Kathmandu has announced it has entered into a binding agreement to acquire 100% of Australian outdoor brand Rip Curl Group for $350 million.
Founded by surfer friends Brian Singer and Douglas Warbrick in Bells Beach in 1969, the brand operates a multi-channel model across the wholesale, retail and online channels, and has a global presence across Australia, New Zealand, North America, Europe, South East Asia and Brazil.
The acquisition will see Kathmandu, Oboz and Rip Curl combine to create a NZ$1 billion global outdoor and action sports business.
The combined group will have an extended global footprint, spanning 341 owned stores, 254 licensed stores and over 7,300 wholesale doorways globally.
The acquisition will expand Kathmandu's portfolio of products to include Rip Curl's range of highly technical wetsuits, boardshorts, swimwear and watches to beach lifestyle apparel, equipment and accessories, providing a seasonal balance to Kathmandu's winter-focused offering.
It will also enable Kathmandu to accelerate its global expansion, particularly in the North American and European markets where Rip Curl has an existing footprint. Kathmandu will also leverage Rip Curl's wholesale expertise to grow its wholesale business.
Meanwhile, Rip Curl will utilise Kathmandu's online capabilities to accelerate growth in its online channel. Rip Curl will also leverage Kathmandu's retail expertise to improve the efficiency of its store network.
Kathmandu CEO Xavier Simonet said that the acquisition greatly diversifies the Kathmandu business.
"This is a fantastic opportunity for Kathmandu to grow and diversify.
"The acquisition of Rip Curl transforms Kathmandu into a NZ$1.0 billion outdoor and action sports company, anchored by two iconic global Australasian brands.
"The combination of Kathmandu, Oboz and Rip Curl achieves diversification in product, channel, geography and seasonality, and creates a platform for the acceleration of our brands’ global expansion into new channels and markets.
"Importantly, there is also strong cultural alignment between our brands, underpinned by a shared focus on quality, innovation and sustainability.
"We wish to acknowledge the role that Rip Curl’s founders have played in building the iconic status of the Rip Curl brand internationally as well as its unique cultural identity, and are pleased that the founders and CEO wish to remain invested in the ongoing success of Rip Curl under Kathmandu ownership," he said.
Rip Curl CEO Michael Daly said that the business is thrilled to begin the new venture with Kathmandu.
"We are excited about the opportunity to partner with another iconic Australasian brand that shares our vision of creating high quality functional products for outdoor and action enthusiasts.
"We look forward to continuing to grow the Rip Curl brand as part of the Kathmandu Group," he said.
The transaction will be financed via a fully underwritten 1 for 4 Pro-Rata Accelerated Entitlement Offer to raise NZ$145 million, and a placement of approximately NZ$32 million of new Kathmandu shares to the founders and CEO of Rip Curl who have elected to receive some of the consideration for the acquisition in Kathmandu shares.
The balance of the transaction will be funded from new senior secured debt facilities.
Daly will continue to lead Rip Curl from its headquarters in Torquay, Victoria and will report to Simonet.
The transaction will go to a meeting for shareholder approval to be held on October 18 in Sydney.
The acquisition is scheduled to be completed by the end of calendar year 2019, subject to shareholder approval and customary closing requirements.
The transaction is based on an AUD/NZD exchange rate of $1.05.