Investors have responded positively to the news on Oct. 1 of Rip Curl's takeover, raising Kathmandu Holdings' stock market capitalization by 5 percent to more than 830 million New Zealand dollars (€472.3m-$521.1m) after a temporary suspension of trading. Like the much bigger VF Corporation, Kathmandu now has one leg in the outdoor sector and another in the action sports sector, and they both share some similarities in culture.

Kathmandu Holdings enjoyed continued growth in sales and profits for the past four years. The 30-year-old Kiwi company's annual report, which has just come out, shows that its operating cash flow fell during its financial year ended on July 31 by NZ$ 13.9 to NZ$ 61.7 million (€35.1m-$38.7m), but the business generated sufficient cash to reduce the company's net debt to NZ$ 19.3 million (€11.0m-$12.1m) in spite of its acquisition of Oboz in April 2018.

To help fund the purchase of Rip Curl, the group has signed a deal to borrow 220 million Australian dollars (€134.8m-$148.5m), but Kathmandu said that its strong cash generation is expected to keep the debt to Ebitda ratio of around 1.5 like in the last year, reducing it subsequently to 1.1 or less.

The acquisition of Oboz has given Kathmandu a way to build strategic partnerships at the wholesale level for its Kathmandu brand in North America and to accelerate DTC operations there. The takeover of Rip Curl should help it to expand more rapidly in new countries, said Xavier Simonet, president and chief executive of Kathmandu, in a conference call with investors to comment on the acquisition.

Noting that Rip Curl has a European sales subsidiary in France, Simonet said that 17 of its 20 top wholesale accounts could carry Oboz and Kathmandu products because they also sell outdoor brands, in addition to surf products. He also noted that the surf market has been growing more or less at the same pace as the outdoor market, adding that there are opportunities for synergies in sourcing some specific products, for cooperation in omni-channel retailing and the build-up of a loyalty program like that of Kathmandu.

In commenting on Rip Curl's acquisition, Kathmandu's management pointed out that it contributes international expertise in the wholesale segment, but added that Rip Curl, Kathmandu and Oboz will keep the operational ownership of their respective businesses.

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