Is K-Swiss About to be Sold?

Rumor has it: K-Swiss is ripe for the picking.

A new report has surfaced that the heritage tennis label is about to switch hands from current owner South Korea-based E-Land World Ltd. to China-based sports brand Xtep.

Citing industry sources, The Korea Herald last week reported that E-land is scheduled to sign a stock purchase agreement with Xtep this month for about 300 billion won ($262 million).

While K-Swiss has been mum on the speculation thus far, several insiders told FN that they see solid potential in such a transaction.

“I think we are going to see the Chinese brands be more aggressive in trying to take back share in China from outside brands,” said Matt Powell, VP and senior industry advisor for The NPD Group, adding that he’s seen the K-Swiss label enjoy a recent resurgence thanks to the retro trend — making the brand a prime acquisition target.

Similarly, B. Riley FBR analyst Jeff Van Sinderen said he has observed heightened interest in various assets, including footwear and apparel, on the part of Chinese firms. Meanwhile, recent moves by K-Swiss to recalibrate the brand has positioned it as one of few viable assets for Chinese investors to target. (Alibaba co-founder Jack Ma has been among the prominent voices pushing to recast China as a consumption-based economy in recent years — sending the message that its burgeoning upper middle class population has a growing appetite for brand name wares.)

“K-Swiss is a valuable heritage brand and it is the type of asset that the Chinese has been going after to grow,” Van Sinderen explained. “K-Swiss has improved product content and has started to gain traction with a targeted niche demographic. It has [stronger] relevance with a certain niche and appears to be on the upswing. I would think a potential acquirer sees this and would like to leverage that potential.”

Under the leadership of president Barney Waters, K-Swiss for the past two years has engaged in an aggressive turnaround effort centered on returning to its heritage tennis roots. At the same time, the brand has installed a more modern marketing stance: selling K-Swiss as a company that makes sneakers for entrepreneurs. (It brought on internet personality and VaynerMedia CEO Gary Vaynerchuk as a nontraditional endorser.)

E-Land acquired K-Swiss in 2013 for $4.75 per share in cash in a deal valued at about $170 million.

K-Swiss did not immediately respond to FN’s request for comment.

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