Citi Reiterates a 'Buy' on VF Corp (VFC), Comments on Potential Acquisition of DC Shoes From Quiksilver (ZQK)
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Citi reiterates a 'Buy' on VF Corp (NYSE: VFC). Price target $74.
Citi analyst says, "VFC may be close to acquiring skate brand DC Shoes from Quiksilver (NYSE: ZQK), according to WWD reports on Friday. We think this could be a positive acquisition for four reasons:
1) The brand fits well within VFC’s newly created Action Sports Americas coalition, and we think there are opptys to create synergies w/ its Vans & Reef brands, 2) VFC will leverage its global sourcing and distribution to further grow the brand like previous acquisitions; 3) VFC is likely to get an attractive price as a result of market valuations and ZQK’s balance sheet; and 4) We think the deal would be slightly accretive, w/out impacting VFC’s dividend or our est. of ~$200M in repurchases for FY09."
"Short-Term Potential Positive for ZQK, But Long-Term Impact Uncertain — The possible cash infusion for ZQK is important as the company needs to refinance its short-term debt, including $167 million which is uncommitted, and a $72 million facility due to mature in March 2009. However, with the possible sale of DC, we think Quiksilver could be losing its growth crown jewel."
V.F. Corporation (VF) is engaged in branded lifestyle apparel and related products. VF owns a portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear and occupational apparel.
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