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Quiksilver Acquires Two Global Licensees

LOS ANGELES — In its quest to become a billion-dollar lifestyle powerhouse, Quiksilver Inc. has structured a $93 million cash and stock deal that will bring its Japanese and Australian licensees under its control.<br><br>The Huntington Beach,...

LOS ANGELES — In its quest to become a billion-dollar lifestyle powerhouse, Quiksilver Inc. has structured a $93 million cash and stock deal that will bring its Japanese and Australian licensees under its control.

The Huntington Beach, Calif.–based action sport powerhouse announced late Tuesday it will merge with Ug Manufacturing Co. Pty. Ltd. in Australia and Quiksilver Japan K.K. in an arrangement that will add an estimated $90 million in revenue to the company during fiscal 2003. The merged operation will generate about $780 million in sales and will give Quiksilver control over nearly all its global business with the exception of a few small licenses in niche markets such as Indonesia.

Australian surfers John Law and Alan Green, the brand’s original founders and the principal shareholders of both distributorships, are scheduled to receive up to $18 million if fiscal targets are met within three years of the transaction. While neither Law nor Green has had an active management role in a decade, both have been brand advisers during that time, said Quiksilver chief executive officer Robert McKnight.

Australian distributor Ug Manufacturing distributes goods under the Quiksilver, Roxy and Hawk Clothing labels, as well as managing 23 Quiksilver Boardriders stores. Quiksilver Japan is a smaller operation, with only six stores, but a key market opportunity because of the island nation’s avid youth culture. McKnight said he envisions adding four to six Boardriders doors in each country during the next several years.

Combining the U.S. and European operations with Australia and Japan shows “we are one single company, with one mind-set and common goals,” McKnight said.

The move drew applause from analysts.

“They’ve done a great job internationally,” said Jennifer Black, an analyst at Wells Fargo Securities. “Everyone in the world knows who they are. Think of where they can go now that they control their own destiny.”

Law and Green founded Quiksilver in 1970. McKnight and partner Jeff Hackman purchased the U.S. license in 1976 and grew the domestic business into the biggest revenue source. In 2000, Quiksilver purchased rights to the worldwide trademark in a deal worth $66 million.