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Kathmandu Holdings Ltd (ASX: KMD) will be on watch from eager investors today following this morning’s announcements that it plans to acquire the iconic Australian surf apparel brand Rip Curl. Kathmandu is one of Australia and New Zealand’s largest outdoor recreational and adventure gear retailers and operates a combined 165 locations across the two countries. The company is a New Zealand based designer, manufacturer, and retailer of outdoor travel goods but has since established a strong operational presence in the Australian market. Accordingly, Kathmandu Holding Ltd is a dual-listed holding on both the Australian and New Zealand stock exchanges.
(Credit: Kathmandu)
Rip Curl similarly sharing strong parallels, is an Australian based designer, manufacturer, and retailer of surfing sportswear that operates globally across Europe, South America, North America, and South Africa. The acquisition offer made by Kathmandu is cited to create an A$1 billion-dollar Australasian surfing and outdoor lifestyle company, which will go on to expand its product mix to a combined customer base across the globe.
Rip Curl is planned to be sold to the camping retailer Kathmandu for a combined sum of NZ$368 million (A$350 million) raised through a combination of debt and equity. Kathmandu requested a trading halt late yesterday following market hours to both NZX Regulation and ASX Ltd ahead of the announcement, where it was the last trading at A$2.79 per share.
The trading halt was requested as Kathmandu is proposing to raise up to NZ$145 million of capital by way of a 1 for 4 accelerated pro-rata entitlement offers, with an addition NZ$220 million to be funded through debt facilities. The new rights issue has been given a subscription price of NZ$2.55 (or A$2.37) per share, significant to note as being offered at a discount.
The acquisition will help further diversify Kathmandu’s seasonal and geographical product mix to consumers, reducing its reliance on winter apparel sales in the Australasian market which it cited in its FY19 results as being its key period for sales growth. Further, this news comes only 18 months since Kathmandu acquired North American based hiking boots business Oboz for US$75 million (A$97 million), citing a 30% growth in sales for Oboz since it’s an acquisition.
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