VF Corp. (NYSE: VFC) has acquired the remaining two-thirds of sportswear maker Mo Industries from Summit Partners and Mo Industries founder Moise Emquies. The deal was valued at $161 million, plus the repayment of $47 million in existing net debt. VF Corp. had acquired the initial one-third stake last June.
VF Corporation (NYSE: VFC) and Mo Industries Holdings, Inc. announced today that VF has acquired the remaining two-thirds of the capital stock of Mo Industries, owner of the Splendid® and Ella Moss® contemporary sportswear brands. VF had previously purchased one-third of Mo Industries stock from its owners — founder Moise Emquies and Summit Partners, a private equity and venture capital firm for growth companies — in June 2008.
The Splendid® brand is known for its use of luxurious fabrics in a wide range of contemporary knit products incorporating modern fit and styling. The Ella Moss® brand is an ultra-feminine collection of casual knit tops and dresses featuring bold colors, whimsical styling and fashion silhouettes. Both brands are distributed primarily through better department and specialty stores. Combined revenues of the two brands were $95 million in 2008 and have more than tripled since 2004. The brands also enjoy strong profitability, with operating margins expected to exceed 20%.
The Splendid® and Ella Moss® brands will become part of VF’s Contemporary Brands coalition, which also includes the 7 For All Mankind® and lucy® brands. In addition, VF has decided to shift responsibility for its John Varvatos® luxury men’s sportswear business from its Sportswear coalition to its Contemporary Brands coalition, further underscoring its commitment to growing its Contemporary Brands portfolio.
Mr. Emquies, who has been serving as Chief Executive Officer and President, will continue as Founder/Chief Executive Officer, reporting to Mike Egeck, President – Contemporary Brands. Jonathan Saven, who has been serving as Chief Financial Officer and Chief Operating Officer of Mo Industries, has been promoted to President. Pamella Protzel Scott will continue in her role as Creative Director for Splendid® and Ella Moss®.
“We’re very pleased to be adding two strong and growing brands to our portfolio,” said Mr. Egeck. “These brands not only complement each other well, but they also complement our 7 For All Mankind® and lucy® brands. The addition of the Splendid® and Ella Moss® brands and the move of the John Varvatos® business to our coalition provide us with the ability to service the contemporary consumer and lifestyle in many different ways.”
“We’re excited to become part of the VF family of brands,” said Mr. Emquies. “This is a great opportunity for both our business and our associates, and we look forward to partnering with VF to leverage their size, scale and resources to continue to grow our business both domestically and internationally.”
The Splendid® and Ella Moss® brands should contribute approximately $70 million to 2009 revenues and be slightly accretive to earnings per share; these expectations were incorporated into VF’s revenue and earnings guidance provided on February 10. While these brands are not immune to the current economic downturn, VF expects that over the long-term their revenues could grow 10% to 15% annually.
The cost to VF to acquire the remaining two-thirds of the capital stock was $161 million, plus the repayment of $47 million in existing net debt, and will be funded through VF’s strong cash flow from operations.
VF Corporation is a global leader in lifestyle apparel with a diverse portfolio of jeanswear, outdoor, imagewear, sportswear and contemporary apparel brands. Its principal brands include Wrangler®, Lee®, The North Face®, Vans®, Reef®, Eagle Creek®, Eastpak®, JanSport®, Napapijri®, Nautica®, Kipling®, John Varvatos®, 7 For All Mankind®, lucy®, Ella Moss®, Splendid®, Majestic® and Red Kap®.
VF Corporation’s press releases, annual report and other information can be accessed through the Company’s home page, www.vfc.com.
About Summit Partners
Summit Partners (www.summitpartners.com) provides private equity and venture capital for growth companies. Founded in 1984, Summit has raised more than $11 billion in capital and has provided growth equity, recapitalization, and management buyout financing to more than 300 growing companies across a range of industries. These companies have completed nearly 125 public offerings and more than 110 have been acquired through strategic mergers and sales. Summit Partners has offices in Boston, Palo Alto, and London.