. As a result, the transaction is expected to have minimal net impact on 2012 results, but is expected to generate earnings per share accretion in the ranges of $0.25 to $0.40 in 2013 and $0.50 to $0.70 in fiscal 2014. The earnings accretion estimates for all three fiscal years exclude one-time transaction expenses, non-recurring integration costs and any other acquisition-related expenses, which are collectively expected to impact 2012 earnings by $0.20 to $0.30 per share.
The closing of the transaction is subject to customary conditions, including receipt of Collective Brands’ stockholder approval and applicable regulatory approvals. Affiliates of Blum Capital Partners have agreed to vote their shares in favor of the transaction.
Robert W. Baird & Co. is serving as exclusive financial advisor to Wolverine Worldwide in the transaction, and Barnes & Thornburg LLP is acting as the Company’s legal advisor.
Please refer to the press release issued earlier this morning by Collective Brands, Inc., for additional information on the definitive agreement to acquire all of the common equity of Collective Brands, Inc.
Wolverine Worldwide will hold a conference call at 10:00 a.m. EDT today, May 1, to discuss the announcement. Participation in the question-and-answer session of the call will be limited to institutional investors and analysts. Individual investors and retail brokers are invited to listen via a live webcast on the Company’s website at www.wolverineworldwide.com. To listen via the Company’s website, click “Investor Relations” in the navigation bar, and then click “Webcasts & Presentations” from the side navigation bar of the “Investor Relations” page. To listen to the webcast, your computer must have a streaming media player, which can be downloaded for free at www.wolverineworldwide.com.
May 1, 2012