RYE, N.Y. and CARLSBAD, Calif. – Jarden Corp. and K2 Inc. have signed a definitive merger agreement pursuant to which Jarden – a company with 20,000 employees worldwide that provides niche consumer products for the home – will acquire K2, the companies said in a release this week.
The total enterprise value of the transaction, including the assumption or repayment of indebtedness, is approximately $1.2 billion. The transaction is expected to be accretive to Jarden’s earnings and to close early in the third quarter of this year.
K2’s primary business lines would be reported through Jarden’s Outdoor Solutions segment upon closing of the transaction.
“We are enormously excited about today’s announcement as it marks another important step in our planned and disciplined growth strategy,” said Martin E. Franklin, Jarden’s chairman and CEO. “Adding K2’s broad portfolio of leading brands to our portfolio would create cross selling opportunities both domestically and internationally, would expand our presence in specialty channels, would further diversify our products, revenues and earnings, and would create additional scale to leverage in our supply chain, distribution, manufacturing and sourcing networks.”
Richard J. Heckmann, K2’s executive chairman of the board, said, “We believe that Jarden is the perfect strategic partner for us. Combining our world-renowned brands with Jarden’s scale and innovative resources should bring tremendous value to our employees, retail partners and customers. I am extremely proud of our employees’ accomplishments over the last five years, and I am excited about the road ahead for K2 as part of the Jarden family.”
The board of directors for both companies have unanimously approved the transaction, which is expected to close during the third quarter of 2007, subject to Hart-Scott-Rodino approval, the approval of K2’s stockholders and other customary closing conditions.
K2 sees growth in marine business
K2 Inc. also reported net sales this week for the first quarter, ended March 31, of $372.7 million versus $348.1 million in the prior year, an increase of 7.1 percent. Adjusted net income for the first quarter of 2007 was $7.1 million, compared to Adjusted net income of $5.0 million in the first quarter of 2006
“We had an excellent quarter as reflected by solid sales and profit growth led by Team Sports and Marine and Outdoor, after adjusting Marine and Outdoor for $1.3 million in amortization related to recent acquisitions,” said Wayne Merck, president and CEO. “In the first quarter we closed the acquisition of Penn fishing tackle, which is highly complementary to our Shakespeare branded product, and we expect a strong financial contribution in the future after we have completed its integration.
“As we look forward this year, we continue to be very optimistic about our ability to achieve our sales and earnings forecast for 2007. We are expecting continued gains from Team Sports and Marine and Outdoor.”
K2’s net sales for the first quarter of 2007 were $372.7 million versus $348.1 million in the first quarter of 2006. The increase was mainly due to growth in sales within the Marine and Outdoor and Apparel and Footwear segments. K2’s gross profit as a percentage of net sales, on an Adjusted basis as set forth in the Statements of Income below, increased to 33.4 percent in the first quarter of 2007 compared to 32.3 percent, in the first quarter of 2006
Shakespeare and Penn fishing tackle, Stearns and Sevylor marine and outdoor products and monofilament products generated net sales of $142.2 million in the first quarter of 2007, an increase of 15.5 percent from the comparable quarter in 2006.
The first quarter sales increase was due to increased sales of fishing kits and combos, Ugly Stik rods, Sevylor inflatables (acquired in December 2006) and Penn fishing tackle (acquired in January 2007), offset by declines in personal flotation devices, immersion suits, Hodgman waders and drywear.
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