VF Corp To Buy Vans For $396-Million Dollars

VF Corporation (NYSE: VFC), the world’s largest apparel company, announced that it has signed a definitive merger agreement to acquire Vans, Inc. (NASDAQ: VANS).

The acquisition would launch VF into the large and growing action sports market with one of the industry’s leading lifestyle brands. Vans’ sales in fiscal 2003 were $330 million, and the company has indicated that it expects sales of approximately $346 to $349 million in fiscal 2004, which ends May 31. The transaction, which is expected to close early in VF’s third quarter, is expected to be neutral to earnings per share in 2004 and slightly accretive in 2005.

A New Growth Engine
Mackey J. McDonald, chairman and chief executive officer of VF, said, “We are making growth happen, and we’re doing it with a powerful brand that resonates strongly with its core teen consumer base. Vans is the original action sports brand, the industry leader in brand awareness. The acquisition will give us a dynamic new brand to add to our growing Outdoor portfolio, provide us with expertise in footwear and other new products and offer clear opportunities for continued top line growth. We expect that Vans’ sales could reach $500 million in the next three to five years, with the potential to meet VF’s operating margin and return on capital targets.”

“The combination with VF represents a great opportunity for the VANS brand to become a leader in both footwear and apparel and our Board of Directors is certainly pleased with the terms of this transaction, which it believes brings great value to the Vans shareholders,” said Gary H. Schoenfeld, President and CEO of Vans. “VF has a compelling strategy to leverage its global resources through the acquisition of market leading lifestyle brands. Vans clearly fits their model, having established a proprietary position in the youth market over the past 38 years. I believe this transaction is a testament to the passion and commitment of our team and a strong endorsement of what we have accomplished.”

Vans, which will become part of VF’s Outdoor coalition reporting to Eric Wiseman, will continue to be based in Santa Fe Springs, California.

Said Eric Wiseman, chairman of VF’s Outdoor and Sportswear Coalitions, “Vans is an excellent company managed by a great team that is completely connected to their consumer. By focusing on the whole action sports industry, the company has grown beyond its roots in skateboarding, and through events like the Vans Warped Tour and the Vans Triple Crown series, it has a created a marketing platform to stay connected to its core consumers. Our first priority is to help the management team there implement their apparel and retail growth strategies. We’ll leverage VF’s apparel expertise and global presence to deliver the next wave of growth for Vans”.

Terms and Other Information
Pursuant to the merger agreement, VF will pay Vans shareholders $20.55 per share in cash. The total cost of the shares, including the cashout of stock options, is approximately $396 million.

The boards of directors of both companies have approved the merger. The merger is subject to Vans shareholder approval, receipt of customary government approvals and other customary conditions.

VF will finance the acquisition initially through available cash and short-term commercial paper borrowings. VF anticipates that with any required borrowings the resulting ratio of debt to total capital would remain below its long-term target of 40%.

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