Quiksilver Announce Rossignol Group Takeover Bid

THERE are probably few more frivolous pursuits than surfing and designing clothing.

But, so good has Quiksilver been at building an empire based on clothing surfers that it can afford to pursue other delights - such as corporate takeovers.

On Wednesday, the global company, which is listed on the New York Stock Exchange and valued at $US1.8 billion ($2.34 billion), announced a $US317 million takeover of French outdoor sporting specialist Rossignol Group.

Although it has yet to be approved by Rossignol shareholders, Quiksilver has been quick to put out its vision for what the combined company should look like.

To be called Quiksilver Rossignol, it will have a headquarters at the surfing mecca of Huntington Beach in California, use branches in Europe and Asia, and sell equipment and apparel associated with everything from bodyboarding to golf.

Quiksilver International would keep its local base at Avalon on the northern beaches of Sydney. Annual sales are expected to be about $US1.9 billion with a management dream of nearly doubling that by 2009.

Pretty impressive for a company which was founded by surfers Alan Green and John Law in 1969 using the mantra of surfers selling T-shirts to surfers. But chasing a slice of the $US42 billion outdoor sports market was always a part of the Quiksilver philosophy.

Supporters of the brand with a keen eye for detail would have noticed its logo was a wave breaking over a mountain.

Quiksilver International president Bruce Raymond said the acquisition of Rossignol would create the global leader in the outdoor sports market, a market that boasts sports growing in popularity, such as skiing, hiking, mountain biking, as well as skateboarding, surfing and golf.

"It (the logo) was intentional, it was part of a 30-year plan to lead the company through both the surf and outdoor adventure markets," Raymond says.

"We want to boost the Rossignol apparel range. We are not trying to sell Rossignol into the surf market but into some well-established chains which we own."

Quiksilver, which had a $US1.3 billion revenue to October 31, will offer E19 ($32) for Rossignol shares.

The acquisition will be earnings positive starting next financial year.

But exactly what is Rossignol?

The company was founded in 1907. It had total sales of $US625 million for the 12 months to September 30.

Its product line covers everything a winter-loving sports enthusiast needs to have fun and tempt injury while in the snow or on the golf links.

But one European analyst said the company did not have enough money to spend promoting its brands.

"We want to be a world leader in the outdoor industry," Raymond say.

"We want to compete with the likes of Timberland, Colombia, Patagonia."

What is strongly being fleshed out to the media by Quiksilver is that both companies share the same culture, values and philosophies - making the combination compelling in the market.

But just as surfing and clothing are two fickle pursuits, so is the equities market. Shares in Quiksilver fell as much as $US2.66 to $US30.54 on the New York Stock Exchange when the acquisition was announced.

It had gained as much as 54 per cent in the previous year.

And the French small shareholders association is considering legal action against Rossignol because the company may be worth more.

"This is all very well for the Boix-Vives family, but minority shareholders may be able to do better," APPAC president Didier Cornardeau says.

The Boix-Vives family, which holds a 49.9 per cent stake in Rossignol, has enjoyed a closer association with Quiksilver than most might think.

Both Quiksilver chief executive Bernard Mariette and Rossignol's 78-year-old chairman Laurent Boix-Vives share a cosy relationship, often taking to the slopes together. Takeover talk was never far away from their dialogue and the pair spent much time piecing together how their two companies would become one.

Quiksilver will buy the Boix-Vives control with 70 per cent cash and the rest in shares and Boix-Vives will be given a seat on the board.

"Quiksilver has chosen France for its European headquarters and I have known and had an excellent relationship with Bernard Mariette for a very long time," Boix-Vives says.

"My endeavours with the Quiksilver-Rossignol group are such that there cannot be a better transaction that would guarantee the longevity of the group that I have built."

Quiksilver foreshadowed that the greatest growth opportunity was for Rossignol's apparel sector, which only accounted for 7 per cent of its revenue.

Former Quiksilver Europe managing director and consultant to the company Harry Hodge says it is important for the company to enter the winter market in Europe.

"It was a natural progression (for Quiksilver) to look into acquiring an adjacent business," he says. "There are a lot of European synergies."

Raymond says one obvious crossover is to apply the young Roxy brand to skiing and attract female enthusiasts who are more than ever looking to the slopes for fun. "Rossignol skis would fit nicely into our Roxy brand aimed at young girls," he says.

By Kevin Andrusiak March 29, 2005

Source: News.com.au

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