VFC VF Corporation

V.F. Corporation (VFC), in an endeavor to grow its outdoor and action sports business through expansion, entered into a merger agreement with Timberland Co. (TBL). The company has offered to pay $43 for each Timberland share or $2.2 billion net of cash acquired.

The inclusion of Timberland in the V.F. Corporation portfolio of brands of outdoor and action sports business comprising Vans, Jansport, Eastpak and other brands, will make 50% of the company's total revenue, expected to rise to 60% by 2015.

The deal, which is expected to reach fruition by the end of third quarter of fiscal 2011, will increase V.F. Corporation’s profit by 25 cents a share and revenues by $700 million in fiscal 2011.

In fiscal 2012, the deal is expected to add 75 cents to the earnings of the company. Timberland is expecting annual sales of $1.6 billion in 2011 while V.F. Corporation targets an annual revenue growth of 10%.

The transaction, subject to customary conditions, including receipt of Timberland stockholder approval and applicable regulatory approvals, will be financed by the company through cash in hand, commercial paper and term debt.

Timberland is a global leader in the design, engineering and marketing of premium-quality footwear, apparel and accessories for consumers. Timberland markets products under the Timberland, Timberland PRO, Mountain Athletics, SmartWool, Timberland Boot Company and Howies brands.

Based in Greensboro, North Carolina, V.F. Corporation is one of the world's largest apparel companies. The company, together with its subsidiaries, engages in the design, manufacture, and marketing of branded apparel and related products in the United States and internationally. Major competitors of the company are Gap Inc. (GPS) and Sears Holdings Corporation (SHLD).

V.F. Corporationcurrently retains a Zacks #2 Rank, which translates to a short-term Buy rating. However, we maintain a long-term Outperform recommendation on the stock.

 
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