VF Corp (NYSE:VFC) stock is soaring higher on Monday following news of a deal to acquire Supreme.
- VFC is going to spend $2.1 billion to bring Supreme into the fold by the end of this year.
- This has it buying shares of the private company from investors The Carlyle Group and Goode Partners.
- Based on the offer price from VF Corp, these investors are making a pretty penny off of Supreme by selling their stakes in it.
- The news is also good for investors in VFC stock as the company expects the acquisition to be accretive to its earnings.
- VF Corp says it expects Supreme to contribute a minimum of $500 million in revenue and 20 cents to its adjusted earnings per share in fiscal 2022.
- The company notes that Morgan Stanley provided it with a fairness opinion and Davis Polk & Wardwell LLP was its legal advisor for the deal.
- Supreme is a seller of accessories, apparel, and footwear mostly through direct online sales.
- VFC says it expects this to complement its own offerings, such as the Vans and Timberland brands.
Simeon Siegel, a BMO Capital Markets retail analyst, said the following to Bloomberg about the news moving VFC stock today.
“What this shows us is companies are looking for needle-moving acquisitions rather than tuck-ins, and they’re looking for needle-moving acquisitions of exciting companies.”
VFC stock was up 13.5% as of Monday morning.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.