Source: Radio New Zealand
KMD Brands has rejected a proposal which would see Rip Curl de-merged into a separate dual-listed company, then merged with Stokehouse to create a new company. photosport
Retailer KMD Brands has rejected a proposal from a US surfwear company to slice off its Rip Curl label and marry the two brands together.
The NZX and ASX-listed company disclosed the details of the concept, suggested by California-based Stokehouse, on Tuesday following a report in the Australian Financial Review.
KMD Brands says the proposal would see Rip Curl de-merged into a separate dual-listed company, then merged with Stokehouse to create a new company.
“The concept proposed by Stokehouse creates no value for shareholders and is challenging from an execution standpoint,” KMD Brands chairman David Kirk said.
“In addition, the combination of multiple surf brands that directly compete with each other is not a strategy that has proven effective.”
If the deal had gone ahead as proposed, Stokehouse would own 22 percent of the new business, and Stokehouse’s chief executive would also head up the entity, according to KMD’s market update.
“This proposed ownership structure is misaligned with the earnings delivered by the Stokehouse and Rip Curl businesses given Stokehouse’s immaterial contribution to combined EBITDA [earnings before interest, taxes, depreciation and amortisation], and would unfairly dilute KMD Brands shareholders,” KMD said in a statement.
In addition to Rip Curl, KMD Brands also owns Kathmandu and Oboz brands. Stokehouse’s core brand is surf label Vissla, and is run by former Billabong chief executive Paul Naude.
The dual-listed company said it carefully considered the concept but had decided it was not in the best interest of shareholders and would instead continue with its current strategy.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
