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-- in the retail sector today is VF court the maker of North Face another iconic outdoor brands agrees the by hiking boot maker Timberland for two billion dollars.
We're joined now by -- Tracy to consumer analyst for FBR capital markets.
For his take on this deal all right -- both stocks are all on the days -- looks like at least investors think that it's good for both parties here.
Yeah you know we think we think the the acquisition temporal and by the -- -- makes a lot of strategic sense for both parties.
Really when you think about -- F -- one of the most acquisitive names in this space.
Clearly have been targeting the outdoor action sports.
Markets it to to pick up another asset.
And in doing with -- -- -- and not really complimentary -- where business.
As you meant to mention the -- operates North Face really allows them to.
Again bring in a complementary business with Timberland and and scale up that outdoor business.
-- deals done in that cash commercial paper term debt.
We know corporate debt borrowing costs are cheap right -- how much did that influence the timing of this deal.
-- I -- I absolutely think it did you have the again VF has been itching to do a deal for quite some time.
Really just you know from a financial perspective -- engineering -- a ton of free cash are really just sitting there waiting to to put to work.
Again I think they're relatively opportunistic with via her -- with Timberland.
You know paid roughly eleven times.
Post energy is warning eight to nine times so really in line with with a group take out multiple -- you mentioned how the financing -- deal.
Again I think the attractive sort of nature of the credit markets help support that.
But again a ton of free cash to put to work that they think.
As a good investment and in taking out temple in here today.
You know it's interesting -- guys -- reading comments from the CEO of love the F corporate wisely cities that is high on.
Timberland deferred at least a decade it is -- -- -- was able to keep it so quiet it's.
That investors that didn't you know -- arbitrage -- didn't get in there and get involved before today.
Well like I've taken they they have been public about targeting the outdoor action sports market.
Although what I will say is that they it's focused more on the two to 300 million.
Size type of deal.
So give in this two billion dollar plus for ten -- -- and much more transformative.
I think the market was expecting that said again Timberland.
A very well well -- I cannot iconic brand out there.
But I just believe the F saw an opportunity posted Tim -- quarter stock had pulled back quite a bit.
And -- an opportunity to to take to get again an iconic branded decent valuation.
And VF seems to think this is gonna be accretive to earnings pretty quickly both shares rising today what is your outlook for shares of the FC -- -- by now I get to wait a little bit.
Since they shot up on.
Yeah I mean formally -- underestimate our estimates are under review we art -- neutral rating market perform rating on VF -- Hundred dollar price target that was before the deal today.
As you mentioned there they're looking for roughly nine -- sense of the creation that's excluding integration and acquisition cost for FY twelve.
And took you to put a call it you know thirteen multiple that typically -- receives that's about a 1052 and a 110 dollar stock I think that's why you're seeing the -- Turned -- the F shares where it is today.
Are we appreciate the analysis thank you -- -- they're Tracey -- the other capital markets we -- they have pesticide on it why even after washing.
Find out -- popular for its -- the Jerry list next on Fox Business.
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