According to a recent article in Transworld * Snowboarding, Quiksilver * and DC Shoes *, Inc have announced a "definitive agreement whereby Quiksilver will acquire DC Shoes".

"DC shoes is a tremendous fit with our organization from a cultural, strategic and operational standpoint", Says Robert B. McKnight, Jr., Chairman and CEO of Quiksilver. He added "We both share respect for the authenticity that makes our brands powerful, and we both benefit from product design that reflects technical excellence and great style."

Bernard Mariette, President of Quiksilver tells the business angle: "DC Shoes fits all of the criteria we identify as key for an acquisition. DC has fantastic global potential, sizeable revenues, and their culture is very similar to Quiksilver’s. In fact, they have already demonstrated international success, and we can build on this with our global platform that has been developed over the past ten years. We expect DC to flourish with its separate design and marketing teams supported by the logistics of Quiksilver. While we have successfully developed a growing branded footwear business, DC’s management team will help fine tune our footwear operations and product. At the same time, we believe that DC has an excellent, but so far, relatively untapped opportunity, to deliver an even stronger sportswear line to the youth market."

Ken Block, President and Founder of DC Shoes., says, "We are very excited to be partnering with Quiksilver, the number-one action sports brand in the industry. Their global platform will provide us with the resources to make DC even stronger, while allowing us to maintain the integrity and spirit of DC's roots."

Damon Way, Executive Vice President and Founder of DC Shoes, Inc., added, "Quiksilver is the ideal partner for us. Their understanding of our vision as it relates to product development, marketing, distribution, global strategies and athletes could not be any better."

Mr. McKnight of Quiksilver summed the deal up thusly: "We believe this deal represents yet another step in the evolution of our business and that our shareholders will be well served through this transaction. It fits incredibly well with our strategy of pursuing opportunities in the global youth market. We are thrilled to expand both the depth and breadth of our management team and portfolio of brands, and we remain highly focused on our goal of building one of the world’s leading branded consumer apparel, and now footwear, companies."

Apparently the total price for the acquisition will consist of an initial payment of $56M in cash, 1.M "restricted shares of Quiksilver common stock", and "the assumption of approximately $10M in funded indebtedness". According the reports, the deal also stipluates that the sellers may receive up to an another $5M over 4 years "if DC Shoes reaches certain performance targets."

The deal must be approved through normal procedures including regulatory approvals and is expected to be effective "by the third quarter of fiscal 2004 *". Reportedly Quiksilver believes the acquisition to have a mildly positive effect on earnings per share this fiscal year and estimates that "earnings accretion" could reach about $0.06 per share in fiscal 2005 *.

DC Shoes is currently privately held and headquartered in Vista, California *. They claim to hold a leadership position in the action sports industry as a premier designer, producer and distributor of skate-inspired shoes, apparel and related accessories. DC’s brand crosses traditional boundaries of both footwear and skateboarding, including product lines popular with some boardriders as well as "a broad base of consumers". Over time DC shoes has proven that one of the cornerstones of its marketing strategy is to build "a world-class team of professional athletes that exemplify and enhance DC’s brand, develop its signature products, and support its promotional efforts."

According to their website, DC Shoes team of professional skateboarders currently includes Danny Way *, Colin McKay *, Josh Kalis *, Stevie Williams *, Anthony Van Engelen *, Brian Wenning, Ryan Smith, and Ryan Gallant *.

Quiksilver designs, produces and distributes clothing, accessories and related products "for youngminded people" and "develops brands that represent a casual lifestyle — driven from a boardriding heritage". The company's primary focus is apparel for young men and women under the Quiksilver, Roxy, Raisins, and Radio Fiji labels, and also manufacture apparel targeted for specifically for boys (Quiksilver Boys and Hawk Clothing *), girls (Roxy Girl, Teenie Wahine and Raisins Girls), men (Quiksilveredition and Fidra) and women (Leilani swimwear). Quicksilver also produces as snowboards, snowboard boots and bindings under the Lib Technologies, Gnu and Bent Metal labels. According to the company, "Quiksilver’s products are sold throughout the world, primarily in surf shops and specialty stores that provide an authentic retail experience for our customers."

This article is based on research by the author and on information in the article "Quicksilver To Acquire DC Shoes" found in Transworld Snowboarding at http://www.transworldsnowboarding.com/snow/ snowbiz/article/0,13009,598873,00.html

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