US: Cutter & Buck agrees to $156.5m buyout by New Wave
Cutter & Buck Inc said late Thursday (12 April) that it had reached an agreement to be acquired by Swedish apparel firm New Wave Group AB for US$156.5m.
Under terms of the deal, expected to close by the end of May, stockholders of Seattle-based Cutter & Buck would receive $14.38 per share. That represents a 23.6% premium to the $11.63 closing price of C&B shares in Thursday's Nasdaq trading session and is 2.7% above the stock's 52-week high of $14.00, reached on 16 February.
The merger agreement was announced after the close of the markets Thursday.
The acquisition would unite two firms that already have a business relationship.
Goran Harstedt, chief executive officer of New Wave, commented: "The two companies' brands are very complementary, allowing us to expand the distribution of Cutter & Buck's brands in Europe and the New Wave Group's brands in the United States.
"We identified Cutter & Buck Inc as the company to carry some of our brands, especially New Wave and Clique, in the United States on the corporate promotional market because, like New Wave Group AB, they are founded on great customer service and operational excellence.
"In addition, they truly understand the markets we operate in. Moreover, we expect to reach substantial synergies within buying, products and distribution."
Ernie Johnson, C&B's CEO, noted that the "combination allows Cutter & Buck Inc access to New Wave Group AB's broad distribution network in Europe as well as New Wave Group AB's exceptional product related resources throughout the world."
Although New Wave has a portfolio laden with brands - Orrefors, Kosta Boda and others in addition to Clique and New Wave - that are sold through about 10,000 independent distributors throughout Europe and in China, Cutter & Buck will add an upscale golf and sportswear collection for men and women with distribution in retail stores, the corporate market and in the recently soft golf channel.
Starting with a base in men's sportswear, the company has layered on golfwear and women's businesses in recent years as well as a direct-to-consumer business.
Closing is contingent upon approval by Cutter & Buck's shareholders as well as standard regulatory provisions.
Cutter & Buck has about 380 employees and during the fiscal year ended 30 April 2006 had sales of $131m, gross profit of $59.7m and net income of $6.3m. Shareholders equity was $70.3m as of 31 January.
New Wave employs about 2,200 and during calendar 2006 had sales of $512m and income from continuing operations before income taxes of about $42m. Shareholders equity was about $190m of 31 December. New Wave's figures have been translated from Swedish kronor.
In a move that was widely expected, Harstedt was named CEO of New Wave just two weeks ago. His predecessor, Torsten Jansson, is slated to be named chairman at the company's annual meeting next month with specific responsibility for acquisitions and new business.
By Arnold J Karr.
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