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PPR, the French luxury goods group that controls Gucci and Puma, said on Monday that it had agreed to buy the sports accessory and clothing company Volcom for $607.5 million.
“We were looking at midsized brands with a strong prospect for growth,” François-Henri Pinault, head of PPR, said in an interview. “It’s an easier bet to take” than large brands, he added.
The Volcom board has approved the offer of $24.50 a share, nearly 25 percent above the closing price of $19.73 on Friday. The board and company directors will tender their 14.4 percent of the company in support of the deal, which is expected to close in the third quarter.
“We believe that this announcement should alleviate the ‘uncertainty’ element and give a credibility boost to management (which over the last 12 months had been saying that it was looking for medium-sized deals in sports & lifestyle),” said Antoine Belge, luxury analyst at HSBC.
Mr. Belge noted that PPR shares had suffered in recent months because of market fears that Mr. Pinault would embark on a deal worth billions that might have rivaled LVMH’s recent acquisition of Bulgari.
“He did what he said he could do,” Mr. Belge said in a interview, referring to Mr. Pinault. ”Volcom accounts for about 3 percent of their market cap, so it’s not a game-changer,” he said.
Volcom, based in Costa Mesa, Calif., specialized in skating, surfing and snowboarding clothing. Mr. Pinault noted that, “like most French guys,” he was a skier himself.
His company has been turning its focus toward luxury and sports, and away from other sectors. He sold its furniture unit, Conforama, to Steinhoff this year, and hastaken the management of Gucci into his own hands.
“I won’t be as involved with them as with Gucci,” he said, referring to Volcom. He noted, however, that the clothing company could benefit from Puma’s global distribution and its production facilities in Vietnam.
Volcom’s chief competitors in the action sports clothing sector are Quiksilver and Billabong.
PPR hired the Peter J. Solomon Company as its financial advisor, and Wachtell, Lipton, Rosen and Katz as legal counsel. Volcom hired Wells Fargo Securities to advise its board, and Latham & Watkins as legal counsel.
PPR shares initially rose on the news, but had fallen 0.15 euros, or 0.12 percent, to 120.60 euros at the close in Paris on Monday.
