Footwear giant expands its footprint
Wolverine's acquisition expected to grow business from $1.4 billion to $2.5 billion
Wolverine Worldwide announced this morning it is closing on its acquisition of Collective Brands' Performance + Lifestyle Group (PLG), which consists of the Sperry Top-Sider, Saucony, Stride Rite and Keds brands, for a total purchase price of approximately $1.24 billion. The deal is expected to make Wolverine a $2.5 billion company.
PLG will now be Wolverine's largest operating group. Wolverine's existing groups, Outdoor, Heritage and Lifestyle — which includes Hush Puppies — now have annual global sales of $1.4 billion.
PLG had more than $1 billion in sales on almost 40 million pairs of footwear in its fiscal 2011, according to Wolverine, with most of those sales in North America. PLG, which will remain headquartered in Lexington, Mass., has 3,800 employees.
The acquisition leaves Wolverine with a total of 16 brands and is "the most significant milestone in our company's history," said CEO Blake W. Krueger. The planned acquisition was first announced in May.
Krueger noted that Wolverine plans to accelerate the growth of PLG sales abroad, using Wolverine's "international infrastructure."
On Aug. 1, Wolverine announced it had secured $1.1 billion in financing at what it called "very attractive rates" — a $550 million Term Loan A, a $350 million Term Loan B and an undrawn $200 million in revolving credit. Since then, market conditions allowed a reduced interest rate on Loan B, saving $2.6 million.
The financing, before the impact of interest rate swaps, has a weighted average cost of approximately 4 percent per year, according to Don Grimes, Wolverine's CFO.
Due to the acquisition, Wolverine is projecting earnings dilution from 25 to 30 cents per share in the remainder of FY2012, with earnings accretion in FY2013 from 35 to 50 cents and from 60 to 80 cents in FY2014.