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.
VF acquires Timberland to capture cost synergies
Capstone Strategic is the meeting point of passion and process in the field of mergers and acquisitions. Founded in 1995 by CEO David Braun, Capstone meets the unique demands of mid-market companies and their corporate growth initiatives. We help clients achieve their dreams through proactive strategic growth programs and successful acquisitions. Put simply, we help companies grow.