Billabong in Deal to Acquire Rvca

Billabong International Ltd. said it has reached a “conditional agreement” to buy California-based skate and lifestyle brand Rvca.

SYDNEY — Billabong International Ltd. said Monday that it has reached a “conditional agreement” to buy California-based skate and lifestyle brand Rvca.

This story first appeared in the July 13, 2010 issue of WWD.  Subscribe Today.

Terms of the deal were not disclosed, but Rvca is expected to contribute about 2 percent of Billabong’s group revenue in the 2010-11 financial year and will be earnings per share neutral. In the 2008-09 fiscal year, Billabong recorded 1.67 billion Australian dollars, or $1.46 million at average exchange, in group sales revenue, up 23.9 percent compared with the previous year.

“Rvca…represents a community of culturally aware youth and is inspired by a diverse range of interests, each of which is underpinned by an original, highly creative design element,” Billabong chief executive officer Derek O’Neill said. “It is a brand that has developed a very strong presence in the United States, particularly in southern California, on the strength of its fashion-forward ranges in categories including art-driven T-shirts, denim, wovens, boardshorts and, more recently, its girls’ line.”

The acquisition includes the current management team, headed by Rvca founder and creative director Pat M. Tenore.

“By joining Billabong, we can retain our focus on our creative strengths while leveraging the distribution and supply chain infrastructure and support of the Billabong group,” Tenore said. “The original concept of Rvca was, and still is, to be a lifestyle brand that integrated different subcultures within one platform.”

Launched out of Tenore’s Costa Mesa, Calif., garage in 2001 — in collaboration with professional surfer Conan Hayes — Rvca generates an estimated $50 million in revenues. Creative collaborations have been an integral part of its DNA, with the Rvca Artist Network Program embracing more than 200 brand “advocates,” from artists to photographers and musicians, who have contributed artwork for limited edition T-shirts and other initiatives. They include model Erin Wasson, who designed an Rvca capsule women’s collection.

In February, Billabong reported a 15 percent net profit slump for the December half-year, to 69.7 million Australian dollars, or $60.9 million, down from 82.4 million Australian dollars, or $72 million, because of a fall in North American sales and currency fluctuations.

First-half revenue was 723.6 million Australian dollars, or $631.7 million, compared with 811 million Australian dollars, or $708 million, in the same period last year. The company reported earnings before interest, taxes, depreciation and amortization of 123.5 million Australian dollars, or $107.8 million, 9.5 percent lower in constant-currency terms, or 16.2 percent lower compared with the same time period last year.

A Billabong spokesman said more information about the Rvca deal will be released Aug. 20, when Billabong makes its full-year profit results announcement.

The Rvca announcement coincided with the news that Billabong’s June 30 bid for Canadian action sports retailer West 49 at 1.30 Canadian dollars, or $1.26, per share for an enterprise value of about 99 million Canadian dollars, or $96 million, may be challenged by Washington-based action sports retailer Zumiez.

On Nov. 23, 2009, Billabong acquired California-based online board sports retailer swell.com for an undisclosed sum, adding to an expanding U.S. action sports brand portfolio, which also includes snow goggle manufacturer Von Zipper and wet suit maker Xcel.