After weeks of sale speculation, the K-Swiss brand — along with Palladium and Supra — are set to be sold.
China-based Xtep International Holdings Ltd. announced today that it has entered into an agreement with E-Land World Company Ltd. and E-Land USA Holdings Inc. to acquire all outstanding shares of E-Land Footwear USA Holdings Inc. for $260 million. (E-Land Footwear USA Holdings Inc. is parent of athletic and lifestyle brands K-Swiss, Palladium and Supra.)
Xtep expects the acquisition to be completed by July 2019.
“Today, we are extremely excited to announce the proposed acquisition with E-Land, a strategic move to complement our product portfolio and elevate us as one of the leading global multibrand sportswear companies,” Xtep chairman and CEO Ding Shui Po said in a statement. “Not only will it strengthen Xtep’s foothold in the expanding Chinese sportswear market, but it will also provide us with growth opportunities in untapped overseas markets such as Southeast Asia.”
Following reports last month that E-Land was in talks to sell K-Swiss to Xtep, B. Riley FBR analyst Jeff Van Sinderen said he observed a growing trend of Chinese firms showing interest in snapping up U.S. footwear and apparel labels.
“K-Swiss is a valuable heritage brand and it is the type of asset that the Chinese have 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.”
The K-Swiss brand has experienced a resurgence in the past two years — logging year over year growth of 12% to $109 million in 2018 — under the watch of president Barney Waters, which yielded collaborations with internet personality and VaynerMedia CEO Gary Vaynerchuk and a new brand platform focused on making sneakers for young entrepreneurs. Palladium also saw gains of 10% for fiscal year 2018 to $78 million. (Supra’s revenues were not specifically reported.)
E-Land acquired K-Swiss in 2013 for $4.75 per share in cash in a deal valued at about $170 million.
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