Listed Kiwi outdoor goods retailer Kathmandu has agreed to buy Australian surfwear apparel company Rip Curl for $368 million.
The acquisition will create a billion-dollar outdoor and action sports company anchored by the Kathmandu and Rip Curl brands, and provide Kathmandu with the opportunity to diversify its geographic footprint, channels to market and seasonality profile.
The post-merger company will have a combined footprint of 341 owned retail stores, 254 licensed stores and over 7300 wholesale doorways.
Rip Curl’s summer and beach focus will provide balance to Kathmandu’s focus on winter and outdoor goods. The two companies also have mutually beneficial opportunities in wholesale, where Kathmandu can leverage Rip Curl’s expertise, relationships and global network to help expand its wholesale business; and in online, where Rip Curl can leverage Kathmandu’s online capabilities to accelerate growth in its underpenetrated online channel.
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.
Founded in 1969, Rip Curl is a designer, manufacturer, wholesaler and retailer of surfing equipment and apparel. It operates a multichannel model through its global presence across Australia, New Zealand, North America, Europe, Southeast Asia and Brazil.
Rip Curl’s chief executive, Michael Daly, will continue to lead Rip Curl from its headquarters in Torquay and will report to Xavier Simonet, Kathmandu’s CEO.
““There are strong parallels with both Rip Curl and Kathmandu,” Daly says. “Both companies thrive on creating high quality, functional products for outdoor enthusiasts, surfers and beach goers around the world. Both brands are also from the same part of the world – Australia and New Zealand. Bringing them together will build on our respective strengths across product, marketing and distribution channels.”
“It will be a new world for all of us after 50 years of private ownership, and our entire crew would like to thank the Rip Curl founders [Brian Singer and Doug “Claw” Warbrick] for everything they have done for surfing over the years,”
Of the acquisition, Simonet says: “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.”
The acquisition is expected to be complete by the end of 2019. It comes after Kathmandu’s purchase of US footwear company Oboz in March 2018 for $NZ103.6million.