VF Corporation Inks $2.1 Billion Deal with Streetwear Brand…

Both firms will learn to adapt to one another’s culture while CEO of Supreme James Jebbia and the senior leadership team will remain with the company at its base of operations in New York.

American worldwide apparel and footwear company, VF Corporation (NYSE: VFC) has announced the purchase of popular streetwear brand Supreme. The acquisition which according to Bloomberg is valued at $2.1 billion will help VF Corporation to expand its retail expansion through digital offerings that Supreme is known for.

Despite the COVID-19 pandemic limiting the purchasing power of the masses particularly as it relates to the stock up of non-essential goods, the Supreme brand has retained its luster which further made it attractive as the needed boost for VF Corporation. The opportunity to acquire Supreme presented itself as the two major investors in the company. The Carlyle Group and Goode Partners are selling out their stakes.

“We are thrilled to welcome Supreme® to the VF family and to build on our decades-long relationship as we create value for all of our stakeholders,” said Steve Rendle, VF’s Chairman, President, and Chief Executive Officer. “The acquisition of the Supreme® brand is further validation of our vision and strategy to further evolve our portfolio of brands to align with the total addressable market opportunities we see driving the apparel and footwear sector.”

Prior to this acquisition, the duo of VF Corporation and Supreme have a relationship in which the latter usually collaborate with the brands of the former including Vans, The North Face, and Timberland. Both companies hope to maintain and build on this relationship in a bid to become a major household fashion brand name moving forward.

Benefits of the VF Corporation Acquisition of Supreme

The acquisition deal which is billed to be completed before the end of the year has spelled growth omens for the VF Corporation already. The shares of VF had an intraday jump as high as 17% on Monday according to Bloomberg before closing at $77.81 with an 11.14% surge.

The intraday high recorded came off as the highest the firm has ever recorded since the 20th of October 1987, a day following the notorious Monday Market Crash. While the company remains modest in its expectations for Supreme to add to its revenue at the end of the current fiscal year which will end in March 2021, VF, however, expects Supreme to add at least $500 million in revenue in subsequent fiscal years, as well as about 20 cents to VF’s adjusted Earnings Per Share (EPS) in 2022 fiscal year.

Both firms will learn to adapt to one another’s culture and the founder and Chief Executive Officer of Supreme James Jebbia and the senior leadership team will remain with the company at its base of operations in New York.

American multinational investment bank and financial services, Morgan Stanley (NYSE: MS) reportedly provided “a fairness opinion in connection with the transaction” according to the company and the legal adviser was Davis Polk & Wardwell LLP.

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