E.Land World Ltd., a South Korean apparel distributor, agreed to pay about $170 million for K-Swiss Inc. to add the money-losing U.S.-based athletic shoemaker’s brands to its portfolio.
K-Swiss stockholders will receive $4.75 in cash per share, 49 percent more than yesterday’s closing price on the Nasdaq Stock Market, the Westlake Village, California-based shoemaker and E-Land said yesterday in a statement.
K-Swiss sales have dropped by about 50 percent since 2005 and the shares have plunged 91 percent from the 2006 high as the shoemaker’s all-white casual sneakers fell out of fashion and the company failed to take advantage of growth in athletic footwear demand. Revenue in the 12 months through September was $231.3 million, compared with $508.6 million in calendar 2005. Net losses from 2009, 2010 and 2011 totaled more than $160 million.
E.Land’s business “will provide K-Swiss with the resources and scale to return to its former performance levels,” Steven Nichols, president of the shoemaker said in the statement yesterday.
Goldman Sachs & Co. advised K-Swiss, while Morgan Stanley advised E.Land World, according to the statement.
The deal gives K-Swiss an enterprise value of about $135 million, or 0.58 times revenue, compared with the 0.64 times average for 18 athletic shoe, footwear and related apparel deals over the past five years, according to data compiled by Bloomberg.
The company was founded by two Swiss brothers who introduced leather tennis shoes in the U.S. in 1966. An investment group led by Nichols, also chairman of the K-Swiss board, then purchased the company and took it public in 1990. Nichols controls the company through his Class B shares, which gave him 69 percent of total voting power as of Dec. 31, 2011, according to company filings.
Closely held E.Land owns a range of apparel and sports brands and distributes products for New Balance. The company made a bid for shoemaker Collective Brands Inc. last year.
K-Swiss rose 48 percent to $4.71 at the close in New York for the largest gain since becoming a public company. Through yesterday, the shares had gained 5.6 percent in the past 12 months.