UPDATE 3: VF to Acquire Timberland

The merger of the two NYSE-listed companies determined to form a $10 billion global clothing and footwear company.

This article was updated at 10:46 am EST, June 16, to reflect the legal team from Richards, Layton & Finger.

VF Corporation and The Timberland Company have agreed to join forces. VF Corp will pay $43 per share to Timberlands shareholders, a deal value of roughly $2 billion net cash.

VF Corp plans to finance the transaction through a combination of cash, commercial paper and term debt.

Timberland retained Goldman Sachs as its financial advisor with David Friedland acting as the lead banker. Jeff Buckalew, Richard Steinman and Chris Grubb of Greenhill & Co are providing financial advice to VF Corp.

Both of the companies' boards of directors have approved the merger and the deal is expected to close in within the third quarter.

The merger agreement states that Timberland has the right to terminate the merger agreement if a superior proposal surface before the stockholder approval which is due by July 26, 2011. Members of the Swartz family have agreed to act by written consent to approve the transaction if the merger agreement has not been terminated by then. Timberland has agreed to pay $87.2 million in termination fees if it decides to take a higher offer.

VF Corp's CEO, Eric Wiseman, stated in the press release that Timberland is a complementary fit with its North Face brand. Wiseman added that Timberland's SmartWool brand will give the company a leadership position in a new category. Vans, JanSport, Reef, lucy, Eastpak, Napapijri, and Eagle Creek are among the other brands that sits within Timberlands outdoor and action sports portfolio.

Timberland, which produces and sells footwear and apparel, expects its revenues for 2011 to generate close to $1.6 billion, of which more than half comes from international sales.

VF Corp expects the acquisition to add close to $700 million to its 2011 revenues and be accretive to its earnings by $.75 by 2012. The addition, which will be paired with VF Corp's outdoor and action sports segment, will boost the unit's revenues by 50 percent. For the most part VF Corp intends to benefit from Timberland's rugged outdoor footwear knowledge and plans to expand in underdeveloped markets like Japan.

According to the companies, the combination will create a $10 billion global clothing and footwear "powerhouse." VF Corp's main goal is to achieve a 10% annual revenue growth for Timberland. The company plans to do so by leveraging its established international platforms in Europe, Asia and Latin America. It also plans to leverage its direct-to-consumer platform, consisting of a global base of retail stores and speeding up the growth of its e-commerce segment. Other plans include; to boost the Timberland and SmartWool brands' apparel offerings and to aggressively grow the women's apparel and footwear unit.

Timberland turned to Ropes & Gray as well as Richards, Layton and Finger for legal advice for the merger. Ropes legal team was led by Jane Goldstein, and includes partners Jonathan Zorn, Robert Gordon, Eric Elfman, Edward Black, and Mit Spears. RLF's legal team included C. Stephen Bigler and Gregory Williams.

VF Corp used Davis Polk & Ward as its legal counsel, with George Bason Jr. as the lead. Partner, Marc Williams also took part on the deal along with associates William Chudd, Jacqueline Pace and Shingira Masanzu. Partner Ronan Harty and counsel Stephen Pepper are providing antitrust advice while partner Kathleen Ferrell is handling tax matters.

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By TAMIKA CODY

American Psychological Assoc.)

References

CODY, T. (2011). UPDATE 3: VF to Acquire Timberland. Mergers & Acquisitions Report, 24(24), 20. Retrieved from EBSCOhost.