Rocky Brands has agreed to acquire the performance and lifestyle footwear business of the U.S. conglomerate Honeywell International for $230 million. The deal is expected to close in the first quarter of 2021.
The assets acquired are The Original Muck Boot Company, Xtratuf, Servus, Neos and Ranger. These brands posted estimated net revenues of about $205 million in 2020, generating Ebitda of around $24.5 million.
The Original Muck Boot Company specializes in quality rubber and neoprene boots, while Xtratuf focuses on durable fishing boots and ”shoes for life on the water,” Servus stands for protective rubber boots. Neos specializes in overshoes and Ranger on value-priced boots for cold and wet weather.
Rocky Brands produces footwear and apparel. Its brands include Rocky, Georgia Boot, Durango, Lehigh and the licensed Michelin.brand of shoes. Honeywell will continue to manufacture industrial safety footwear under brands such as Oliver, MTS and Honeywell Bacou.
The purchase is being funded with an $80 million senior secured asset-backed credit facility with Bank of America and a $130 million senior secured term loan facility with The Direct Lending Group of TCW Asset Management Company, as well as cash on hand. The credit facility bears interest at Libor plus 1.50 percent and the term loan bears interest at Libor plus 7.00 percent.
Along with the acquisition, seven managers in charge of Honeywell’s lifestyle footwear business will be hired by Rocky Brands. The group has agreed to grant stock options to the managers to purchase a total of 25,000 shares on the date of closing of the transaction. The options have a term of 10 years from the date of grant and vest 50 percent on the first anniversary of the date of grant, with the remaining 50 percent vesting on the second anniversary.
Thanks to the deal “we will greatly enhance our powerful portfolio of footwear brands and significantly increase our sales and profitability. We’re acquiring a well-run business with corporate culture and a customer base similar to ours, which provides meaningful growth opportunities within our existing categories as well as an entrée into new market segments,” explained Jason Brooks, the president and CEO of Rocky Brands.
He added that the brands complement Rocky Brands’ offering with minimal overlap. The company plans to leverage its fulfillment capabilities to improve the distribution of the new brands to wholesale customers and accelerate direct-to-consumer penetration.