Apparel Giant Vf to Buy Timberland in Us$2bn Merger

US branded clothes label giant VF Corp and outdoor shoes and clothing company Timberland Co said yesterday they would conduct a US$2 billion (1.4 billion euros) merger to create a US$10 billion apparel giant.

“This acquisition will continue the transformation of VF’s portfolio, propelling VF’s Outdoor & Action Sports businesses to 50 percent of total revenues,” VF chief executive Eric Wiseman said in a statement.

The merger, approved by the boards of both companies, will be accomplished by VF buying out Timberland stock at US$43 per share — a premium of 43.4 percent to the latest Timberland closing price — and is expected to close in the third quarter.

Timberland shares climbed US$12.26, or 40.1 percent, to US$42.25 in pre-market trading.

VF, whose brands include Wrangler, The North Face, Vans, JanSport and Eastpak, is targeting 10 percent annual sales growth for Timberland

“This will be a winning combination, leveraging VF’s international and direct-to-consumer platforms to drive growth in the Timberland and Smartwool brands globally,” Wiseman said.

“At the same time, VF will benefit from Timberland’s rugged outdoor footwear expertise, international penetration in markets such as Japan and leadership position in sustainability,” he added.

The merger should also help boost profitability by reducing sourcing costs.

VF said Timberland should add approximately US$700 million to its sales this year and increase earning per share by US$0.25 this year and US$0.75 next year.