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M&A Buzz Heats Up - Retail Geeks

M&A Buzz Heats Up - Retail Geeks

M&A Buzz Heats Up - Retail

M&A Buzz Heats Up - Footwear News - WWD.com http://www.wwd.com/footwear-news/ma-buzz-heats-up-3525401/print/ Page 1 of 3 2/28/2011 M&A Buzz Heats Up by Michelle Tay Posted MONDAY FEBRUARY 28, 2011 From FOOTWEAR NEWS ISSUE 02/28/2011 NEW YORK — Look for a lot more companies to get hitched this year. At least four deals have been completed in the last few weeks, and many footwear firms that are capping their fiscal year with large cash piles on their balance sheets are on the hunt for buys, market watchers said. “You have the usual suspects. Everyone from Foot Locker Inc. to Deckers Outdoor Corp. and VF Corp. have spoken openly about looking at acquisitions, [but] for some the drum beat gets a bit louder than others,” said Christopher Svezia, an analyst at Susquehanna Financial. “The potential is definitely out there, probably more so this year than in prior periods.” According to Svezia, one company to watch is Wolverine World Wide Inc. because “it is always looking for small, tuck-in acquisitions.” And on the international front, JD Sports and JJB Sports — both British athletic retailers — “have stepped up conversations [about making buys] recently.” Steven Madden Ltd. said it will make at least one acquisition in the footwear and accessories space in 2011, with company Chairman and CEO Ed Rosenfeld saying in a call with analysts last week that “we’d love to have another brand for the mid-tier or the mass channel.” Angel Martinez Photo By Courtesy Photo Referring to last year’s Betsey Johnson deal, B. Riley & Co analyst Jeff Van Sinderen observed that Madden is “really good at making acquisitions and paying less than market value.” He added that Madden would be eyeing deals “perhaps the size of Betsey Johnson,” which was about $50 million, although the firm paid nearly half of that since Johnson’s brand was in financial turmoil. Steve Marotta, analyst at C.L. King & Associates, said, “It makes sense that companies will pursue opportunities to acquire new brands as avenues of growth this year because the industry is not growing from a square-footage standpoint [due to] a lack of [real estate for] new stores. “Additionally, it’s been a year since the chatter started and with mostly positive year-end results being reported now, companies have the financial wherewithal to do these kinds of deals,” he said. The activity is already on the rise. Brown Shoe Co. said its $145 million acquisition of American Sporting Goods earlier this month added “the critical element of performance athletic footwear to [Brown’s] comfort and fitness offerings.” The firm’s president and COO, Diane Sullivan, also noted that ASG’s financial performance would help boost Brown’s operating margin into the double digits over the next couple of years. (For more, see page 8.) Blake Krueger A few days before the Brown deal, Castanea Partners bought a majority stake in Donald J Pliner and has plans to ramp up store expansion and e- commerce for the line, as well as branding and advertising efforts. Meanwhile, Auri Footwear announced last week it will go public as Auri

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