High Sierra Sport Company for $110 million cash. In a filing to the Hong Kong bourse, Samsonite said the acquisition would help enlarge its foothold in the $4 billion North American casual bag market, and allow it to use its global distribution network and retail presence to expand High Sierra's brand in additional markets in Asia, Europe and Latin America.
"High Sierra is a perfect complement to our existing portfolio," said
Tim Parker, Chairman and Chief Executive Officer of Samsonite, in a
separate statement. "This acquisition gives Samsonite a strong brand and
product offering that represents an immediate and larger foothold in
the US$4 billion North American casual bag market, which is twice the
size of the region’s luggage market. It also provides us exciting
opportunities to leverage Samsonite’s well-established global
distribution network and retail presence to significantly expand High
Sierra’s respected brand in additional markets in Asia, Europe and Latin
"Our deep experience in the travel luggage industry,
along with our worldwide distribution capabilities and significant
resources, make Samsonite the perfect brand steward to help High Sierra
achieve its global potential," Parker added.
Under the terms of
the transaction, Samsonite will purchase substantially all of the assets
of High Sierra for US$110 million in cash. The purchase is being funded
from internal sources and Samsonite’s recently expanded Revolving
Credit Facility of US$300 million.
“Today marks a thrilling
moment in High Sierra’s history, and opens the door to a whole new
future for the brand,” said High Sierra CEO Hank Bernbaum. “In
Samsonite, we have found a true partner that values our high quality,
innovative products and the tremendous potential of our brand. It will
be exciting to see how High Sierra develops in the hands of Samsonite
given its global scale and expertise. There is an unprecedented
opportunity to grow the High Sierra brand and reach millions of new
customers — in the U.S. and around the world.”
High Sierra’s range of backpacks, adventure luggage, and sports bags appeals to active
lifestyle consumers including outdoor enthusiasts, skiers and
snowboarders, adventure travellers, students and young consumers. The
acquisition also provides Samsonite with significant opportunities for
brand extensions, both direct and through licenses. Furthermore,
Samsonite gains access to sporting goods retailers, an important
distribution channel where it currently has limited presence. The
Company also plans to open a number of High Sierra retail stores in
North America and around the world.
High Sierra’s net sales grew
by 31 percent in 2011 to US$64 million. Approximately 90 percent of High
Sierra’s 2011 sales came from the U.S., with the remaining 10 percent
from the rest of the world. Asia, Europe, Latin America and Canada
accounted for 38 percent, 31
percent, 29 percent and 2 percent, respectively, of High Sierra’s sales
outside the U.S. in 2011. Profit after taxes reached $6.7 million, up
from $5.5 million in the year-ago period.
High Sierra to continue achieving strong double-digit growth going
forward, with the acquisition, which is expected to close in the current
quarter, to be accretive to Samsonite’s earnings per share in 2013, the
first full earnings year following closing.
According to the
filing to the Hong Kong bourse, Samsonite said the acquisition "gives
the company a strong brand and product offering that represents an
immediate and larger foothold in the US$4 billion North American casual
bag market, which is estimated to be twice the size of the region’s
luggage market. It also provides the company with opportunities to
leverage the company’s well-established global distribution network and
retail presence to significantly expand High Sierra’s brand in
additional markets in Asia, Europe and Latin America.
anticipated that High Sierra will continue to achieve double-digit
growth and that the Acquisition will be accretive to the company’s
earnings per share in the year ending December 31, 2013, the first full
earnings year following closing. The financial return from the
Acquisition is expected to meet the investment criteria considered by
"Based on the above, the directors, including the
independent non-executive Directors, consider that the terms of, and the
transactions contemplated under, the Asset Purchase Agreement are fair
and reasonable, are on normal commercial terms, and are in the best
interests of the company and the shareholders as a whole."
to the statement, High Sierra's revenues reached $64.1 million in its
year ended Dec. 31, up from $49.0 million a year ago. That represents an
increase of 31 percent compared to the previous year. The U.S.
accounted for approximately 90 percent of High Sierra’s sales in 2011.
noted that High Sierra is the official supplier of bags and luggage for
the U.S. Ski and Snowboard Team. Founded in 1978, High Sierra is
head-quartered in Gurnee, IL, near Chicago.
Earlier this month,
Samsonite said it had increased a revolving credit facility to $300
million from $100 million to help fund potential acquisitions.
Davidson & Co. served as financial advisor and Freeborn &
Peters LLP served as legal advisor to High Sierra. Ropes & Gray
served as legal advisor to Samsonite.