Tarrant Apparel Group said it planned to acquire the Buffalo Group, maker of Buffalo Jeans, in a deal worth up to $120 million.
Tarrant, based in Los Angeles, said that under the deal to buy Buffalo, it would pay $40 million in cash, $15 million in promissory notes, 13 million shares of common stock, "earn-out" payments of up to $12 million and a contingent payment if Tarrant stock fails to reach a minimum price over the next five years.
Buffalo, founded in 1985 and based in Montreal, reported revenues of $104 million last year and had sales of $75 million for the first nine months of fiscal 2006. The company operates 45 stores in Canada under the Buffalo by David Bitton name, and has 200 in-store shops in the department store channel. Expansion of Buffalo's retail operations will be a focus of Tarrant's management after the acquisition closes, which is expected to occur during the first quarter.
"Buffalo is a major brand in Canada through the broad coverage it has via its retail locations," Gerard Guez, chairman and chief executive officer of Tarrant, said in a statement. "We expect that we will be able to build on its reputation in Canada through the opening of additional locations and anticipate expanding the retail business into the U.S."
Gaby Bitton, president of Buffalo's business development, will bes ceo of the acquired business and will be given a seat on Tarrant's board. Gaby's four brothers — Charles, David, Gilbert and Michel — will hold senior-level positions in the new company.
News of the acquisition sent shares of Tarrant soaring in Nasdaq trading on Thursday. Shares traded up more than 20 percent to close at 1.60.
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