Surfwear company Billabong International has expanded into the footwear market with acquisition of Palmers Surf, which owns the Kustom surf shoes brand, for $20-$25 million including earnouts.

"We have indicated in the past that footwear was a natural progression and this acquisition gives us a solid foundation on which we can build," Billabong chief executive Derek O'Neill said in a statement.

"Kustom has achieved great success in the Australian surf market, particularly in Queensland, and we see opportunity to continue its growth by strengthening its distribution both domestically and internationally," he said.

O'Neill said he expects the Palmers Surf business to contribute more than $30 million in revenue by the financial year 2005-06.

The acquisition is the second following O'Neill's appointment as managing director at the start of 2003. Billabong purchased surf retailer Honolua Surf in January.

Billabong said Palmers Surf founders and principals Al Cook and Glen Delaney will be retained.