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The Huntington Beach company announced tonight it has sold Cleveland Golf to a Japanese company. While Quiksilver said it wants to sell some of the smaller ski labels, executives appear committed to keeping Rossignol hard goods. Here's the release (I rearranged the order of the quotes a bit to get to the good stuff sooner):
HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)--Quiksilver, Inc. (NYSE: ZQK - News) today announced that it has reached a definitive agreement to sell 100% of the stock of its Cleveland Golf Company, Inc. subsidiary to SRI Sports Limited, based in Japan.
The transaction value is $132.5 million and the transaction is expected to close during the fiscal quarter ending January 31, 2008. Net proceeds from the sale will be used to repay existing indebtedness.
Quiksilver originally acquired a portion of the interest in Cleveland in its July 2005 acquisition of the Rossignol Group. The remaining interest was acquired in a separate transaction in September 2007.
This transaction resulted from Quiksilver's initiative, first announced in June 2007, to explore strategic alternatives to reduce its exposure to the hardgoods manufacturing businesses. Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented,
"We are very pleased to have reached a compelling transaction with SRI Sports. While we believe that Cleveland is the best up-and-coming brand in the golf market with significant growth opportunities, it is not a strategic asset for us as we strive to maximize our core businesses and brands."
Bernard Mariette, President of Quiksilver, Inc., commented, "We believe this transaction is a key strategic action for our company that will drive immediate value and enable us to reduce both our exposure to the hardgoods space and our degree of leverage. We are pleased to turn over the leadership of Cleveland to such a capable and well-respected company and believe that this transaction is a clear win for everyone involved."
Commenting on Quiksilver's remaining hardgoods brands, Mr. Mariette continued, "We remain fully committed to our vision to transform Rossignol to a global lifestyle brand and therefore to the continued ownership of the related hardgoods assets." Mr. McKnight added, "We are continuing to evaluate ways to reduce our exposure to risk in some of our non-core winter equipment businesses, including Dynastar, Lange, Look, Kerma and Risport which, like Cleveland Golf, were acquired in 2005 as part of the Rossignol Group."
Ryochi Sawada, Chairman of the Board of SRI Sports Limited, commented, "We are very excited to add the Cleveland brand and business to our operations. Cleveland has a clear position of dominance in the important wedge market and a fast-growing presence in drivers and irons. We believe that this business will prove highly complementary to our own. We are looking forward to demonstrating Cleveland's full potential to the market and believe that the business can benefit greatly from our stewardship."
Greg Hopkins, President of Cleveland Golf Company, Inc, commented, "We are excited by the many positive aspects of this deal, including the combination of a great brand in golf with a new organization that is completely and solely devoted to the sport. Significantly, their operating model is set up to anticipate and respond to the seasonality and other specific requirements of the golf market. We believe that this singular focus will benefit the entire Cleveland organization in a number of ways. Each of the three companies involved - Cleveland Golf, Quiksilver, and our new parent SRI Sports benefit in significant ways as this transaction will positively effect the futures of all three companies."