K-Swiss Inc. completed its purchase of Palladium SAS yesterday, acquiring the remaining 43 percent equity interest in the French footwear firm for $5 million euros, or $7.1 million, as well as a potential earn-out based on Palladium’s EBITDA for 2012. The deal is expected to close later this month and result in a non-operating loss of approximately $2.6 million for the second quarter ending June 30.
Westlake, Calif.-based K-Swiss initially purchased a 57 percent equity interest in Palladium for $5.3 million, or $8.5 million, in July 2008. K-Swiss also acquired the St. Priest, France-based brand’s American and Canadian trademarks for $6 million in cash prior to its purchase date. Dollar amounts are converted at average exchange rates for the period.
Palladium plans to bow product in the U.S. market in July of this year.
“With an imminent launch for the brand in the U.S., this is the right time to exercise our option to acquire full ownership of Palladium,” Steven Nichols, K-Swiss chairman and president, said in a statement.
K-Swiss sold its Royal Elastics brand in May of this year to REH, an investment group headed by the label’s former product design director, John Bondoc, leaving just Palladium and its flagship K-Swiss brand in the company’s portfolio. Nichols announced a long-term plan to reinvigorate the struggling K-Swiss label during the firm’s annual meeting last month, following its first-quarter net loss of $1.1 million and 25 percent drop in sales.