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Wolverine hunts for deals

by Richard Collings | Published January 31, 2012 at 9:48 AM

Rockford, Mich.-based footwear retailer Wolverine World Wide Inc. plans to use its available cash for acquisitions and is in various stages of discussions to make purchases, CFO Don Grimes said.

Grimes made the comment during an interview conducted at the 14th Annual ICR XChange Conference held in Miami from Jan. 10-12.

Wolverine had about $140 million in cash and cash equivalents and no long-term debt, as of Dec. 31, according to a Monday, Jan. 30, filing with the Securities and Exchange Commission.

The company's portfolio of brands includes Bates, Chaco, Cushe, Hush Puppies, HyTest, Merrell, Sebago, Soft Style and Wolverine, and the company licenses brands Cat, Harley-Davidson and Patagonia.

Grimes declined to comment on the discussions Wolverine has entered into with various parties. He also declined to comment on likely targets, including Washington Shoe Co. or footwear provider Earth Inc., or Collective Brands Inc. divisions such as Keds or Sperry Top-sider.

Collective Brands on Aug. 29 hired advisers Perella Weinberg Partners LP and Kurt Salmon Associates Inc. to shop assets of the company, including its shoe brands and national discount footwear retail chain Payless ShoeSource.

Washington Shoe hired Partnership Capital Growth LLC in March as its investment banker, with the mandate to conduct an auction of the rubber boot maker.

Grimes explained that while Wolverine has typically completed small deals -- such as its acquisition of the Merrell brand in 1997 for a reported $17 million from Sports Holding Corp. -- the company is capable of pulling off a larger acquisition.

In its last deal, Wolverine acquired the Chaco brand, which had revenue in 2008 of about $20 million, from founder Mark Paigen. Terms for the deal were not disclosed.

Separately, Grimes predicted that over the next 18 months, the apparel industry could witness another acquisition the size of VF Corp.'s $2 billion purchase of Timberland Co., which closed in September.

He explained that the outdoor, active, and healthy lifestyle category remains an attractive area to do deals. He expects to see more consolidation in the footwear sector.

Grimes declined to reveal if Wolverine would be involved in such a major transaction, or if it could look to merge with the likes of Rocky Brands Inc. or Brown Shoe Co., or a similar entity.

Wolverine announced Monday that its revenue for the fiscal year ending Dec. 31 was $1.4 billion, up 7.7% from the $1.3 billion in revenue it generated for the same period a year earlier. Net earnings for the year were $123 million, up about 18.3% from $104 million last year.

Wolverine's stock closed up 1.32%, to $38.46 per share, giving it a market capitalization of $1.87 billion.

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