Columbia Sportswear to Acquire Prana

Cash purchase for $190 million in cash expected to close during second quarter.

Columbia Sportswear Co. has dipped its ordinarily chilly toes in the red-hot ath-leisure market with an agreement to acquire Prana Living LLC from Steelpoint Capital Partners and others for $190 million in cash.

This story first appeared in the April 30, 2014 issue of WWD.  Subscribe Today.

Prana would join a portfolio of brands that includes Columbia, Mountain Hardwear, Sorel and Montrail while expanding the company’s business outside cold-weather apparel and into the fast-growing yoga market and adding an asset closely identified with sustainable products and practices.

“Prana fits Columbia’s strategic priorities to expand into categories that appeal to complementary consumer segments, reduce our dependence on cold-weather products and leverage Columbia’s global operational platforms to expand across key geographic markets,” said Tim Boyle, president and chief executive officer of Portland, Ore.-based Columbia.

Upon consummation of the deal, Prana would become a wholly owned subsidiary of Columbia while maintaining its headquarters in Carlsbad, Calif., and continuing to be led by Scott Kerslake as ceo.

Noting that Prana will be among a group of “distinct outdoor brands,” Kerslake said, “Prana is a brand founded on designing stylish, functional, active apparel made in an environmentally sustainable way. With Columbia’s financial strength, operational expertise and global market platform, we now will be able to reach a much broader audience of socially conscious consumers worldwide.”

Columbia said the $190 million purchase price equals about 13 times Prana’s projected earnings before interest, taxes, depreciation and amortization for the current year. The company is projected to surpass $100 million in sales in 2014 with an estimated $55 million landing on Columbia’s books after the acquisition. Columbia expects to fund the purchase through available cash.

Prana was founded in 1992 and provides apparel for active pursuits including yoga and rock climbing. The founders of the company sold it to the then Liz Claiborne Inc. in 2005 with management acquiring the firm for $36.5 million, plus up to $4 million in performance-based earn-outs, in 2008.

In addition to wholesale distribution, the brand operates five stores and its own e-commerce site in the U.S. but distribution outside North America currently accounts for less than 5 percent of revenues.

Columbia disclosed the acquisition as it reported improvements in first-quarter earnings and sales that exceeded analysts’ expectations and lifted its guidance for the full year. In the three months ended March 31, net income more than doubled to $22.3 million, or 63 cents a diluted share, from $10.1 million, or 29 cents, in the year-ago period. Net sales expanded 21.8 percent to $424.1 million from $348.3 million, with currency translation reducing the sales gain by about 1 percent. On average, analysts expected earnings per share of 33 cents on sales of $397.6 million.