VF Corporation, which owns outdoor brands like The North Face and Reef, is acquiring Timberland, known for rugged boots that became a synonym for hip-hop style, for US$ 2.3 billion.
VF Corporation, which has its headquarters in North Carolina in US and is also the owner of Vans footwear and Wrangler Jeans, proposes to fund this acquisition by way of utilizing US$ 500 million in cash from its own capital, US$ 300 million from Timberland's balance sheet, US$ 700 million by raising short-term borrowings that it proposes to repay by close of the current year and US$ 800 million through long-term debts.
Outdoor segment is a preferred choice of apparel labels as it is considered a mode of attracting well-to-do customers whose spending capacity does not get affected by economic volatility, in spite of the fact that most of these buyers never use these apparels near a mountain or a forest.
According to VF's Chief Executive, Eric Wiseman, the new acquisition would boost VF's action and outdoor sportswear sales to 50 percent of its total turnover, making it a US$ 10 billion firm after clubbing VF's expected turnover of US$ 8.4 billion for the current year with Timberland's forecasted revenues of US$ 1.6 billion.
Mr. Wiseman emphasised that VF's China based retail outlets would provide a great opportunity to Timberland to enhance its sales. Analysts hailed VF for its potential of adding new brands to its international supply chain.
Fibre2fashion News Desk - India
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