Kathmandu buys Rip Curl for $350m

Adventurewear retailer Kathmandu has bought the iconic surf wear brand Rip Curl for $350m.

Surf wear brand Rip Curl was founded at Bells Beach in Victoria in 1969. Picture: Suplied

Listed clothing and outdoor equipment retailer Kathmandu has purchased the iconic surf wear brand Rip Curl for $350 million.

Kathmandu will launch an equity raising to pay for the acquisition.

Rip Curl was founded at Bells Beach in Victoria in 1969 by surfer friends Brian Singer and Douglas Warbrick.

The company designs, makes and sells surfing equipment and apparel and has a global presence across Australia, New Zealand, North America, Europe, South East Asia and Brazil.

The deal will give Kathmandu Group a combined global footprint of 341 owned retail stores, 254 licensed stores and over 7,300 wholesale doorways.

“The acquisition of Rip Curl transforms Kathmandu into a $NZ1.0 billion outdoor and action sports company, anchored by two iconic global Australasian brands,” said Kathmandu chief executive Xavier Simonet.

It would enable Kathmandu to diversify its geographic footprint, its channels to market and its seasonality profile.

Rip Curl will retain operational ownership of their respective businesses, with Michael Daly continuing as chief executive and reporting to Mr Simonet from its headquarters in Torquay.

Kathmandu will fund the acquisition with a one for four pro-rata accelerated entitlement offer to raise $NZ144.5m and a $NZ32m placement to Rip Curl’s founders and chief executive, who have opted to be paid partly with shares.

The rest of the acquisition will be funded with debt.

Kathmandu investors must first tick off the deal at a shareholders meeting scheduled for October 18.

A customer at a Kathmandu store. Picture: AAP

The price equates to 7.3 times its pro forma normalised earnings before interest, tax, depreciation and amortisation of the transaction will be funded from new senior secured debt facilities.

Kathmandu estimated the transaction would boost its fiscal 2020 earnings per share by more than 10 per cent on a proforma basis before accounting for any savings.

Working on the equity raising is Credit Suisse, Jarden and Deutsche Craig’s, with shares being offered at NZ$2.55 each.

Shares in Kathmandu last traded at $2.79.

Rip Curl was up for sale in 2017 through Gresham, but at the time did not find a buyer.

Rip Curl helped organise Australia’s first professional surfing competition, the Rip Curl Pro, in 1973, and the event still attracts the world’s best surfers as one of the legs of the Association of Surfing Professionals World Championship Tour.