Active Sportswear has snatched up H²O, adding this 42-year-old Danish sportswear brand to a portfolio of house brands that includes Color Kids, Kilmanock and FZ Forza. Several companies had shown interest in H²O, reportedly including Hummel, before and after the recent bankruptcy of Buksesnedkeren, its former parent company (see previous issue).
Partly owned by a fund, Greystone Capital, Active Sportswear is taking over only the assets of H²0 along with 20 of its employees. They will join the company’s own staff of 80 employees. Buksesnedkeren’s other more fashion-oriented brand, Signal, is being taken over by members of its management. The terms of these agreements were not disclosed.
Thøger Thøgersen, who ran Buksesnedkeren from 1997 to 2005, is starting off as chief executive of Active Sportswear next Monday. He had strongly developed H²0 as a sport-inspired fashion brand for the sporting goods stores, but left the company after negotiating the sale of Buksesnedkeren to a British investment fund, Change Capital.
John Mark Jensen and Mark Christiansen, the two former Danish athletes who founded Active Sportswear in 1989, then approached Thøgersen to become their CEO, but due in part to a non-competition clause, he decided instead to run a Danish fashion company, Pruuns Bazaar, which had sales of 200 million Danish kroner (€26.8m-$34.3m) last year.
Thøgersen is expected to take H²O back to its original DNA, a process that will probably entail its pull-out from the golf and tennis clothing segments to focus on general sportswear and on outerwear. After his departure, Buksesnedkeren’s new management had decided to diversify into these and other segments in order to generate extra revenues and cash flow because of the high debt due to be serviced following the company’s leveraged buy-out. However, after an initial sales increase, the revenues of H²0 started to decline and reached 220 million DKK (€29.5m-$37.7m) in 2008, while those of Signal increased to around 140 million DKK (€18.8m-$24.0m). Group losses climbed and debt swelled to more than 100 million DKK (€13.4m-$17.2m).
Headquartered in Brønderslev, Active Sportswear will seek to generate major synergies between its existing businesses and H²O. Although H²O will be run as an independent entity, it will benefit from lower sourcing, administrative, sales, marketing and management costs under the new ownership. In Norway, for example, where Active Sportswear has its own sales subsidiary, the same sales force will handle H²O as well as some of its own other brands. The company will also use its joint venture in Hong Kong and its subsidiary in China for H²O’s product range.
In Active Sportswear’s portfolio, H²O takes the place of a former sportswear brand, Faccio, which was dropped a little while ago. The acquisition will further boost the company’s revenues generated by its own brands, which grew to 140 million DKK (€18.8m-$24.0m) in the year ended last June 30. Another 40 million DKK (€5.4m-$6.9m) stemmed from the distribution of Babolat in Denmark, New Balance in Denmark and Iceland, and all the products of Grendene in the Nordic countries.
As about half of H²O’s sales are outside Denmark, the acquisition will also help to internationalize Active Sportswear’s sales operations. Specializing in badminton, Forza is gaining ground in Norway and other countries. Stronger progress is being recorded at Color Kids, a nice brand of children’s activewear, with a great location at the Ispo show, that brings in one-third of its revenues of 75 million DKK (€10.1m-$12.9m) from outside Denmark.
