The skateboard-shoe company Vans * agreed yesterday to be acquired by VF Corp., maker of Lee and Wrangler Jeans, in a $396 million deal that would give VF an instant foothold in the action sports segment.

The acquisition is part of a consolidation trend in the action sports industry, which includes lifestyle and apparel companies centered around such sports as skateboarding and snow boarding. The move underscores how the lucrative segment has become a go-to area for apparel companies looking to tap into the youth market for growth.

Last month, DC Shoes *, a Vista skateboard-shoe company, agreed to be acquired by surf apparel company Quiksilver *, based in Huntington Beach. Hurley *, a surf apparel company, was acquired by Nike * Inc. in 2002 *.

Vans, based in Santa Fe Springs east of Los Angeles *, is one of the oldest and biggest players in the action sports industry. Yet the company has stumbled in recent years after a largely a failed venture * into indoor skateboarding parks.

"They have been in a constant state of turnaround for about four years," said Michael Pachter, an analyst with Wedbush Morgan Securities.

The deal calls for VF to acquire Vans for $20.55 a share in cash, representing a 30 percent premium to Vans' closing price before the acquisition was announced. Vans had fiscal 2003 * sales of $330 million and has forecast fiscal 2004 * sales of $346 million to $349 million.

VF hopes to expand Vans into a $500 million business within five years, spokeswoman Cindy Knoebel said, mostly by building the brand's apparel business. About 90 percent of Vans' revenue comes from shoes sales, and the rest from items such as skate shorts and T-shirts.

"We see a larger opportunity in the apparel side of the business," Knoebel said.

Vans will be part of VF's outdoor brands group, which includes The North Face and is among the Greensboro, N.C., apparel producer's fastest-growing segments. The deal won't have any effect on VF's earnings this year, the company said, but should add slightly to 2005 * earnings.

The acquisition is scheduled to close in the third quarter and has been approved by the boards of both companies. It still needs shareholder and governmental approval.

Yesterday's acquisition had observers in the action sports industry wondering if the Vans brand might be sullied with the backing of a larger corporate parent, as is often the case when an action sports company is acquired.

VF has a diverse stable of brands, such as Nautica *, but none in the action sports segment. Knoebel said VF plans to operate Vans as a separate division, keeping its headquarters and management team in place.

"I guess I'm a little surprised, but lately nothing surprises me," said Chris Miller, president of Atlas Distribution in Carlsbad. "It makes sense for VF, but does it make sense for Vans? That's what I would question."

Atlas owns the Planet Earth * brand of clothing and the Adio * brand of skateboard shoes and was acquired by sporting goods maker K2 Inc. several years ago. Such deals were novel at the time and prompted one of Planet Earth's competitors to place ads that sought to portray the company as a sellout.

For decades, Vans has been able to increase business without losing credibility with core consumers. The company was founded in Orange County * in 1966 as Van Doren Rubber Co. and found a following with skateboarders a decade or so later.

Vans strayed from its core audience in the 1980s when it started making baseball and football shoes. The costly expansion forced the company into bankruptcy in 1984. Four years later, after emerging from bankruptcy, Vans was sold to investment banking firm McCown DeLeeuw Co., then went public in 1991 *.

"You can count on one hand the number of (action sports) companies that have been able to grow to more than $100 million in sales and retain their core credibility," said Doug Palladini, director of Cynic Youth, a marketing company that specializes in the action sports industry.

"It's an attractive category . . . if you can find those gems – we're kind of running out of them."

This article was originally entitled "Apparel giant set to buy skateboard-shoe pioneer" and was found at http://www.signonsandiego.com/news/business/ 20040428-9999-1b28vans.html

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