UPDATE: US clothing giant VF Corp's Icebreaker acquisition needs OIO approval
(updates and recasts lede to include need for OIO approval and VF statement on the deal in the fourth paragraph)
By Rebecca Howard
Nov. 3 (BusinessDesk) - US-based VF Corporation needs Overseas investment office approval to buy Kiwi merino clothing maker Icebreaker, meaning the deal is worth at least $100 million. The terms of the deal were not disclosed.
VF Corporation has a market capitalization of around US$28 billion and its portfolio includes The North Face, Timberland, SmartWool, Vans, Wrangler and Lee. In its third-quarter result, the company forecast its 2017 revenue would be approximately US$12.1 billion.
Icebreaker had annual sales of $220 million, of which 86 percent were in offshore markets. Its own outlets and e-commerce sales make up 32 percent of sales, according to the company's latest statement.
While the terms of the deal were not disclosed, Icebreaker confirmed the need for OIO approval due to the size of the transaction, implying a minimum value of at least $100 million. In a separate statement, VF said "the purchase price is not material to VF." It also clarified that it expects the transaction to close in April 2018.
Bringing Icebreaker into the VF portfolio is a "special opportunity," said Steve Rendle, VF chair, president and chief executive. "Together, the SmartWool and Icebreaker brands create an advantaged position for VF as a leader in the growing and underpenetrated natural fiber category," he said.
According to Icebreaker, the deal creates an expanded opportunity for the New Zealand merino industry. "This is a once in a lifetime opportunity for our global Icebreaker team and for our New Zealand wool suppliers to introduce a whole new universe of consumers to the benefits of sustainably farmed, ethically sourced, New Zealand Merino wool," said Icebreaker founder Jeremy Moon.
John Brakenridge, CEO of the NZ Merino Company, noted VF have also had a long-term commitment to the New Zealand Merino industry through their investment in SmartWool and NZ Merino has worked with SmartWool in areas such as sustainability and social responsibility.
"Today we are seeing record demand and prices for New Zealand merino wool ...the synergy of these two brands working as sisters from the same stable to build increased awareness of the Merino apparel category represents an exciting new development for the New Zealand merino wool industry," he said.
Icebreaker chairman Rob Fyfe said it is the best opportunity for Icebreaker "to realise our ambition to become a $1 billion brand." Both Fyfe and Moon have committed to ongoing roles with Icebreaker.