PPR's $608M Takeover Of Volcom To Bolster Puma, Sports Lifestyle Division
PPR yesterday announced a $608M “takeover of California sportswear brand Volcom Inc., as the French luxury and retail group strives to bulk up its sports division around its Puma label,” according to Christina Passariello of the WALL STREET JOURNAL. The “potential for synergies between PPR's Puma athletic wear brand and Volcom is high.” The “majority of Puma's business is shoes,” and Volcom -- which sells skateboarding, snowboarding and surfing apparel -- “only has a small footwear business.” PPR plans on “amping up Volcom's distribution, in part by opening stores” and the company “expects Volcom to tap into Puma's Asian manufacturing." PPR Deputy CEO & CFO Jean-Francois Palus said that with the acquisition of Volcom, PPR “expects its sports lifestyle division -- which will also comprise Puma and the Cobra golf brand -- to generate” US$7.4B in sales by ’15. The sports lifestyle division in ’10 had about US$4B in sales; Volcom had sales of $323M. PPR Chair & CEO Francois-Henri Pinault emphasized that no future target for acquisition "would be bigger than Puma, limiting the potential for a major purchase” (WALL STREET JOURNAL, 5/3). Pinault yesterday said that Volcom “would maintain its independence within the PPR group, whose aim would be to add value by improving sourcing and boosting Volcom’s international expansion plans rather than co-opting the brand.” The FINANCIAL TIMES’ Stanley Pignal notes the acquisition “is expected to close in the third quarter” (FINANCIAL TIMES, 5/3). Pinault said Volcom was “arguably one of the most desirable global action-sports brands.” Wall Street Strategies analyst Brian Sozzi said that the deal “could be viewed as a slight to surfwear giant Quiksilver Inc. of Huntington Beach, which was previously rumored to be a PPR target.” Sozzi: “The fact it has went the direction of Volcom underscores (Quiksilver’s) poorly situated balance sheet, among intangible factors” (L.A. TIMES, 5/3).