From Running Insight:
Saucony, Keds and Sperry acquired by Wolverine Worldwide
In a move that has been anticipated for almost a year, Saucony, one of the hottest brands in the running business for the past five years, will be acquired by Wolverine Worldwide, the footwear conglomerate that owns Merrell, Chaco, Sebago and a number of other brands. The two companies announced a definitive agreement that Wolverine along with Blum Capital Partners and Golden Gate Capital will acquire the Performance Lifestyle Group of Collective Brands which also includes Keds and Sperry. The deal is valued at $1.23 billion, more than 10 times the PLC group’s projected 2012 EBITDA.
When the transaction closes, it will mark the third time in seven years that Saucony has changed corporate parents. In 2005, the company was purchased by Stride-Rite and then in 2007 Stride-Rite was purchased by Payless Shoe Stores, which subsequently changed its name to Collective Brands. Although Saucony thrived under Collective’s ownership, the overall company struggled. At the time Payless acquired Saucony and its sister brands, many in the industry were skeptical that one company could successfully manage brands with specialty distribution and simultaneously run the biggest shoe store in the world, which basically sold inexpensive footwear and not a lot of brands.
Eventually the Collective board of directors agreed and put pressure on its charismatic CEO Matt Rubel to focus on the Payless side of the business. Apparently, he did not react to their satisfaction and 11 months ago, he resigned and the company announced it would pursue strategic options to increase shareholder value.
At that moment, it was apparent that the Performance Lifestyle Group would be sold either as a group or in pieces. Clearly, Saucony was the crown jewel in the portfolio and the brands were able to fetch more as a group than by being sold individually.
Wolverine has made no secret of its desire to make acquisitions and was in a strong financial position to do so. The company understands specialty brands and retail and should not dramatically alter the strategic direction of Saucony or the other brands. VF Corporation, parent of The North Face, Vans, Eastpak, Jansport and a number of apparel brands, was also said to be interested in buying the brands. But VF is very much still in the process of digesting Timberland, for which it paid $2 billion in cash less than a year ago.
The large multiple paid for the brands and the intense interest in Saucony demonstrates that professional money (and big professional money) continues to flow into the running business. Last year, Finish Line made a relatively small investment by buying a group of run specialty stores and subsequently attracted $10 million for a minority stake in that deal from Gart Capital Partners.
Saucony has put together an experienced executive team led by Richie Woodworth, a highly regarded manager and strategist who has worked for Nordica skis, Reebok and The National Hockey League. He has built a veteran team, which includes former New Balance exec Fran Allen, former Nike running executive Fred Doyle, VP of International Mary O’Brien and CMO Chris Lindner. Over the past five years, Saucony has made major strides in the specialty store business, moving up from a pack of brands to challenge for the number three market share spot behind Brooks and ASICS. Saucony has been a leader in product development with its Kinvara series of lightweight shoes and signed a number of athletes to help market the brand. If Wolverine can keep the executive team in place, the brand is in prime position to continue its momentum backed by Wolverine.