Berkshire Partners LLC, a Boston-based investment firm, along with other investors including New Balance Holding Inc., has inked a deal to buy The Rockport Co. from the Adidas Group.
The Adidas Group pegged the asking price at $280 million, most of which will be paid in cash with the remainder comprised of notes. The transaction is expected to be finalized later this year and will free up the $16.5 billion Adidas Group to focus on its core athletic business. The German juggernaut has struggled in the North American and Russian markets in the past year. To try to turn things around, the company promoted Mark King to the role of president of its North American business in June. Beyond its successful hookups with Stella McCartney, Jeremy Scott and other widely known designers, Adidas is reportedly bolstering its roster of sponsored professional athletes.
The Adidas Group’s chief executive officer, Herbert Hainer, weighed in on the deal Friday, saying, “Rockport is a brand that has performed well over the last years. [But] our focus is clearly on sport and operating a brand portfolio with a clear agenda to unleash the potential of athletes and inspire consumers to live active lives. The brown shoe category is not core to this strategy and the sale of Rockport will allow us to reduce complexity and pursue our target consumer more aggressively with the Adidas, Reebok and TaylorMade brands.”
Executives at Berkshire Partners could not be reached for comment by press time.
Founded more than 40 years ago in Canton, Mass., by father-and-son team Saul and Bruce Katz, Rockport footwear was first sold out of the trunk of their family’s vehicle. Rockport makes what it calls “comfort footwear” for women and men. Their aim was to use athletic footwear technology to enhance comfort in dress and casual shoes. In addition to its wholesale accounts, Rockport has freestanding stores and an e-commerce site. As part of the deal, Drydock Footwear LLC, a New Balance affiliate and home to the Cobb Hill, Aravon and Dunham brands, will join with The Rockport Co. to form The Rockport Group, a new stand-alone company offering dress and casual footwear under the Rockport, Cobb Hill, Aravon and Dunham brands.
Rockport will remain based in the greater Boston area.
Boston-based Berkshire Partners seeks to invest $50 million to $500 million of equity capital in each portfolio company. The firm has invested in more than 110 middle-market companies since 1986 through eight private equity funds with aggregate capital commitments of more than $11 billion. The firm is investing from Berkshire Fund VIII, a $4.5 billion fund raised in 2011, and it generally invests $50 million to $500 million of equity capital in each portfolio company.
New Balance, a 4,000-plus person international operation, posted sales of $2.73 billion in 2013. The Boston-based brand is known for its flag-waving production and marketing. More than four million pairs of New Balance athletic footwear is made or assembled in the U.S., which, according to the company, represents “a limited portion” of its U.S. sales.
Drydock was founded in May 2011 by industry veteran Bob Infantino. He joined forces with New Balance to create an independent business to deliver innovative, stylish and comfortable footwear across the Cobb Hill, Aravon and Dunham brands. Once the deal is completed, Infantino will serve as president of Drydock and ceo of The Rockport Group.
Drydock Footwear was formed in 2011 and assumed control of New Balance’s men’s and women’s casual shoe brands, Dunham and Aravon. In the fall of 2012, Drydock launched what has become its largest brand, Cobb Hill, targeting the women’s comfort category.
John Withee, chief financial officer of New Balance, said, “Given our history of success working together with Bob, we are confident in his ability to lead The Rockport Group and look forward to continued success with our investment in this venture. Bob leads with integrity and has always been committed to delivering great products to retailers and customers.”