Zumiez Inc. has inked a deal to acquire Austrian action sports retailer Blue Tomato for $75.3 million.
The Everett, Wash.-based action sports chain said the total purchase price of 59.5 million euros, or $75.3 million at current exchange, is subject to certain pre-closing and post-closing adjustments. The agreement also provides for an additional 22.1 million euros, or $28 million, in contingent future payments based on the achievement of certain performance objectives over the next three years.
The acquisition is expected to close before the end of the month. The purchase will be funded by Zumiez’s existing cash balances, while a portion of the contingent future payments — $5 million — will be in the form of Zumiez stock, according to Marc Stolzman, Zumiez’s chief financial officer, said in a conference call about the transaction. The company also said the acquisition will be “modestly accretive” to earnings per share in fiscal 2012.
Blue Tomato was founded in 1988 by former European snowboard champion Gerfried Schuller. It operates five stores in Austria comprising of a 10,750-square-foot flagship in Vienna, two smaller local stores and two seasonal snow shops. The e-commerce operation through blue-tomato.com is available in 14 languages and contributes 75 percent of Blue Tomato’s total net sales, Stolzman said.
Blue Tomato will remain headquartered in Schladming, Austria, and senior management led by Schuller will continue in their current roles.
For the fiscal year ended April 30, Blue Tomato posted net income of 3.5 million euros, or $4.4 million, on a 27 percent net sales gain to 29.4 million euros, or $37.2 million.
Rick Brooks, chief executive officer of Zumiez, said, “Joining forces with Blue Tomato represents the next step in our strategic plan to build the leading global action sports retail business. Europe has a large, vibrant and growing action sports community, which Gerfried and his team have skillfully tapped into through a broad offering of authentic brands and products, a differentiated retail experience with superior customer service.”
Stolzman said the transaction gives Zumiez an “immediate and sizeable footprint in Europe” and meets the firm’s goal in building a “global action sports retailer.”
The cfo said Zumiez now expects second-quarter diluted EPS at between 4 cents to 6 cents, inclusive of acquisition-related costs and expenses, on total sales estimated at between $134 million to $136 million, which includes a $2 million contribution from Blue Tomato provided the deal is completed by July 1.