Columbia Sportswear has signed an agreement to acquire prAna, the active lifestyle brand that started in 1992 making yoga and rock climbing inspired apparel. Majority owner Steelpoint Capital Partners and all other minority stakeholders will sell to Columbia for $190 million in cash – a multiple of roughly 13 times Prana’s projected 2014 EBITDA. PrAna will join Columbia’s portfolio of outdoor brands, which include Columbia, Mountain Hardwear, Sorel and Montrail.
Transaction expected to close during second quarter of 2014, subject to customary conditions and regulatory approvals, with the acquisition expected to be accretive in first full fiscal year (2015). According to the companies, PrAna’s sales grew at a compound annual growth rate of more than 30 percent between 2010 and 2013, and are on pace to surpass $100 million in 2014 and generate low double-digit operating margin.
Prana will stay headquartered in Carlsbad, Calif., and Scott Kerslake will remain CEO of Prana, reporting to Columbia President and CEO Tim Boyle. The existing seasoned management team will also remain in place, says Columbia.
“We are very excited to welcome prAna to Columbia’s brand portfolio,” said Tim Boyle, Columbia’s president and chief executive officer. “PrAna is a rapidly growing lifestyle apparel brand positioned at the intersection of today’s healthy, active lifestyles and socially conscious consumerism. A growing number of women and men are embracing prAna’s versatile products that are designed and manufactured with sustainability as a core value.
Boyle continued, “PrAna fits Columbia’s strategic priorities to expand into categories that appeal to complementary consumer segments, reduce our dependence on cold-weather products, and leverage Columbia’s global operational platforms to expand across key geographic markets.”
PrAna’s products are currently sold through select specialty and online retailers across North America, as well as company-owned direct-to-consumer channels that include 5 U.S. retail stores, a U.S. ecommerce site and direct-mail catalogs. Markets outside of North America currently comprise less than 5 percent of annual sales and represent a substantial opportunity to accelerate growth by leveraging Columbia’s international relationships, said the company.
“With Columbia’s financial strength, operational expertise, and global market platform, we now will be able to reach a much broader audience of socially conscious consumers worldwide,” said Kerslake.
Assuming the transaction closes in the second quarter of 2014, Columbia expects to recognize incremental prAna net sales of approximately $55 million over the remainder of 2014, which is expected to contribute low double-digit operating margin to Columbia’s consolidated 2014 results, excluding the effect of one-time transaction fees, purchase accounting adjustments, and other integration costs. One-time transaction fees are expected to total approximately $4 million in 2014. In addition, under GAAP purchase accounting methods, amortization of certain acquired assets and other integration costs are expected to total approximately $9 million in 2014. In 2015, Columbia expects prAna’s annual sales to increase at a double-digit rate over 2014, operating margin to be in the low-teens, excluding purchase accounting amortization and other integration costs of approximately $5 million, resulting in accretion to Columbia’s consolidated earnings in 2015.
