Rip Curl chief executive officer Michael Daly will continue to lead the firm and will report to Kathmandu CEO Xavier Simonet.
In a statement, Rip Curl’s founders said the sale was an emotional event, with the company being an “integral part” of their lives for over 50 years.
We realise, Rip Curl, our baby has grown into an adult recognised all over the planet and we are proud that we have created one of the world’s great brands.
Rip Curl founders Brian Singer and Doug Warbrick
“We realise, Rip Curl, our baby has grown into an adult recognised all over the planet and we are proud that we have created one of the world’s great brands,” the founders said.
“There are strong parallels with both Rip Curl and Kathmandu. Bringing them together will build on our respective strengths across product, marketing and distribution channels,” said Mr Daly.
It’s not Rip Curl’s first attempt at a sale either, with the founders looking to sell the business for $500 million in 2012 and for $400 million in 2017. The company had also toyed with the idea of publicly listing the business.
Mr Singer and Mr Warbrick each hold 35.5 per cent of Rip Curl, and will, along with Mr Daly, receive a portion of 10.9 million Kathmandu shares in exchange, worth a total of $31 million.
The rest of the transaction will be funded through a $138 million capital raise and a new $220 million debt facility. Kathmandu shareholders will be able to participate in the capital raise on a 1-for-4 share basis, and all the company’s directors are intending to participate in the offer.
Kathmandu is hoping the acquisition will boost its earnings before interest, tax, depreciation and amortisation by 10 per cent to around $NZ151 million, with net profit before tax of $NZ81.1 million.
The two companies are yet to identifying any major cost-saving synergies, but Kathmandu says the two will share support functions where appropriate.
Shareholders will be required to approve the deal at a special meeting on October 18. Kathmandu’s largest shareholder is NZ retailer Briscoe Group, who once attempted to purchase the apparel retailer.
In a statement, Kathmandu chief executive Xavier Simonet said the acquisition was a “fantastic opportunity” for the business.
“The combination of Kathmandu, Oboz and Rip Curl achieves diversification in product, channel, geography and seasonality, and creates a platform for the acceleration of our brands’ global expansion into new channels and markets,” he said.
“Importantly, there is also strong cultural alignment between our brands, underpinned by a shared focus on quality, innovation and sustainability.”
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.