"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 America."
"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.
Samsonite anticipates 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.
"It is 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 the company.
"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."
According 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.
Samsonite 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.
D.A. 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.
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