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KMD

Kathmandu Holdings Ltd Diversifies Their Market Mix

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

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.

Kathmandu - RipCurl
(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.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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