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VF Corporation to acquire Timberland for 22 times 2010 earnings

|Includes:Timberland Co. (TBL), VFC

VF Corporation, a leader in branded lifestyle apparel, and The Timberland Company announced yesterday that they have signed a definitive merger agreement. VF will pay Timberland shareholders $43 per share, representing a total enterprise value of approximately $2 billion net of cash acquired. The bid represents a multiple of 21.9 times Timberland’s 2010 financial year end Diluted Normalised EPS.


VF is targeting 10% annual revenue growth for Timberland through:


·         Leveraging VF's established international platforms in Europe, Asia and Latin America

·         Leveraging VF's direct-to-consumer platform, consisting of a global base of retail stores and rapidly growing e-commerce business

·         Enhancing the Timberland(NYSE:R) and Smartwool(R) brands' apparel offerings

·         Aggressively growing the women's footwear and apparel business


In addition, VF believes it can substantially increase Timberland's profitability through:


·         Expense management to improve SG&A ratios;

·         Supply chain capabilities to reduce sourcing costs;

·         Operating disciplines of VF's highly profitable international and direct-to-consumer businesses.


"We look forward to working with Jeff and Timberland's strong team of leaders as we build our plans for the future together," concluded Mr. Wiseman.


The acquisition, which is expected to close in the third quarter, should add approximately $700 million to VF's 2011 revenues. It is also expected to be accretive to VF's earnings per share, by $.25 in 2011 and by $.75 in 2012, inclusive of deal costs and other acquisition related expenses in both periods. Excluding these expenses, EPS accretion would be approximately $.45 in 2011 and $.90 in 2012. Timberland will become part of VF's Outdoor & Action Sports coalition and will remain headquartered in Stratham, New Hampshire.


VF stock closed up $13.21 at $43.20.


Disclosure: The author has no long or short positions in VF Corporation or Timberland.


Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.


Stocks: TBL, VFC