Oboz Footwear gets a big kick with 16.3x EBITDA acquisition multiple

On March 20, 2018, it was announced that New Zealand-based Kathmandu Holdings Limited (NZSE:KMD), a public company focused on designing and selling footwear for outdoor adventure use, entered into an unconditional binding agreement to acquire 100% of the stock of Bozeman, Montana-based Oboz Footwear, in a deal worth $75 million. The deal consists of $60 million to be paid in cash upfront with an additional earnout of up to $15 million to be paid based on a December 31, 2018 EBITDA target of $7.1 million.

With reported revenue and EBITDA of $30.3 million and $4.6 million, respectively, for 2017, acquisition multiples translate to a revenue multiple of 2.48 and EBITDA multiple of 16.3.

Oboz was founded in 2007 to provide superior hiking footwear to outdoor enthusiasts who demand footwear with an insole designed for fit, feel, and performance. Oboz’s proprietary ‘O Fit Insole’ provides just that, delivering an unmatched footwear experience, separating Oboz from the competitors. Oboz sells its hiking boots, trail shoes, sandals, casual shoes, and insoles under a wholesale only platform, selling through traditional outdoor retailers and shoe stores, as well as ecommerce websites.

Oboz has been growing rapidly, with revenue and EBITDA growth of 37% and 84% between 2016 and 2017, respectively. Between 2013 and 2017, Oboz’s revenue grew at a compound annual growth rate of 40%.

The transaction is expected to be mid-single digit EPS accretive for Kathmandu in 2019. Xavier Simonet, Kathmandu CEO, stated, “The bringing together of two leading outdoor brands with shared values makes good sense because it will enable both brands more opportunities to fulfil their potential.”

To fund the acquisition, Kathmandu will raise approximately $29 million through an institutional placement of ordinary shares, up to $10 million through a share purchase plan, with the remainder from a combination of new and existing debt facilities.

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Sources:

https://sgbonline.com/oboz-to-be-acquired-by-kathmandu/

https://www.odt.co.nz/business/acquisition-oboz-not-without-risk

https://footwearnews.com/2018/focus/athletic-outdoor/oboz-footwear-kathmandu-1202540174/