Columbia Sportswear outbid Perry Ellis for the acquisition of Pacific Trail, a low-priced American outerwear label, and its four secondary brands - Towne outerwear and rainwear, Pac Tec performance outerwear, Black Dot surf apparel and Moonstone mountain equipment. Columbia landed the Pacific Trail portfolio for $20.4 million, 41 percent higher than Perry Ellis’ offer of $14.5 million. Columbia and Perry Ellis were two of four bidders. The two others were Studio Ray LLC and an unnamed Canadian company that was interested only in the Towne brand. It’s possible that Columbia will decide to retain only the Pacific Trail label in the end.
With revenues of only $30 million in 2005, Pacific Trail has been on a rapid decline since a sales peak of $135 million in 2002, leading its parent company, the London Fog Group to file for bankruptcy in the USA on March 20. Columbia saw the acquisition as an opportunity to extend its distribution in the USA into the mass market.
The Asian manufacturers of Pacific Trail were owed roughly $6.4 million for products already delivered, so there was pressure to divest the business before the end of March by providing the suppliers with financial reassurance in order to guarantee deliveries of Fall products. If Pacific Trail’s Fall orders are below $26,157,000, Columbia’s purchase price of $20.4 million will be adjusted downward.
