Gold Coast, Australia - Billabong International Limited today announced it has entered into an agreement to acquire the business of DaKine Hawaii, Inc, a leader in the premium accessories category within the surf, skate, snow and windsurf markets.
DaKine was founded in 1979 in Hawaii by Rob Kaplan and is currently based in Hood River, Oregon, one of the premier action sports venues in North America. The brand has developed a strong reputation as the global action sports industry’s leading provider of specialised backpacks and technical accessories with an excellent historical growth profile.
Billabong International Limited Chief Executive Officer Derek O’Neill said the inclusion of a complementary, authentic and internationally proven boardsports brand added further depth to the Group.
“DaKine is well established within the boardsports sector and it is a brand that has built its reputation on the quality and reliability of its technical range,” said Mr O’Neill.
“It has built a strong sales base in North America and a growing sales base in several international territories, making it a powerful addition to the Group.”
Billabong North America General Manager Paul Naude said DaKine had particular strength in the ocean boardsports sector and had a 20-year history in the snow category with a strong offering in backpacks, bags, gloves and accessories.
“DaKine is a brand that leads the boardsports backpack category, excels in the surf accessories market in the ultimate testing ground of Hawaii and has excellent penetration in winter product categories including snow gloves,” said Mr Naude.
“It is a brand that has focused on function over fashion and this has endeared it to active boardsports participants.”
DaKine founder Rob Kaplan said the sale presented synergies for both businesses and he welcomed the additional infrastructure Billabong offered to support future growth.
“Billabong and ourselves have both determined that each of us has complementary skills and strengths and together we have a compelling authentic offer,” said Mr Kaplan.
Rob Kaplan will remain integrally involved as a key member of the DaKine management team and will be based in the brand’s regional office in Maui, Hawaii. All employees, along with the current management team, are being retained and will remain in the brand’s head office in Oregon.
The purchase is subject to several conditions, including US regulatory approval under the Hart-Scott-Rodino Anti Trust Improvement Act. It is anticipated the acquisition will be completed by 1 October 2008, subject to the aforementioned conditions being satisfied.
The purchase price comprises initial consideration estimated at US$99.9 million, to be funded from existing borrowing facilities, and deferred consideration estimated at a minimum of US$33.3 million, subject to an audit of the normalised EBITDA for the year ending 31 December 2008. The final amount of the deferred consideration, due in the second half of calendar year 2012, is subject to the future performance of the business and certain management retention conditions.
DaKine is expected to contribute approximately 4% of Billabong International Limited’s Group sales in the 2008-09 financial year and is expected to be earnings per share positive in year one.