Market Upbeat on Potential VF-Quiksilver Deal

NEW YORK — Industry analysts said Monday that a VF Corp. acquisition of DC Shoes would be a good move for both companies.

As reported by Footwear News on Friday, a number of skate players on the ASR show floor said that a deal could be announced within a few weeks.

Citigroup analysts wrote in a Monday note that the acquisition would be positive for VF, given DC’s synergies with Vans and Reef, and the ability to leverage sourcing and distribution across all three brands.

The buzz comes just days after VF Corp. split its Outdoor Americas coalition into two groups. The firm’s new Action Sports segment, headed up by Vans President Stephen Murray, includes Vans and Reef — and DC Shoes could fit well under that umbrella, given that all three brands are headquartered on the West Coast.

For Quiksilver, the “possible cash infusion is important as the company needs to refinance its short-term debt, including $167 million, which is uncommitted, and a $72 million facility due to mature in March 2009,” the Citigroup analysts wrote. “However, with the possible sale of DC, we think Quiksilver could be losing its growth crown jewel.”

Some believe a VF/DC deal also paves the way for an even bigger industry acquisition. Nike is said to be pursuing Quiksilver, and that deal is said to be contingent on the sale of DC.

One analyst said the timing could be right for both deals.

“Given the health and attractiveness of Quiksilver brands is overshadowed by ongoing financial and liquidity troubles, we believe a good solution would be a friendly transaction with stronger strategic players,” Todd Slater, an analyst with Lazard Capital Markets, wrote in a research note.

Also of note, according to Slater, is that Quiksilver CFO Joseph Scirocco has been involved in high-profile sales before. During his tenure at Tommy Hilfiger, he led the sale of the company to Apax Partners for $1.6 billion in December 2005.

Quiksilver shares were up as much as 55 percent in Monday trading. VF shares also rose on the news and were nearly 3 percent higher on Monday afternoon. 

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