Lotto Sport Italia has signed a deal to acquire Etonic at a price close to the turnover that it will generate this year. This former property of Spalding, whose product range is quite complementary to that of the Italian company, expects to raise its revenues to €30 million this year from €18 million in 2005, and Lotto’s management is shooting to double them over the next three years.
Acquired by a group of managers in 2003, Etonic, an American brand whose history goes back to 1876, has reached the breakeven point after pursuing a successful niche strategy, with investments in innovative products such as the spikeless golf shoe and a more recent running shoe model, the Jepara, that has been given high recognition by Runner’s World. Already well known for the victories of Bill Rogers in the Boston and New York marathons, Etonic attacked the U.S. running footwear market again at the beginning of this year after achieving high market penetration in the areas of golf and bowling shoes since its latest takeover.
Lotto sees considerable synergies in R&D, back-office functions and distribution with Etonic. The brand, whose image remains very high in the USA, comes with numerous patents and with a strong management team that includes Gary Siriano, formerly with New Balance. Etonic has added an interesting line of shoes for exercize walking, and Lotto is considering adding an apparel range about three years from now, after the brand achieves a stronger presence internationally.
Lotto is looking for new distribution partners worldwide for Etonic in specific areas such as golf and bowling, but its sales offices and many of its own distribution partners around the world will get first crack at its running shoes, complementing Lotto’s own technical offerings in football and tennis.
On the other hand, Etonic’s head office in Brockton, Massachusetts will become the North American sales office of Lotto after the Italian brand’s distribution deal with Priva Sport expires in December 2007. It will start to take orders already in May or June of next year. Another contract stipulated by Lotto with other American partners for its own lifestyle range will remain in place.
Etonic will continue to be run by Thomas W. Seeman, a former management consultant with McKinsey who has worked also in Europe, along with his two partners, Daniel Ledd and Karen Pitts. They are in charge of sales and marketing, respectively. The trio took over Etonic in a management buyout three years ago, before the rest of Spalding went to Russell Corp..
Lotto has been looking at various acquisitions over the past few years. It made an offer for Brooks, which subsequently joined the Russell camp. The acquisition of Etonic comes after an investment fund apparently approached Lotto about a possible merger with Sergio Tacchini, which is looking for a new shareholder. Lotto’s management has no comments about those discussions, which have since been suspended.