VF acquires Timberland to capture cost synergies

VF agreed to acquire Timberland for $2 billion, which is a 43% premium on its recent stock price.  VF says their focus will be on cost reductions as it tries to consolidate the footwear segment.  Timberland operates on an operating margin under 10%, while VF’s is around 20% — double.  I expect these cost savings focused acquisitions will continue for the remainder of 2011 as companies struggle with rising costs and waning consumer demand.  If you can’t grow your top line organically then the opportunity for larger companies is to focus on consolidation and attempt to drive cost savings.