LOS ANGELES — Columbia Sportswear Co. bested Perry Ellis International Inc. and other bidders to buy Pacific Trail’s portfolio of outdoor brands for $20.4 million in cash in an auction following the bankruptcy of Pacific Trail’s parent company, London Fog Group Inc.
Seattle-based Pacific Trail represents the fourth acquisition in Columbia’s 68-year history and its second purchase this year. With Pacific Trail, Portland, Ore.-based Columbia also expands its distribution to mass retailers including Costco Wholesale Corp. and Wal-Mart Stores Inc. London Fog previously disclosed that Pacific Trail built a national reach of more than 10,000 stores.
“[Pacific Trail] has customers that Columbia does not have,” said Tim Boyle, Columbia’s president and chief executive officer, in an interview. “It’s a broadening of [Columbia’s] customer base.”
Boyle said Columbia had discussed internally the potential of buying Pacific Trail, which has competed against Columbia for half of a century, over the past 20 years.
“The portfolio of brands is spectacular,” Boyle said. “There were bidders right up to a few dollars of us. We think the price was fair.”
In addition to the outerwear and sportswear brand Pacific Trail, the purchase includes rainwear line Towne, the high-performance outerwear label Pac Tec, the surfboard apparel brand Black Dot Clothing and the mountain equipment label Moonstone.
Boyle said the acquisition also includes the assumption of certain liabilities, which Columbia is currently reviewing. He said Columbia will provide further guidance pertaining to its strategy for the newly acquired brands and impact on corporate revenue in its first-quarter earnings conference call in late April.
Pacific Trail has annual sales of $22.2 million, according to a report issued Thursday by apparel analyst Lizabeth Dunn of New York’s Prudential Equity Group. Dunn said Columbia’s acquisition of Pacific Trail dispels any speculation that Columbia would be a target for private equity firms that have been hunting for buyouts in the apparel industry.
“This move further defines [Columbia] as a buyer, not a seller, in our view,” Dunn wrote.
In late January, Columbia acquired the assets of Montrail Inc., a Seattle-based outdoor footwear company, for $15 million in cash plus the assumption of certain liabilities. Columbia bought Mountain Hardwear Inc., a Richmond, Calif.-based mountaineering apparel and equipment maker, in 2003, and Sorel by Kaufmann, a Canadian cold-weather footwear firm, in 2000.
London Fog filed for voluntary Chapter 11 bankruptcy on March 20 because it couldn’t sufficiently fund day-to-day operations.
Investment banking firm Avalon group was hired before the bankruptcy to sell Pacific Trail and it reached an agreement to do so with Miami’s Perry Ellis. But the deal called for Perry Ellis to be a “stalking horse” in a bankruptcy court auction to buy Pacific Trail for $14.5 million. The deal was subject to better offers, resulting in Columbia’s successful bid.
Columbia said Grant D. Prentice, its vice president of global outerwear integration, will oversee interim management of the Pacific Trail brands.