Wolverine World Wide Inc
), one of the leading designers, manufacturers and marketers of
branded footwear and apparel, announced that it has sealed the
acquisition of the Performance + Lifestyle Group business (the "PLG
Collective Brands Inc
) for $1.24 billion.
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Earlier, Wolverine partnered private equity firms, Blum Strategic
Partners and Golden Gate Capital Opportunity Fund, in order to
acquire Collective Brands. Per the terms of the merger agreement,
Wolverine agreed to acquire Collective Brands' Performance +
Lifestyle Group (PLG) unit. The other two units, Payless ShoeSource
and Collective Licensing International, will be jointly taken up by
Blum Capital and Golden Gate.
The PLG unit sells footwear and related products, both wholesale
and retail, for children and adults under popular brands which
include Stride Rite, Sperry Top-Sider, Saucony, and Keds, and
generated approximately $1 billion in revenue in fiscal 2011.
Wolverine is focusing on long-term strategic initiatives to drive
profitability, and we expect the acquisition to provide ample
opportunities to Wolverine for boosting its growth prospects while
facilitating the company in enhancing its portfolio of brands.
Going ahead, the company expects earnings dilution in the range of
25 cents to 30 cents a share for the rest of fiscal 2012.
However, Wolverine added that the action will be accretive to the
earnings of fiscal 2013 and 2014 in the range of 35 cents to 50
cents and 60 cents to 80 cents, respectively. Moreover, total
revenue is expected in the range of $1.46 billion - $1.50 billion,
reflecting a year-over-year growth of 3.6% to 6.4%.
Currently, we are maintaining a long-term 'Neutral' recommendation
on the stock. However, Wolverine, which competes with
Deckers Outdoor Corporation
Skechers USA Inc
), has a Zacks #4 Rank that translates into a short-term 'Sell'
rating as secular headwinds act as short-term deterrents for the