PrAna is a rapidly growing lifestyle apparel brand that complements
Columbia's portfolio of authentic, active outdoor brands.
PrAna's sales grew at a compound annual growth rate of more than 30
percent between 2010 and 2013, and are on pace to surpass $100 million
in 2014 and generate low double-digit operating margin.
Purchase price of $190 million, which is subject to customary working
capital adjustments, equates to approximately 13 times prAna's
projected 2014 EBITDA.
Acquisition expected to be accretive in first full fiscal year (2015).
Existing seasoned management team to remain and drive continued growth
rooted in prAna's core brand values of healthy, mindful living and
Transaction expected to close during second quarter of 2014, subject
to customary conditions and regulatory approvals.
PORTLAND, Ore.--(BUSINESS WIRE)--
Columbia Sportswear Company (NASDAQ: COLM), a leading innovator in the
global outdoor apparel, footwear, accessories and equipment industries,
today announced that it has signed a definitive agreement to acquire all
controlling interests in prAna Living LLC from majority owner Steelpoint
Capital Partners and all other minority members for $190 million in
cash, which is subject to customary working capital adjustments. PrAna
will join Columbia's portfolio of authentic, active outdoor brands,
which include Columbia, Mountain Hardwear, Sorel and Montrail.
"We are very excited to welcome prAna to Columbia's brand portfolio,"
said Tim Boyle, Columbia's president and chief executive officer. "PrAna
is a rapidly growing lifestyle apparel brand positioned at the
intersection of today's healthy, active lifestyles and socially
conscious consumerism. A growing number of women and men are embracing
prAna's versatile products that are designed and manufactured with
sustainability as a core value.
Boyle continued, "PrAna fits Columbia's strategic priorities to expand
into categories that appeal to complementary consumer segments, reduce
our dependence on cold-weather products, and leverage Columbia's global
operational platforms to expand across key geographic markets.
"Of equal importance is the cultural fit and professional camaraderie
we've found at prAna as we've worked with CEO Scott Kerslake and the
prAna management team. We look forward to completing the transaction and
teaming with them to unlock prAna's global brand potential."
Since its founding in 1992, prAna has been committed to inspiring
healthy, active, free-spirited lifestyles rooted in yoga, rock-climbing
and fitness, and reflecting values of social and environmental
responsibility, community, service and optimism. PrAna sales grew at a
compound annual growth rate of more than 30 percent between 2010 and
2013, and are on pace to surpass $100 million in 2014 and generate low
double-digit operating margin. PrAna's products are currently sold
through select specialty and online retailers across North America, as
well as company-owned direct-to-consumer channels that include 5 U.S.
retail stores, a U.S. ecommerce site and direct-mail catalogs. Markets
outside of North America currently comprise less than 5 percent of
annual sales and represent a substantial opportunity to accelerate
growth by leveraging Columbia's international relationships.
"We are thrilled at the prospect of joining Columbia's portfolio of
distinct outdoors brands," said prAna's chief executive officer, Scott
Kerslake. "PrAna is a brand founded on designing stylish, functional,
active apparel made in an environmentally sustainable way. With
Columbia's financial strength, operational expertise, and global market
platform, we now will be able to reach a much broader audience of
socially conscious consumers worldwide."
PrAna will remain headquartered in Carlsbad, California, and operate as
a wholly owned subsidiary of Columbia Sportswear Company, with Kerslake
continuing to serve as chief executive officer reporting directly to
Columbia president and CEO Tim Boyle.
Columbia intends to fund the purchase from available cash and expects
the transaction to close during the second quarter of 2014. Assuming the
transaction closes in the second quarter of 2014, Columbia expects to
recognize incremental prAna net sales of approximately $55 million over
the remainder of 2014, which is expected to contribute low double-digit
operating margin to Columbia's consolidated 2014 results, excluding the
effect of one-time transaction fees, purchase accounting adjustments,
and other integration costs. One-time transaction fees are expected to
total approximately $4 million in 2014. In addition, under GAAP purchase
accounting methods, amortization of certain acquired assets and other
integration costs are expected to total approximately $9 million in
2014. In 2015, Columbia expects prAna's annual sales to increase at a
double-digit rate over 2014 and operating margin to be in the low-teens,
excluding purchase accounting amortization and other integration costs
of approximately $5 million, resulting in accretion to Columbia's
consolidated earnings in 2015.
The transaction is subject to customary conditions and regulatory
J.P. Morgan Securities LLC is serving as exclusive financial advisor to
Columbia Sportswear Company in the transaction and Wachtell, Lipton,
Rosen & Katz is serving as the company's legal advisor.
