Transformational sale of Hi-Tec Sports to Cherokee Global Brands
NIBC worked with Hi-Tec for several years grooming the business for sale while awaiting an offer the founding owner couldn’t refuse.
Established in 1974 and based in the Netherlands, Hi-Tec Sports (Hi-Tec) is a privately held branded footwear company that designs, markets and sells sports- and outdoor footwear globally, primarily under the Hi-Tec® and Magnum® brands, representing global brand sales of around EUR 270 million. The business was owned by its founder Frank van Wezel, with his son Ed van Wezel acting CEO since 2012.
The sale of the company in December 2016 has been a family decision and a smart way to take advantage of the Hi-Tec brand’s potential, amid the rapid changes in the global sports and outdoor retail landscape.
Over the last years, as Hi-Tec remained one of the few, large-scale family-owned sports footwear companies, the Van Wezels had recurrently said they were not looking to sell, but that a strategic takeover could always be envisaged if a judicious offer came along. The purchase price of € 90 million agreed with the American brand licensing group Cherokee Global Brands appeared to fit into this category.
NIBC was mandated as financial advisor already in 2012 to start grooming the business for sale and to act as the owners’ spokesman in managing discussions following regular unsolicited approaches from various potential buyers.
In order to realise the envisaged premium valuation, the company had to be converted into a brand licensing model, consistent with Cherokee’s licensing strategy. Consequently, all assets of the wholesale operations of Hi-Tec had to be sold to new operating partners in three back-to-back M&A transactions in the US, UK and South Africa, the proceeds of which were needed to fund a portion of the Hi-Tec acquisition purchase price. Concurrently, the new operating partners entered into licensing agreements with Hi-Tec, as a subsidiary of Cherokee.
As a result of the envisaged transformation process, the combination would yield material cross-selling opportunities between Cherokee and Hi-Tec brand portfolios, which allowed Cherokee to deliver a full premium price.
Since Cherokee showed up as a keen buyer in late 2015, the NIBC team negotiated the terms of the deal, managed the due diligence investigations by Cherokee and its back-to-back partners, and stayed hands-on throughout the process, in particular between Heads of Agreement and legal completion to ensure a successful outcome.
Cherokee Global Brands has built a compelling global platform that, combined with the new brand licensing model, allows Hi-Tec to adapt to the fast-changing retail and consumer environment. It also broadens the reach and offering of Hi-Tec’s core brands and builds the select distribution channels it has established over the past 40 years.
With the passionate and patient commitment by the NIBC M&A team, we made a deal the family could live with and guaranteed global continuation for our two brands. - Frank van Wezel, Founder and Chairman of Hi-Tec Sports.