VF Corp. is back in the deal-making game.
The brand management firm — which has focused on organic growth and fine-tuning its portfolio since its 2011 acquisition of Timberland — announced today that it will acquire Williamson-Dickie Mfg. Co.
VF will pay $820 million in cash for the company, which owns workwear apparel and footwear brands Dickies, Workrite, Kodiak, Terra and Walls.
On a trailing 12-month basis, Williamson-Dickie generated approximately $875 million in revenue. VF expects the brands will add more than $1 billion in revenue to its balance sheet by 2021.
After the deal closes, Williamson-Dickie will become part of VF’s Imagewear coalition — joining the firm’s current workwear offerings, including Wrangler, Riggs Workwear and Timberland Pro.
Williamson-Dickie CEO Philip Williamson will remain with the company, headquartered in Fort Worth, Texas.
“As we develop our 2021 strategy and look for ways to accelerate growth in our workwear platform, the highly fragmented nature of the $30 billion global workwear market offers several unique acquisition opportunities,” VF president and CEO Steve Rendle said during a call with investors today, noting that the company plans to create a $1.7 billion workwear powerhouse. “Williamson-Dickie is one of the largest companies in the work sector and has a diverse, global portfolio of iconic brands and a deep heritage in authenticity.”
In an exclusive interview with Footwear News last month, Rendle said the firm — which recently shed its Licensed Sports Group business, including the Majestic brand — had been focusing on both acquisition and divestitures as it seeks to strengthen its portfolio in turbulent retail times. (In August 2016, VF also finalized the sale of its Contemporary Brands businesses, which included the 7 for All Mankind, Splendid and Ella Moss brands.)
“You’ve seen us divesting, but what you don’t see is the increased activity we have around looking at acquisition opportunities,” he said in a July interview with the publication. “We’re looking at the usage occasions that our core consumers focus on in their day-to-day lives, and we’re trying to find opportunities for us to move beyond the products and categories that we supply them today and into new parts of their lives.”
Today, Rendle doubled down on those comments, emphasizing that the company is “not finished.”
“We remain committed to ongoing and active portfolio management, and we will continue to make transformational moves and evolve VF as we have done many times throughout our history,” he said.
VF raised its 2017 outlook to include the impact of its newest acquisition. Revenue is now expected to reach $11.85 billion, up 3.5 percent on a reported basis — or 4.5 percent currency-neutral — and includes about a $200 million contribution from Williamson-Dickie. This compares with the previous expectation of $11.65 billion, a 2 percent increase on a reported basis (or up 3 percent currency-neutral).
Earnings per share is now expected to be $2.96, versus the previous expectation of $2.94, and includes about 2 cents in contribution from Williamson-Dickie. EPS is expected to decline approximately 1 percent on a reported basis — up at a mid-single-digit percentage rate currency-neutral — compared with 2016 adjusted EPS of $2.98
The firm also raised its 2021 targets: revenue is now expected to grow at a five-year compounded annual growth rate (CAGR) between 5 percent and 7 percent to more than $15 billion, versus the previous expectation of a 4 percent to 6 percent five-year CAGR — including Williamson-Dickie’s expected $1 billion-plus contribution. EPS is now expected to grow at a five-year CAGR between 11 percent and 13 percent to more than $5, versus the previous expectation of a five-year CAGR between 10 percent and 12 percent. Williamson-Dickie is expected to contribute more than 25 cents in EPS by 2021.
“For nearly a century we’ve worked hard to judiciously grow our company and portfolio of strong brands to maintain our leadership in the global workwear marketplace,” said Williamson. “Today’s announcement is an authentic and natural next step as we look to combine the strengths of our two companies to create significant opportunities for our employees, vendors, retail partners and ultimately our customers. We expect that under VF’s leadership, we’ll be able to experience the next wave of growth and better meet the needs of workers everywhere.”
As of 11 a.m. ET, VF shares were up nearly 2 percent to $62.68.