The company will host a conference call on Tuesday, April 29, 2014 at
5:00 p.m. ET to review this announcement, together with the company's
first quarter financial results and 2014 outlook which will also be
announced separately today at approximately 4:00pm ET. Dial 877-407-9205
to participate. The call will also be webcast live on the Investor
Relations section of the Company's website at http://investor.columbia.com
where it will remain available until approximately April 28, 2015.
About Columbia Sportswear
Columbia Sportswear Company is a leading innovator in the global outdoor
apparel, footwear, accessories and equipment industry. Founded in 1938
in Portland, Oregon, our products are sold in approximately 100
countries and have earned an international reputation for innovation,
quality and performance. Our products feature innovative technologies
and designs that protect outdoor enthusiasts from the elements, increase
comfort, and make outdoor activities more enjoyable. In addition to the
Columbia® brand, Columbia Sportswear Company also owns the outdoor
brands Mountain Hardwear®, Sorel®, Montrail® and OutDry®. To learn more,
please visit the company's websites at www.columbia.com,
PrAna is a lifestyle apparel brand that draws its name from the ancient
Sanskrit word for breath, life and vitality of the spirit. The prAna
team creates mindfully-designed, purposeful and stylish clothing for
free spirited people to pursue their passions from the mountains to the
beach. Since its founding in 1993, prAna has been committed to
sustainable practices in both its operations and supply chain, working
to reduce its impact on soils, water supplies and other natural
resources while promoting conservation. PrAna is also conscious of its
impact on communities and has worked to include a growing number of fair
trade styles every year. It is the first apparel company in North
America to offer Fair Trade USA certified products and
accessories. PrAna is sold in five flagship stores, online at prana.com,
and in 1,400 specialty retailers across the US, Canada, Europe and Asia.
To learn more visit www.prana.com.
This document contains forward-looking statements within the meaning of
the federal securities laws, including statements regarding the expected
growth of the prAna brand's sales and profits; prAna's expected EBITDA
margin; the ability to expand prAna's sales into key global markets; the
effect of the acquisition on Columbia Sportswear Company's consolidated
sales, operating margin and earnings; the level of operational synergies
upon completion of the transaction; and the timing and costs of
completion of the acquisition. In addition, words such as "estimates,"
"anticipates," "believes," "forecasts," "plans," "predicts," "projects,"
"is likely," "expects," "intends," "should," "will," variations of such
words and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions ("Risk
Factors") that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and
outcomes may materially differ from what may be expressed or forecasted
in such forward-looking statements. Risk Factors include, among others:
the possibility that the prAna acquisition does not close successfully,
including, but not limited to, due to the failure to obtain governmental
approval; the ability to realize the forecasted benefits of the prAna
acquisition on a timely basis or at all; the ability to combine
Columbia's business operations with prAna's successfully or in a timely
and cost-efficient manner; the degree of business disruption to Columbia
and/or to prAna that may result from the acquisition and related
integration efforts; loss of key customer accounts; the ability to
successfully develop prAna's brand and business globally; changes in
duty structures in countries of import and export including anti-dumping
measures and trade defense actions; changes in consumer preferences or
spending patterns; cancellation of orders for future delivery, changes
in planned customer demand, re-orders or at-once orders; the
availability and pricing of raw materials and manufacturing capacity;
reliance on foreign sourcing; disruption of technology systems;
regulatory or other changes affecting the supply or price of materials
used in manufacturing; the availability of power, labor and resources in
key foreign sourcing countries, including China; the impact of
competition and pricing; the impact of changes in the value of foreign
currencies; the development of new initiatives; the risks of doing
business in developing countries, and politically or economically
volatile areas; retail buying patterns; consolidation in the retail
sector; changes in economic and market conditions; acts and effects of
war and terrorism; weather; and additional factors discussed in the
Company's reports filed with the Securities and Exchange Commission and
exhibits thereto. The company cautions that forward-looking statements
are inherently less reliable than historical information. The company
does not undertake any duty to update any of the forward-looking
statements after the date of this document to conform them to actual
results or to reflect changes in events, circumstances or its
expectations. New factors emerge from time to time and it is not
possible for the company to predict all such factors, nor can it assess
the impact of each such factor or the extent to which any factor, or
combination of factors, may cause results to differ materially from
those contained in any forward-looking statement.
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140429006857/en/
Columbia Sportswear Company
Ron Parham, 503-985-4584
Director of Investor Relations & Corporate Communications
Columbia Sportswear Public Relations
Source: Columbia Sportswear Company
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