Icebreaker, one of the company’s that made merino fashionable, is selling to a USA company but the deal needs OIO approval:
US-based VF Corporation needs Overseas investment office approval to buy Kiwi merino clothing maker Icebreaker, meaning the deal is worth at least $100 million. The terms of the deal were not disclosed.
Merino producers have been getting a lot of pressure to sign up to 10-year contracts with Icebreaker. The proposed sale explains that and a good number of committed producers would have made the deal more attractive to the buyer.
VF Corporation has a market capitalization of around US$28 billion and its portfolio includes The North Face, Timberland, SmartWool, Vans, Wrangler and Lee. In its third-quarter result, the company forecast its 2017 revenue would be approximately US$12.1 billion.
Icebreaker had annual sales of $220 million, of which 86 percent were in offshore markets. Its own outlets and e-commerce sales make up 32 percent of sales, according to the company’s latest statement.
While the terms of the deal were not disclosed, Icebreaker confirmed the need for OIO approval due to the size of the transaction, implying a minimum value of at least $100 million. In a separate statement, VF said “the purchase price is not material to VF.” It also clarified that it expects the transaction to close in April 2018. . .
I would think the deal would be worth considerably more than $100 million. Regardless of how much more, closure by next April is probably very optimistic.
Friends who have had dealings with the OIO, as sellers and buyers, said it was a very time-consuming process.
Unless it gets a straight decline from the outset, it won’t be any faster under the new government.
According to Icebreaker, the deal creates an expanded opportunity for the New Zealand merino industry. “This is a once in a lifetime opportunity for our global Icebreaker team and for our New Zealand wool suppliers to introduce a whole new universe of consumers to the benefits of sustainably farmed, ethically sourced, New Zealand Merino wool,” said Icebreaker founder Jeremy Moon.
John Brakenridge, CEO of the NZ Merino Company, noted VF have also had a long-term commitment to the New Zealand Merino industry through their investment in SmartWool and NZ Merino has worked with SmartWool in areas such as sustainability and social responsibility.
“Today we are seeing record demand and prices for New Zealand merino wool …the synergy of these two brands working as sisters from the same stable to build increased awareness of the Merino apparel category represents an exciting new development for the New Zealand merino wool industry,” he said. . .
People tend to be less opposed to selling land to foreigners than selling companies.
But no matter who owns it the land and the business carried out on it stay here.
When a company is sold, there is no guarantee anything will stay in New Zealand.
Icebreaker is a New Zealand company and its clothing is designed here using locally grown merino wool but manufacturing has been done overseas for several years.