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Iconic Australian surf brand Rip Curl is set to be acquired by New Zealand-based Kathmandu (ASX: KMD) for $350 million.
If the acquisition is successful, Kathmandu expects to have in excess of NZ$1 billion of revenue thanks to the combination of its Kathmandu, Oboz and Rip Curl brands.
The combined group will have a footprint of 341 owned retail stores, 254 licensed stores and over 7,300 wholesale doorways globally.
Rip Curl is an iconic Australian brand, designer, manufacturer, wholesaler and retailer.
The company was founded in 1969 in Bells Beach, Victoria and has since become synonymous in Australia with everything surf culture.
The business in 2019 operates a multi-channel model across the wholesale, retail and online channels, and has a global presence across Australia, New Zealand, North America, Europe, South East Asia and Brazil.
Kathmandu says Rip Curl is the perfect counterbalance to its own brand, with Rip Curl's summer and beach focus providing seasonable balance to Kathmandu's winter and outdoor focus.
Additionally, as Rip Curl is already established in North America and Europe, the business is a perfect wave to ride for Kathmandu to accelerate its international expansion into those areas.
Kathmandu CEO Xavier Simonet says the acquisition makes sense for the business on a number of key fronts.
"This is a fantastic opportunity for Kathmandu to grow and diversify," says Simonet.
"The acquisition of Rip Curl transforms Kathmandu into a NZ$1 billion outdoor and action sports company, anchored by two iconic global Australasian brands. The combination of Kathmandu, Oboz and Rip Curl achieves diversification in product, channel, geography and seasonality, and creates a platform for the acceleration of our brands' global expansion into new channels and markets. Importantly, there is also strong cultural alignment between our brands, underpinned by a shared focus on quality, innovation and sustainability."
The transaction is to be financed via a fully underwritten entitlement offer to raise NZ$145 million, and a placement of approximately NZ$32 million of new Kathmandu shares to the founders and CEO of Rip Curl who have elected to receive some of the consideration for the acquisition in Kathmandu shares.
Rip Curl CEO Michael Daly will continue to lead Rip Curl post-acquisition from the company's headquarters in Torquay and will report to Kathmandu's Simonet.
The transaction requires shareholder approval, which will be decided at a special meeting of shareholders on Friday, 18 October 2019.
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Business News Australia
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